Inexperienced investors may have never heard of Bitcoin Halving before; however, it is something big and it happens far more than you think. The most recent Bitcoin Halving happened in 2020 on the 11th of May and was met with a whole lot of attention that wasn’t expected. To really be able to explain what Bitcoin Halving is, you must first gain an understanding of how the Bitcoin network as a whole actually operated.
Everyone knows about Blockchain and how it is Bitcoins entire underlying process that is highly intelligent and well-regarded. A transaction is the processing of Bitcoins that occurs after all of the parties operating in Bitcoin’s network approve the block that the transaction exists in. The transaction is not able to go forward unless the Bitcoin network approves it.
Basically, anyone can participate in Bitcoin’s network as a node, however, they must have enough storage to download the entire blockchain and its history of transactions, not all of them are miners. A Bitcoin Halving event is when the usual reward given to miners during a transaction is cut right in half, hence, halving. This event then also cuts in half Bitcoin’s inflation rate and the rate at which new Bitcoins enter circulation.
Bitcoin Halving
Bitcoin Halving happens when 210,000 blocks mined, or every four years. This arises when these events occur, and the end result is that the block reward given to Bitcoin miners for processing transactions is cut directly in half. This also changes the way that new Bitcoins are released into circulation by half.
It is said by many people that this system will continue until around the year 2140. When this year comes around, miners will, in turn, be rewarded with fees for processing transactions that will be paid by all of the network users. The paid fees will ensure that the miners still have something that makes them want to mine, much like an incentive.
This will also help to keep the network going. It is all according to the idea that competition regarding the above-mentioned fees will cause them to remain low after all of the halvings are finished. The halving will always prove to be significant because it marks another drop in Bitcoins already dwindling finite supply of 21 million.
The bottom line
Bitcoin has certainly seen some big changes in the last few years and with apps such as the Bitcoin Revolution one becoming available, there is certainly room for more growth in the years to come. There is room for substantial growth, and it will likely come far sooner than originally thought as well. This means that over time, Bitcoin Halving could also have a far larger impact and make a huge difference in the way the Bitcoin world works.
It is said that this is the proposed theory of Bitcoin Halving:
The reward is halved → half the inflation → lower available supply → higher demand → higher price → miners’ incentive still remains, regardless of smaller rewards, as the value of Bitcoin is increased in the process.
