Bitcoin halving – Why it matters and how effect on market?

The last Bitcoin halving happened in 2020. And this assumes that the next Bitcoin halving will happen in 2024. Bitcoin halving refers to a process where new coins reduce the rate at which they are issued. This makes it clear that halving means reducing block subsidies to miners. To ensure a halving, this means maintaining a control rate of all bitcoins until the entire asset is exhausted. A block is a file that contains 1 megabit of bitcoins.

Blockchain is a record of Bitcoin transactions. And the hash is an output of 64 characters that locks an entire transaction into a block. The hash blocks the transaction in such a way that the block cannot be changed. How Bitcoin halving works when Bitcoin started its journey, miners were paid 50 BTC per block. The rate at which new bitcoins are created is halved to mine 21000 blocks. And it happens every 4 years.

The Basics of Bitcoin

Bitcoin is a cryptocurrency that is not like any normal currency. This Bitcoin is also called a virtual digital currency and with it you can buy all kinds of things online. This Bitcoin was created in 2009 by a person named Satoshi Nakamoto or his entire team. Bitcoin is one of the first cryptocurrencies to be created in the online world. Many types of cryptocurrencies are created around this Bitcoin. This currency is a currency that is not issued by any government or central bank. All the transactions that are done through this Bitcoin are made through the blockchain.

Transactions through this cryptocurrency do not involve any third party. This is done by a sophisticated design called Bitcoin Cryptography, So that no one can understand this Bitcoin wallet or anything transacted through it. It is designed for maximum protection. The first BTC block was mined on 3 Jan, 2009.

The reward for mining is halved every 210000 blocks and this is the first reward halving since 2012. 1 Bitcoin is divided into 100 million parts and its 1 unit is called 1 Satoshi. The reason a Bitcoin is so valuable is because it is broken into many smaller pieces. And the value of this cryptocurrency called Bitcoin continues to increase rapidly over time. At present, this one Bitcoin is worth about several thousand dollars, so this Bitcoin is divided into smaller amounts. So that everyone can buy any product or service with Satoshi, a small part of this Bitcoin. And all Satoshi are stored in a virtual wallet called Bitcoin Wallet.

Bitcoin mining uses a variety of hardware and software that consumes a lot of electricity. If you want to mine bitcoins, you need to have a lot of computer skills. Along with this, you should have a high-speed computer. Many people find this mining process troublesome because it involves a lot of technology to mine and at the same time it is a lengthy process. Buying these bitcoins is more convenient than mining them. Currently you can buy bitcoins in this online world through currency exchange. It goes without saying that exchanging bitcoins is more convenient than mining them, so those who want to buy small amounts of bitcoins should consider crypto exchanges.

What is Bitcoin halving?

What is Bitcoin halving?

It enters as a block reward of new bitcoins that is produced by the efforts of miners who buy large amounts of electricity for production. This means that mines require large amounts of expensive electrical equipment. The story of the bitcoin halving occurs when mining bitcoin transactions are halved.

Halvings deducted the coin or tokens rates which are made and thus lowered at hand amount of new supplies. By 2140, it will decrease completely when the number of bitcoins in circulation reaches 21 million. After the network has mined 210,000 blocks roughly every 4 years the miners’ reward is cut in half. This entire process is called halving because it releases half of the Bitcoin circulation.

Bitcoin Halving Date and History

According to Bitcoin’s halving history, the last three halvings occurred at in 2012, 2016, 2020. The first Bitcoin halving in history happened in 2012. When it was first halved in 2012, reward for miners dropped from 50 to 25 btc. Bitcoin was halved for the second time in on 2016, at that time each block is halved from 25 to 12.5 i.e. halved.

Why is Bitcoin Halved?

Bitcoin halving occurs as part of the protocol and controls the flow of new Bitcoin entries. In fact, it is a way to maintain parity with the Bitcoin market so that Bitcoin market consistency exists. There are many primary reasons for the bitcoin halving, Let us know about some reasons:

Scarcity and control supply

We know that Bitcoin is a digital virtual currency. It was invented by Satoshi Nakamoto or his entire team. They wanted to create a digital currency that would be delivered with a limit and well-regulated management. A halving of the mining reward means a halving of the Bitcoin production rate. It can be seen that over time its price and demand have increased massively as its market supply is kept in short supply. As a virtual asset, its market value is much higher than that of other cryptocurrencies. We know that when there is less supply of a product in the market, its price gradually increases.

