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One of the ways to protect a cryptocurrency's value is with a cap on supply. Compare this to a traditional currency like the U.S. Dollar (USD) - governments can print more USD at any given time, and when too much enters circulation, it easily loses value.
Bitcoin (BTC), on the other hand, has a maximum supply of 21,000,000, meaning there will never be more than 21 million bitcoins in circulation at any given time.
To keep the maximum supply fixed, the circulating supply of Bitcoin gets cut in half once it reaches a certain threshold. These halving events happen every four years or so - and historically, they've had massive effects on the price of Bitcoin.
The earliest event happened in November 2012. BTC at the time averaged around $11. By November 2013, it had surpassed $1,000.
The next one was triggered in July 2016. At the time, the price averaged between $600 to $700. By December of 2017, it had surged to near $20,000.
The third event, in May 2020, saw BTC go from around $10,000 to upwards of $60,000 by May 2021.
Here's where we need your undivided attention now.
Because this time, it's Ethereum (ETH) with a halving event on the horizon. And this isn't just any old halving we're talking about.
This is an Ethereum triple halving - a historic event that's going to make those Bitcoin halvings look like child's play.
Before this catalyst hits, here's what you need to know to prepare yourself for the profits ahead...
The Roadmap to Ethereum's Triple Halving
First, it's important to understand that Ethereum was built on the same proof-of-work (PoW) mechanism first pioneered by Bitcoin, which uses mining to validate new transactions, add them to the blockchain, and generate new tokens.
The problem with this PoW network is that it wastes major computing capacity and slows down transactions due to the nature of mining coins, which is incredibly energy-consuming.
Not only are there ecological concerns around this, but the PoW mechanism also demands an ever-increasing amount of time per puzzle, making the blockchain slow and inefficient in critical situations like sudden price fluctuations.
An optional form of permission that consumes less power, manages volatility, and improves security has been an urgent need for users, developers, and investors in the cryptocurrency space for years.
To help address the flaws in its network, Ethereum has introduced a number of exciting upgrades that will make it more sustainable, secure, and scalable. The end goal is for Ethereum to make a full transition to a proof-of-stake (PoS) network. (Editor's Note: The Alternative Wealth Daily team broke down the difference between proof-of-work and proof-of-stake here.)
Its London Hard Fork upgrade, launched in August 2021, introduced EIP-1559 (EIP stands for Ethereum Improvement Proposal) to help improve Ethereum's notoriously high gas fees.
The Merge upgrade, which is expected to roll out in the second quarter of 2022, is the one that will represent the official switch to proof-of-stake - after which the Ethereum mining era will no longer exist.
When The Merge happens, and Ethereum makes the full transition to proof-of-stake, it will cause an issuance shock. Together, the EIP-1559 upgrade and ETH issuance will trigger a cliffening (or drop off), where a large percentage of gas fees will be burned. And as a result, ETH will drop from 15k ETH a day to 1.5 ETH a day in the biggest catalyst of all - the Ethereum triple halving.
ETH is essentially being cut by 15 and divided by two three times. With less of the coin being sold, the price tends to go up. And the final result will be a 90% reduction in selling pressure, reduced supply, and a more efficient network.
We don't know exactly when this triple halving event will unfold - some analysts have pointed to August or September 2022 - but we do know it will be the equivalent of three Bitcoin halvings.
You saw how significant a single Bitcoin halving was for the price of BTC - 90x gains followed by 60X gains followed by 6X gains.
Given that this triple halving has three times the potential power of those prior events, you can imagine what this will do to ETH. We're talking about a possible price explosion so huge that ETH could even overtake BTC in market cap.
You'll want to be in position to take full advantage of this opportunity before that happens.
Any investor serious about crypto needs to have the two "foundational" coins, Ethereum and Bitcoin, in their portfolio, especially when halving events come around.
But there's a lot more to the crypto market than the popular tokens.
There are a bunch of tiny coins - microcurrencies, if you will - that sell for pennies on the dollar compared to the cost of a single Bitcoin. Yet they are quickly racking up some of the biggest gains we've ever seen anywhere - easily beating the stock market and gold market.
I'm talking potential returns of 75 to one, 211 to one... even 5,567 to one. This new class of game-changing cryptos is set to skyrocket, and we have all the details on them here...