TL; DR
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Bitcoin’s halving is coming, which means new money, new companies… and new failures.
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New money, new rules and new vulnerabilities bring hidden risks with every bull run.
Full story
The Bitcoin Halving.
It’s like Christmas, for the crypto world!
If you’ve never experienced one, the basic idea is this:
Every four years, Bitcoin mining rewards are reduced – wait for it – by half.
And it has historically led to a few things:
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An increase in the price of BTC over 18 months (such as a big increase)
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Increased investment inflow into crypto projects
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A huge increase in new users across the board
It is awesome! But it is not without risks… In fact, after the halving next April we will certainly see the collapse of at least a few projects.
Why would a project collapse during a running of the bulls?
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Too much money.
We know, we know. It does not make any sense! But listen to us…
During a bull run, it’s often easy for investors (and founders) to convince themselves that the growth and prosperity will never end.
But that always happens (what goes up must come down).
Projects that don’t set aside money to get them through the inevitable crypto winter will be more likely to fail.
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New rules.
Over the past decade, the blockchain industry has developed in an area without any set regulations.
That will probably change soon.
In fact, the European Union has started enacting strict regulations on crypto companies, while the US SEC is on the warpath. Projects will need to consider how they will navigate the ever-evolving global regulatory landscape.
(Without falling into oblivion).
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Security flaws.
New money entering the space means more funding, means new crypto projects, means new vulnerabilities.
With every new project, hackers test for vulnerabilities. Inevitably, they will find some, siphon off a lot of money, and abandon a few projects.
It sucks. But it is a reality.
Okay, we’re starting to feel like ‘The Grinch who stole’ Christmas The Bull Run, so that’s where we stop.
But hey, now you know!