The supply of this Bitcoin is designed so that its value increases and so does its demand. Over its limitations and controls through Bitcoin halving.

Bitcoin halving is done to control inflation

Bitcoin is not a fiat currency it is a digital cryptocurrency. So the regulation of Bitcoin is also not like this normal currency. So Bitcoin maintains the parity of the Bitcoin ecosystem through halving. This limited issue kept Bitcoin’s market price at an all-time high and demand skyrocketing. This halving creates inflation in the market and reduces the supply of Bitcoins. Bitcoin halving is the halving of miners’ rewards every 4 years. So far only 3 times this bitcoin halving has happened. And the next Bitcoin halving will take held in 2024.

Bitcoin halving is done to maintain market power and economy

Bitcoin halving is done to maintain market power and economy

The Bitcoin halving event affects both Bitcoin miners and its market, not just one side. It can be said that this Bitcoin halving has an economic impact on both sides. In this whole process miners have to constantly change their activity so that they can also earn a small amount of reward. The market demand for the product which is less productive is slightly higher. When productivity is low it drives miners away and we know there will be 21 million total bitcoins so that’s the limit. The halving process decentralizes the entire network.

Bitcoin’s market price is affected by the halving

When the Bitcoin halving starts happening in the market, the price of this currency increases. If we analyze the early days of Bitcoin, we can see that when the Bitcoin halving happens, the price of this currency increases. When the supply of a commodity is low and demand changes, all kinds of positive sentiment in the market and potential price increases result. Now it’s a matter of fact that Bitcoin’s value doesn’t just increase due to halving, there are many other things that come with it. Bitcoin has the highest demand among all the cryptocurrencies available today and its price is also much higher than all the others.

What happens if miners suddenly stop mining Bitcoin?

If many miners suddenly stop mining Bitcoin, it will affect the Bitcoin Hash Rate and other related aspects. This bitcoin halving system will affect all bitcoin networks. If many miners stop mining this bitcoin all at once, the overall hash rate of this entire bitcoin will decrease. And if miners slow down or stop mining Bitcoin, it will take longer to form blocks and network security will decrease. If the miners decide to exit the mine at the same time, the entire network will suffer deadlock and this will give hackers an advantage. Now the fact is that all these reactions are not caused by the Bitcoin halving event.

However, events such as Bitcoin halving do not create these reactions. It can be seen that the hash rate decreased during the first Bitcoin halving, but it has increased rapidly since 2013. And after that gradually the hash rate and mining profit increases again. So we can say that as long as this half process exists there will be some problems related to network mining and hash rate. But whenever this halving process is completed after a few months, its hash will increase every moment, that’s the advantage of halving. This halving is beneficial to both the network as a whole and the miners.

When is Bitcoin likely to halve next?

When is Bitcoin likely to halve next?

Until all bitcoins are mined, it is said that every 4 years bitcoins will be halved. We know that one bitcoin is mined every 10 minutes. The first Bitcoin halving was held in 2012, the second in 2016 and the last in 2020. And according to this halving design, it appears that this bitcoin halving will happen again in 2024. Based on previous halvings, it is assumed that this Bitcoin halving will reduce the reward for miners to 3.125. It can be seen that every Bitcoin halving reduces the miner’s reward which increases the level of competition among these miners.

Actually this bit is how halving works

When a halving process is completed on the Bitcoin blockchain, this halving process takes place to control the production level of Bitcoins. This bitcoin halving determines the rate at which new bitcoins will be created. This means that miners’ rewards are fully halved so that inflation in the Bitcoin market increases and its market value is always high. This bitcoin halving is to indirectly control the entire bitcoin market.

This halving process will continue until the year 2140 until all these bitcoins have been mined. The reward for this mining is also called block reward. All of this bitcoin mining money is earned from bitcoin transaction fees. Like all other fiat currencies, it is impossible for this coin or Bitcoin to exist over 21 million. Although it is not regulated by a central bank or government, it provides an orderly market so that Bitcoin does not become too easy for the masses.

Final Words

Bitcoin is a digital virtual currency that is not controlled by any central government or central bank. So naturally the market for this currency will be separate from all other fiat currencies and no one can create a new market for this currency by design. This bitcoin halving is a process where the entire bitcoin market is regulated indirectly. This halving will halve the rewards for Bitcoin miners to increase competition and benefit users.

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