Bitcoin is a well-known cryptocurrency and is even considered to be the first cryptocurrency to be launched. Before we go any further, let’s take a look at how Bitcoin compares to gold. Gold is a mineral that is well known for its scarcity. Satoshi Nakamoto designed Bitcoin to have a limited supply, distinguishing it from other currencies.
Nakamoto aimed to make Bitcoin valuable just like gold, and with current events, you can tell Bitcoin is rapidly growing in value.
Every four years starting with 2012, the number of coins received by miners has been cut in half, hence the term “Bitcoin halving.”
To get a deeper perspective of how this entire process works, here is an introduction that will be able to answer your question: what is Bitcoin halving and how does it work?
What Is Bitcoin Halving?
Are you wondering about what is Bitcoin halving? Let’s first look at Bitcoin mining. This is a process where miners verify new transactions to the system and are rewarded with Bitcoin. Miners receive both a block reward and a transaction fee payment. When miners use these coins, new Bitcoin enters the market.
Nakamoto created a system known as Bitcoin halving, which means decreasing mining block rewards by half after every 4 years. The purpose of this is to prevent the supply of Bitcoin in circulation from growing too quickly. Without this protection, Bitcoin could potentially be devalued.
How Does Bitcoin Halving Work?
Satoshi Nakamoto set the limit at 21 million Bitcoins that will be distributed until 2140. Then, no new Bitcoins will be created. As we speak, 18 million Bitcoins have been mined, with only 3 million remaining.
As we discussed in the section “What Is Bitcoin Halving?” above, the mining block reward is reduced by half after every 4 years. The first halving was done in 2012. The 50 BTC block reward was cut into 25 BTC for miners who successfully verified new transactions. Eventually, miners will receive less than 1 BTC, but at this time, the value of Bitcoin will have risen to make any amount of BTC received valuable. When block rewards cease in 2140, miners will rely on Bitcoin transaction fees alone as payment. By this time, the value of Bitcoin will have gone up. Hence, they will still earn more.
Bitcoin halving is a wide topic that we cannot cover all at once. To learn more, just visit Loop for interesting information about crypto.
What Is Bitcoin Halving and When Were Previous Bitcoin Halving Dates?
To better understand “what is Bitcoin halving?” and other questions about Bitcoin, let’s examine the previous dates when halving occurred.
We are going to start with 2012. This is when the first-ever Bitcoin halving was recorded. After verifying a new transaction, miners were rewarded with 25 BTC instead of 50 BTC. At this point, 10.5 million Bitcoins had entered the market, leaving only 10.5 million coins left to be mined.
The next halving event happened in 2016, when the 25 BTC block reward was cut in half again. The following one, which is the most recent, happened in 2020. Every miner then received 6.25 BTC per verification. At that time, 18 million Bitcoins had been introduced into the market.
In the year 2024, miners will have their block reward decreased to a total of 3.125 BTC.
Conclusion
What is Bitcoin halving? You can now confidently answer this question. In the above article, we have covered some of the most important topics on Bitcoin halving that will help you understand your Bitcoin investment.