Bitcoin Halving What Is It About?

There have been a buzz about bitcoin halving this few weeks and it finally happened this week, if you noticed, a lot of people have asked the question and want to really know what it means in simple terms and how it will affect them especially if they have invested in it before or thinking about it.

I have put this info together to help those in a short and very simple form to understand. you can also access similar write ups out there to help you understand more if need be.

Before reading, note that I am not an advocate of bitcoin as an investment, as its highly volatile and can lead to serious loss of investment. To successfully invest you must understand what it is and how it works.

Bitcoin halving?

The Bitcoin halving is simply a recurring event in which the number of Bitcoins awarded to miners is cut by half. The First Bitcoin was first released in 2009, and its reward was 50 BTC per block. Halving are programmed to take place every 210,000 blocks that have been mined, which takes roughly four years. This means the first halving happened in 2012, when it was reduced to 25 BTC per block also In 2016, it was reduced to 12.5 BTC per block. This year’s halving will see the block rewards fall from 12.5 to 6.25 Bitcoin. Making it the fourth halving since launch, so the next halving is expected in 2024 when the rewards will fall to 3.125 new BTC, and it goes on.

Who are miners?

Miners provide security and confirm Bitcoin transactions. A miners role is to secure the network and to process every Bitcoin transaction, they achieve this by solving computational problem which allows them to chain together blocks of transactions (hence the word “Blockchain”)

Back to bitcoin halving, just as currencies such as the US Dollar are issued by central banks of the United States, for bitcoin there is no central body ‘issuing’ Bitcoin. Instead, it’s written into the Bitcoin protocol that new Bitcoin be ‘issued’ as a reward to miners for validating a ‘block’.

Why Halving?

  1. The supply of bitcoin, but it will affect the supply of new bitcoins, its supply will always increase until bitcoin reaches the total number that can ever be created (21 million Bitcoins, as written into Bitcoin’s protocol). This has been predicted to happen sometime around the year 2140. However, this means fewer bitcoins are created every time or minutes.
  2. The halving is simply a mechanism to control inflation and encourage sustainable growth of the Bitcoin market.

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