Bitcoin halving is an event programmed into the Bitcoin blockchain network that occurs every four years. During this time, the supply of the mined bitcoins is reduced by half. The most recent bitcoin halving event occurred on May 11th, 2020 and the next one is expected to happen in 2024.
Bitcoin runs using blockchain technology which is made up of blocks or nodes that keep a record of all Bitcoin transactions that have been conducted on the network. Each block plays a key role in either approving or denying transactions on the network. Bitcoin miners can participate in the blockchain network by using their computers as transaction processors or validators and in turn, get rewarded with bitcoins.
Every four years, the reward given to miners for their efforts in processing and validating transactions is reduced by half. This is Bitcoin’s way to ensure that all the bitcoins available have been released to circulation. In this post, we share the key things you need to know about bitcoin halving.
Bitcoin halving explained
Bitcoin miners use specialized computer software and compete to add the next node in the Bitcoin blockchain network by solving complex mathematical problems. Once the problem has been solved, a random 64-character normally referred to as ‘hash’ is generated, facilitating the addition of the node to the blockchain network and making it unalterable. A miner receives a reward after successfully completing this task.
It is during mining that new bitcoins are created. Bitcoin halving occurs after 210,000 blocks have been successfully mined. The halving process most certainly reduces the revenue earned by bitcoin miners but also is a way to ensure that all bitcoins go into circulation. You can visit this link to learn all that there is to know about bitcoin halving.
Is bitcoin halving good or bad?
Anyone who is into the world of crypto trading considers bitcoin halving to be a good thing and a necessary occurrence. It is even believed that the bitcoin halving process has contributed to Bitcoin retaining its status as the most popular and valuable cryptocurrency. The process has also played a key role in making blockchain technology one of the most revolutionary technologies in the world.
Bitcoin halving contributes to keeping the supply of Bitcoin limited. As such it also contributes to keeping the Bitcoin price stable. Unlike fiat currencies which are unlimited in supply, the limited supply of Bitcoin provides opportunities for investors to earn more from Bitcoin trading.
Does bitcoin halving affect the bitcoin price?
Bitcoin halving does affect the price of Bitcoin but in a good way. Looking back, the price of bitcoin has always recovered within one and half years of a bitcoin halving. When the first bitcoin halving event happened in 2012, the following year the bitcoin price shot up by a whopping $1000.
The same scenario was seen during the second halving event with the price even rising higher to hit record figures. This means that crypto enthusiasts who have been HODLing Bitcoin stand a great chance of reaping huge rewards after every halving event.
Bitcoin halving occurs every four years but has proven to be beneficial for many crypto enthusiasts. It is evident that the price of Bitcoin usually goes up after every halving event because of the reduced supply of bitcoins. This is what has contributed to Bitcoin retaining its status as the most valuable digital asset.