Bitcoin halving is one of the most, if not the most, important event in crypto world. It impacts rate at which new Bitcoins enter circulation. In this article you will learn all you need to know about it.
The Concept of Bitcoin Halving
Bitcoin miners earn new bitcoins as block rewards by validating transactions and adding them to the blockchain. In other words they get new supply of Bitcoins. Roughly every four years, the number of bitcoins rewarded to miners is halved. So, in every four years, Bitcoin supply is halved. This intentional reduction, programmed by Bitcoin’s creator Satoshi Nakamoto, aims to create scarcity and control inflation over time. Reason being, Bitcoin is here to fight traditional banks and financial institutions, and what good it would do if BTC itself fell prey to unchecked inflation.
Evolution of Bitcoin Rewards
Since Bitcoin’s inception in 2009, the block reward has undergone several halving events. Initially set at 50 bitcoins every 10 minutes, it has reduced to 6.25 bitcoins per block as of the latest halving. The process will continue until the maximum supply of 21 million bitcoins is reached, expected around the year 2140. Once every Bitcoin is mined, miners will still be necessary but they won’t be getting new Bitcoin rewards any more. However, they will be getting transaction fees. So Miners will still be around, to keep BTC network safe and secure.
2024 Bitcoin Halving
The Bitcoin halving just occurred on 20th April of 2024. The block reward for miners was decreased from 6.25 BTC to 3.125 BTC.
Origin of Bitcoin’s Distribution Schedule
Satoshi Nakamoto, the pseudonymous creator of Bitcoin, introduced the halving mechanism to establish a predetermined distribution schedule for new bitcoins. Nakamoto lays out his reasoning as inflation control, in his early communications.
Impact on Bitcoin’s Price:
Bitcoin halving has always caused parabolic upward movement in price. Bull market always comes months after halving occurs. Some think it’s because of reduced supply, which further drives demand. Demand up, supply down, is recipe for raising prices. Others say it happens purely because of speculation. People believe price must go up after halving, and that belief is realized.
As you can see, after every halving, Bitcoin price takes off. That occurred in 2013, with mindboggling 8000% gain by 2014, in 2016 and 2020 halvings we saw huge gains too. What’s to say we won’t see the same thing after 2024 halving.
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