Bitcoin’s halving is an issue that generates conflicting views from crypto users. You’ve heard a lot of things about the Bitcoin halving and its effects, but most of them are just rumors and myths. The following article covers the basics of halving Bitcoin and other helpful information to help you understand it properly.
What is the Bitcoin Halving?
Bitcoin’s halving is a special event or process that is embedded in the Bitcoin network and programmed to occur after 210,000 blocks have been completed, which is every four years. The event will take place at these intervals until we hit the limit of 21 million bitcoins. As it suggests, halving Bitcoin cuts the amount of Bitcoin rewards given to miners for validating transactions by half.
For example, between 2016 and 2020, bitcoin miners earned 12.50 bitcoins every ten minutes per transaction or crypto block for four years. After the most recent halving in 2020, they only got 6.25 bitcoins for the same tasks, and the rewards are again reduced by 50%. to 3.12 bitcoins after the next four year cycle.
Why the Bitcoin halving is happening
As one expert explains, Bitcoin creators assumed that miners’ subsidies would decrease as the transaction fees generated by the network increased. So the halving started mainly to streamline the provision of bitcoins in a decentralized way as the cryptocurrency was supposed to work.
The miners will earn huge returns on the transaction fees paid by the users as the adoption and use of Bitcoin continues to grow around the world. As a result, Bitcoin creators assumed they wouldn’t need higher subsidies. It’s almost similar to how MasterCard earns 2.5% from every transaction on the card.
The impact of the Bitcoin halving
The main feature of the Bitcoin halving is that it instantly slows down the rate of production of Bitcoin, thus ensuring scarcity. Imagine that Bitcoin published withdrawals of 12.5 Bitcoins every 10 minutes for four years; then suddenly they cut it in half. Now, take a moment to imagine if governments would reduce global annual gold production by 50%. That would undoubtedly drive the gold price up.
This is the same effect that the halving has on Bitcoin. Bitcoin’s price is likely to skyrocket as the halving makes supply scarcer. Past statistics point to a massive spike in Bitcoin prices that is correlated with the halving. Take a look at the following data.
- When Bitcoin was first halved in 2021, Bitcoin’s price rose rapidly from $ 12 to around $ 1,150 in a year.
- During the second halving in 2016, Bitcoin’s price rose from around $ 650 to nearly $ 20,000 in 17 months.
- Bitcoin’s third halving occurred in 2020, catalyzing recent growth to just a few points below $ 50,000.
Bitcoin founder Satoshi Nakamoto said miners will hit the 21 million bitcoins ceiling by 2140. Then the halving of Bitcoin will stop as the miners have completely exhausted supply reserves. However, this would take over a century, giving investors more leeway to make money with Bitcoin.
Even if you are not interested in Bitcoin mining, you could make huge profits from Bitcoin stocks and trading. There are several trustworthy crypto exchanges like Big money rush Join for free to start trading Bitcoin and other cryptocurrencies.
Overall, Bitcoin is still in the preliminary stages of its introductory curve. The halving should happen every four years until the offer hits the $ 21 million ceiling. Analysts predict that Bitcoin’s popularity and value will continue to grow in the future. This means that there are still plenty of opportunities for aspiring investors to make money as the supply of Bitcoin also declines over time. Life has no guarantees, but you can be lucky if you start investing in Bitcoin.
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