What is Bitcoin halving, via Afrokonnect. Bitcoin is available as digital money, yet it cannot be created endlessly.
On the other hand, if we talk about its verifiable shortcoming, then it is basically for its value proposition.
In addition, there exist two concepts that are fundamental to the bitcoin protocol.
Bitcoin whose number is limited to only 21 million, on the other hand, the number of each new BTC added to the network is halved every four years, this process cognizes as halving.
As such, at the beginning of the year 2020, each bitcoin was added through virtual “mining” to 12.5 new networks approximately every 10 minutes.
That amount was halved with an amount of only 6.25.
Whereas in the year 2024, it could drop to about 3.120 – and this process will continue until 19 million coins are minted. If you are having difficulty trading crypto, here are some common tips to prepare bitcoin and cryptocurrency for your heirs.
Why is bitcoin halving considered important?
With fewer bitcoins issued over time, the more likely it is for bitcoin to increase in value.
This is the exact opposite when compared to fiat currencies, where they tend to depreciate over time,
Usually through inflation – this is one of the main reasons coke was sold for a penny during the 1960s.
The persistence of bitcoin’s protocol and the increasing demand for bitcoin by the millions
is one reason for the shortfall.
How is it able to work?
Typically, bitcoin is compared to gold – as bitcoin is also a valuable scarce asset, similar to gold, one that may be able to resist inflation.
But bitcoin has emerged as a digital currency that is the exact opposite of gold, and its exact scarcity can be verified and known by anyone.
In addition, according to the United States Geological Survey, the amount of gold mined so far is enough to fit three swimming pools, but it is not clear how much gold is present on Earth.
When it comes to gold, discoveries are released every year, making the supply schedule unpredictable.
On the other hand, if we talk about bitcoin, it is limited and its supply schedule is known: is only close to 21 million.
- Bitcoin is additionally mined like gold
However, it is done electronically by a worldwide organization of computer to contend with regards to confirming bitcoin transaction.
- The person who mines the bitcoin gets rewarded.
At the beginning of the year 2020, when someone mined every 10 minutes, they were rewarded with about 12.5 new bitcoins.
And after a few months, this reward was halved, which was reduced to 6.25.
- The BTC mining reward, otherwise called the “block reward”, will be divided roughly like clockwork.
This cycle will go on until each of the 21 million BTC have been mined in all directions the year 2140.
On the other hand, if we talk about the income of bitcoin miners,
They will get their income from transaction fees on the network, which is the exact opposite of earning new bitcoins mined.
- If seen in existence, it is not possible to have more bitcoins.
This is as a glaring difference to government issued types of money,
Where more cash can be printed at the carefulness of the national bank or government, making the potential for expansion.
When will the bitcoin halving happen?
Perhaps you already know that once around 210,000 blocks are verified,
Then halving happens automatically because if we talk about halving,
Its actual time is not completed on a predetermined date.
Kind of depends on the blockchain. As a result, it can be roughly estimated when halving may occur.
The bitcoin halving initiates synthetic price inflation in the cryptocurrency’s network as
well as halving the rate at which new bitcoins are issued in circulation.