What is bitcoin halving? What happens after Halving?

What is bitcoin halving? And what does it mean? When does it occur? How does it affect the value of Bitcoin? Experience shows that a few months after the previous halving, the price of Bitcoin experiences a significant jump. Halfing 2024 Will it be the same?

What is bitcoin halving?

Having Or Halving Bitcoin is an afterthought after Minehar 21000 Block on blockchain and almost every Once every 4 years occurs and the mining reward 50 percent makes less. At the moment Mining reward 6.25 Bitcoin is after halving to 3.125 will receive. Having until approx Year 2140 It will continue and at that time there will be no bitcoins to mine.

Since the The halving event Actually Supply rate of new bitcoins Or the same supply half According to experts, this event has a significant impact on the price of Bitcoin and can Bitcoin value increase over time.

Read more: What does Bitcoin mining mean? How is the Bitcoin mining process?

Bitcoin Mining and Halving

Bitcoin works by relying on computers that Node have names In fact, ninety-one series computer That Bitcoin software It runs on them and every computer Total transaction historyIt stores bitcoins on itself.

These nodes are Decentralized and to confirm each new transaction, the nodes must match the transaction with the transaction records, and this work requires processing power or CPU power It takes from nodes that are miners. The mining reward that is halved during the Halving is actually a reward to the miners for sharing the same processing power.

Why is mining reward halving important?

In general, Bitcoin is an anti-inflationary currency; It means that its supply is limited and eventually the day will come when the supply of Bitcoin will reach zero and no new Bitcoin will enter the cycle. As a result, to achieve an anti-inflationary currency, a mechanism such as halving the mining reward is necessary.

When Satoshi Nakamoto was defining the rules of the Bitcoin protocol, he emphasized two rules the most:

• Bitcoin balance is limited to 21 million units.
• The number of Bitcoins generated per block will decrease by 50% after every 210,000 blocks.

Vitalik Buterin, the creator of Ethereum, writes in a note on the Bitcoin Magazine website about Halving:

The main reason for doing this is to control inflation. One of the biggest mistakes of traditional fiat currencies that are controlled by central banks is that these banks can print as much money as they want, and if they print too much, the value of the government currency will quickly decrease according to the law of supply and demand.

How often does bitcoin halving happen?

BTC halving every Once every 4 years it happens; Considering that every hour on average 6 blocks is produced and the Halving event is also so every 210 thousand blocks It happens, we can roughly say that it happens once every 4 years.

At the beginning of Bitcoin activity, 50 Bitcoin units were produced every ten minutes, or to be more precise, the first miner who reached the answer to the block equation received 50 Bitcoins. In 2012, after the first halving, the mining reward reached 25 units, and in 2016, after the second halving, the mining reward reached 12.5 units. Today, as we are writing this article, about 12.5 bitcoins are generated every ten minutes. This figure will decrease to 6.25 bitcoins after the next bonus halving, which will happen in May 2020.

On what date will the next halving take place?

According to the average time needed to produce a block (10 minutes), the next halving should happen in April 2024.

The truth is that the block time of Bitcoin is not exactly 10 minutes, but on average it reaches 10 minutes. Since the creation of Bitcoin, the average time required to create a block has been 9 minutes and 20 seconds, not the full 10 minutes, which is about 7% faster than our estimated time.

How does halving affect the price of Bitcoin?

The biggest question people have about halving is whether it will affect the price of Bitcoin, and the answer is that no one knows. In fact, on paper and theoretically, assuming constant demand, if supply were to be halved, the price would have to double to meet demand, but that does not necessarily mean that demand would remain constant and not decrease.

First Halfing (2012)

ABitcoin halving Also in history November 28, 2012 And it happened after mining the 210,000th block. Bitcoin price on that date 13.42 It was dollars and the halving didn’t seem to have much effect on the price. It is true that the price of Bitcoin after a short time to 230 The dollar arrived, but many attribute this increase to the financial crisis of Cyprus.

In the first halving, the mining reward was 50 bitcoins, after which it reached 12.5 units.

The Second Half (2016)

In the year 2016 And a week after the second halving event, there was not much change in the price of Bitcoin. At that time, the price of Bitcoin was approx $650 and a week later its price was $675 It turned out that it was not a significant change. But more than a year later in 2017, the price of Bitcoin reached its all-time high of $20,000.

During this halving, the mining reward decreased from 25 to 12.5 bitcoins.

The Third Halfing (year 2020)

The third halving, the last to date, took place in May 2020. In this event, the block reward increased from 12.5 bitcoins to 6.25 units.

After this halving, the price of Bitcoin decreased in the short term, but after about a year, Bitcoin’s biggest bull market It happened that a large part of the experts attribute it to hawing.

However, there are still arguments that the price of BTC will increase after the halving, and this will cause the buying of Bitcoin to increase.

Many believe that this event is known only to members of the Bitcoin community and therefore cannot surprise anyone or cause a significant change in the price of Bitcoin.

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