What Is Bitcoin Halving and How Does It Work? : We all know about bitcoin. Halving is the only word associated with bitcoin. As time goes by, the date for the Bitcoin Halving is getting closer. But how will the halving of bitcoin affect the crypto market. So in this blog, we know in details that What Is Bitcoin Halving?
What Is Bitcoin Halving?
The halving of bitcoin is considered a major event in the cryptocurrency market. The maximum supply of bitcoins in the world is 21 million. Halving reduces the rate of inflation when the supply of new bitcoins in the market is halved. Mining of bitcoin continues continuously by miners all over the world.
It is also the job of miners to maintain it continuously and keep the bitcoin ledger secure. For doing this miners get reward in the form of newly mined bitcoins. All these newly mined bitcoins are halved with the help of halving, this is called Bitcoin Halving.
Why is Bitcoin Halving done?
The maximum supply of bitcoins is 21 million. But only 1,91,52,900 bitcoins have come in the circulation of the market. And yet another 18,47,100 bitcoins are yet to be mined. There is still a few more years left to mine the remaining bitcoins. As soon as the supply of all bitcoins will come in the market. Until then there can be halving.
Halving will stop once full supply is reached. Bitcoin generated through continuous mining makes a big difference to its market price. Halving of bitcoin is done because the price of bitcoin constantly moves according to the market trend.
When is Bitcoin Halving done?
The halving of bitcoin occurs every four years. The halving of bitcoin occurs every four years. New bitcoins are created from mining every four years by cutting-off the supply of bitcoins. We all know that the price depends on the demand and supply.
Bitcoin Halving is required every four years to maintain demand and supply. However, the timing of the halving was not fixed. Four years time is a regular time frame. There may also be up and down in the time of its halving for a few months. If we look at the history of halving, there is an event of halving one or two months before or after the completion of almost four years.
Bitcoin Halving Date
Bitcoin was first mined by Satoshi Nakamoto in the year 2009. 50 bitcoins were given as a reward for a block for the first time mined. Bitcoin Halving was done for the first time in 2012 after three years of mining.
- The year 2012 marked the first time Bitcoin Halving was halved 50 rewards bitcoin. Meaning that the reward was 25 bitcoins.
- Bitcoin Halving was done for the second time in the year 2016 and the reward was halved again. That is, the reward was 12.5 bitcoins.
- There have been a total of three Bitcoin Halvings so far. And the last halving was done in the year 2020 and the reward was 6.25 bitcoins.
- Bitcoin Halving will be done again in the year 2024 and the reward will be halved again.
- Until all the bitcoins means that 21 million bitcoins are not mined. Then this Bitcoin Halving process will continue every four years.
- It is estimated that by the year 2140, all bitcoins will be mined, until then the process of Bitcoin Halving will continue.
Impact of Bitcoin’s Halving on MINERS
- MINERS OF BITCOIN It takes a huge amount of capital to mine bitcoins. In which they have to setup computer and use rigs. And in mining also a lot of expenses have to be incurred such as electricity bill and maintenance of equipments etc.
- Halving also halves the reward every year, but people still mine because halving makes a big difference to the price of bitcoin. grow. The reward received from which MINERS gets in the form of profit.
- Apart from this, MINERS also receive rewards for the transactions that happen on the bitcoin network and for maintaining the network. That’s why a lot of miners do bitcoin mining.
Impact of Bitcoin Halving on Price
- According to the rule of demand and supply, the supply of bitcoin is limited because where the supply increases, the demand works and the price falls. Halving is necessary to maintain it.
- Until a few days before the 2016 halving, bitcoin was trading at $660. Bitcoin Halving caused it to decline and its price fell to $533. It is often seen that after a gap of a few days of Bitcoin Halving, there is a big pump in the price. Only a few months after this i.e. at the end of the year 2016, bitcoin made its ALL TIME HIGH which was $20,000. This means that within a few months, bitcoin gave profits of up to 290% to traders.
- Similarly, in the year 2020 also it happened at the time of halving. When the price of bitcoin was at $12000. A few days after the Bitcoin Halving, there was a big drop in price. But a good profit was waiting for the right time. After a few months i.e. in the year 2021, bitcoin again made its new ALL TIME HIGH which was $68000. And once again it provided good profits to the traders.
What happens if all the bitcoins are mined?
As it is estimated that by the year 2140 the mining of all the bitcoins will be completed and all the bitcoins will be available for trade in the market. But the rewards that MINERS get are not only available on mining of bitcoins but also on bitcoin transactions and every single transaction is validated.
Even after all the bitcoins are mined, they will continue to get this reward of MINERS. And these rewards allow you to earn a good income. MINERS get some bitcoin reward from the transaction fees for every single transaction. These rewards ratios are expected to increase further in the future. The larger the number of bitcoin transactions, the higher the transaction fees and the higher the reward for the miners.
Conclusion
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