- Table of Content:
- Bitcoin Halving
- Bitcoin Mining
- What Happens When Bitcoin Halves
- When was The Last Bitcoin Halving? How many Bitcoin Halvings are Remaining?
- Why Bitcoin Halving Matters
- Conclusion
What Is Bitcoin Halving
Bitcoin halving refers to a mechanism written into the blockchain’s algorithm to control the supply of the coin, which has a cap of 21 million. However, at halvings, there is a cut in half of the Bitcoin mining reward, i.e., miners receive 50% fewer Bitcoins for verifying transaction activities. This event lowers the supply quantity of Bitcoin entering the market, thereby leading to scarcity of the cryptocurrency.
Bitcoin Mining
Since Bitcoin is a decentralized digital currency that exists on blockchain, it involves a network of computers (miners) to compete in solving complex puzzles. When a miner gets the puzzle before other competitors, the miner gets to add a new block to the blockchain. Some freshly minted coin is the miner’s reward for mining.
What Happens When Bitcoin Halves?
Furthermore, when the event is taking place, miners receive rewards for mining new blocks; the reward is 50% fewer Bitcoins for verifying transactions. This might make BTC mining sound less lucrative; nevertheless, historically, it has led to the cryptocurrency’s price increase, motivating miners.
When was The Last Bitcoin Halving? How many Bitcoin Halvings are Remaining?
Historically, there have been four halving events; these have helped in the rise of BTC.
- 1st Bitcoin halving date—November 28, 2012–Reward down: 50 BTC to 25 BTC.
- 2nd Bitcoin halving date–July 9, 2016 ———-Reward down: 25 BTC to 12.5 BTC.
- 3rd Bitcoin halving date—May 11, 2020——–Reward down: 12.5 BTC to 6.25 BTC.
- 4th Bitcoin halving date—April 19, 2024——–Reward down: 6.25 BTC to 3.125 BTC.
- Next Bitcoin halving date–April 17, 2028——-Reward down: 3.125 BTC to 1.5625 BTC.
From the list above, there is a concise illustration that just one more halving remains. About 19.7 million bitcoins were in circulation. Leaving just around 1.3 million to be released via mining rewards.
Why Bitcoin Halving Matters
- Scarcity Add Value: During the halving phase, there is a decrease in the quantity of bitcoin supply, leading to increase in the value of each piece. Bitcoin has a cap of 21 million coins. Therefore, through halving, there is a reduction in the circulation of new coins, making everyone regard it as digital gold.
- Market Sentiment: From previous observations, halving has led to a price increase of Bitcoin in the crypto market, though it doesn’t happen instantaneously. Price increases once there is a decrease in supply, which always attracts investors globally.
- Controls Inflation: Halving is an expert way of controlling inflation with its built-in mechanism, thereby reducing miners reward. Transaction fees become valuable since rewards are not enough.
Conclusion
Bitcoin halving is a major way of maintaining the uniqueness in the value of bitcoin, it controls inflation in the cryptocurrency market. More so, the careful engineering of Bitcoin is visible in every halving phase. finally, as a crypto enthusiast, whenever you come across the term, with this explanatory work, you should be able to understand what is happening in the Bitcoin market.
