The creator of bitcoin, known under the pseudonym Satoshi Nakamoto, tied the process of the appearance of new coins to the processing and confirmation of transactions with them. New bitcoins are generated by miners whose computers perform complex calculations that confirm transactions in a public registry - the blockchain.
Transactions are packaged in blocks, and miners compete with each other for who exactly will complete a new block of transactions, that is, add it to the blockchain. When a block of transactions is finally confirmed by the miner, he receives newly issued bitcoins as a reward for the block.
What is Bitcoin Halving?
Halving is a planned reduction in the remuneration received by the miner when adding a block of transactions to the blockchain. Bitcoin halvings occur approximately every four years, namely every 210 thousand blocks completed by miners. With each halving, the number of bitcoins received by miners per block is halved.
At the time of bitcoin's launch in 2009, miners received 50 bitcoins per block, but after the first halving in 2012, this reward was reduced to 25 bitcoins, then in 2016 to 12.5 BTC, in 2020 to 6.25 BTC, and in 2024 it is planned to reduce to 3,125 coins.
What is the meaning of halving Bitcoin
The issue of bitcoin is initially limited - a total of 21 million coins will be issued, so over time, miners will get the last bitcoin. Some supporters of the cryptocurrency see this as prerequisites for the growth of its exchange rate: if the value of ordinary money decreases due to inflation with constant emission, then the limited supply of currency makes it more valuable. Halving prevents bitcoin inflation by slowing down the pace of new coin creation.
When will Bitcoin halving happen
Halving in 2024 is expected in April, but the exact date and time is difficult to determine due to various factors affecting the speed of generation of new blocks.
According to various estimates, before the maximum number of bitcoins is mined, that is, 21 million coins, by about 2140, 64 halvings will occur, after which the halving process will stop. After that, miners will be rewarded only for processing transactions.
How halving affects the Bitcoin exchange rate
There is no direct connection between halving and the bitcoin exchange rate, but there is historical data. For example, in 2012, after halving, the price of bitcoin increased by about 8000%, and after halving in 2016 - by almost 1000%. After the last halving in May 2020, a bull market began, which reached the historical maximum of the bitcoin price of about $ 69 thousand in November 2021. It is worth noting that other factors besides halving affect the bitcoin exchange rate. For example, the rise in the price of bitcoin in 2020 and 2021 coincided with growth in the stock market and incentive payments to the population during the pandemic.
Several analytical companies predict that halving in 2024 may lead to an increase in the bitcoin exchange rate by at least 80%. However, some skeptics argue that it is incorrect to associate price increases only with halving. For example, the price increase after halving in 2016 coincided with the popularization of bitcoin and the ICO boom, and the growth in 2020 and 2021 is associated with a rally in the stock market and incentive payments.
What to do with bitcoins after halving
Halving does not directly affect bitcoin transactions. For the ordinary owner of cryptocurrencies, nothing will change in using them. The speed of bitcoin transactions and the amount of fees will remain unchanged. Halving affects only the remuneration of miners and, therefore, the supply of cryptocurrency.
