What is Bitcoin halving?

Kabir903

Bitcoin halving, also known as "Halving," refers to a pre-programmed event set in the Bitcoin protocol where every 210,000 blocks, a process called halving occurs (roughly every four years). Halving is the process of reducing the amount of cryptocurrency generated per unit of time, primarily achieved by decreasing block rewards.

The supply of Bitcoin is capped at 21 million units, and once this total is reached, the generation of new BTC will cease. Bitcoin halving ensures that the number of bitcoins that can be mined per block decreases over time. By the year 2140, it is estimated that all bitcoins will have been mined, with the total slightly below 21 million.

This process aims to control the issuance of new bitcoins and maintain their scarcity, thereby ensuring a limited supply of Bitcoin. Essentially, halving cuts the reward given to miners in half.

On April 20th, Bitcoin underwent halving at block height 840,000, reducing the block reward from 6.25 bitcoins to 3.125 bitcoins.

Public data indicates that currently miners bring approximately 900 bitcoins to the market each day. After halving, this number will decrease to around 450 BTC.

Halving has a significant impact, mainly because it often leads to market fluctuations and increased speculation in the cryptocurrency sector; reshapes the mining landscape, with miners' profitability decreasing; stimulates technological innovation and community development within the blockchain ecosystem. However, halving events may also serve as a hedge against inflation and enhance the attractiveness of Bitcoin as a long-term investment asset.

Satoshi Nakamoto published the Bitcoin whitepaper on October 31, 2008, and the Bitcoin genesis block was born on January 3, 2009. Halving is implemented to control the circulating supply of bitcoins; by reducing block rewards, the rate at which new bitcoins enter the market slows down, helping to prevent inflation and maintain the stability of Bitcoin's value.

The halving on April 20, 2024, is expected to reduce Bitcoin's inflation rate from about 1.75% to just 0.85%.

Bitcoin was created mainly in response to the unrestricted issuance of currency by some countries. Satoshi Nakamoto envisioned a currency that would not be controlled by anyone and could facilitate value transfer between any two nodes, thus designing this peer-to-peer transaction system.

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