Bitcoin Sees Two-Year High, Tops $700, Still Nerdy

How do the words 'ethereum' and the 'halving' make you feel? What do they mean?

Bitcoin (BTC) hit a two-year high over the weekend, peaking Monday at $719––trading above the $500-mark for the first time since February 2014. 

Digital currency speculators say the reported 21 percent jump from just last week in the value of the online money that weird dudes talk about on first dates, can be attributed to an increase in trading and transaction volume in anticipation of a major change for BTC, called the "halving." According to MarketWatch, Chinese buyers weary of an economic crisis at home, "were behind the bulk of the rally, trading volumes show, with nearly 85 percent of transactions conducted in yuan."

But what is a "Halving," if not a school dance attended by Harry, Ron, and Hermione? 

From Wall Street Journal

"The more important factor, though, is almost surely a rare event in the bitcoin world that is coming within a month: the 'halving.'
When bitcoin was released, it had a 'cap' programmed into it: no more than 21 million bitcoins would ever be produced (about 15.7 million have been mined so far). To ensure that those bitcoins would be mined over a long time (well into the next century), certain speed bumps were programmed in. One was a roughly ten minute lag between confirmed blocks. The other was a quadrennial reset of the mining reward, an event called the 'halving.' Every four years, the mining reward is cut in half. When bitcoin launched, the reward was 50 bitcoins. In 2012, it was cut to 25. In less than 30 days, it will be cut again, to 12.5 bitcoins."

Some BTC nerds say they saw it coming. CoinDesk says this will happen a total of 64 times, and that the resulting fallout of each halving could bankrupt some BTC operations––a space that has seen an influx of USD via venture capital in recent years. The BTC watchdog publication concludes, "The bitcoin network has been through this situation before, albeit with a much smaller mining presence and less overall market activity."

Despite the rise in value, even BTC is at risk of being disrupted by a said-to-be better-than-bitcoin clone, called Ethereum. 

"[Ethereum has the] ability to create binding financial agreements that can be enforced entirely by software—no involvement by courts or other human mediators required. That, in turn, has made possible virtual organizations that exist only on the internet. . . The network's currency, called 'ether,' is now worth more than $1 billion—that compares to Bitcoin's total market value of nearly $7 billion. 

Ethereum is currently trading at around $18 per unit, and the popular BTC exchange Coinbase, added ether trading at the end of May. For the record, Ethereum also sounds like something people might want to smoke.