Halving

Halving relates to Bitcoin, and it describes an event where Bitcoin mining rewards are reduced by 50%.

A Bitcoin Halving occurs every 210,000 blocks. which usually takes around four years.

The Bitcoin supply is limited to 21 million coins. There will never be any more.

New bitcoins are created and released through bitcoin mining, which rewards miners with new bitcoin (BTC) for securing the Bitcoin network.

When a Bitcoin miner confirms a block, new bitcoins (BTC) are released into circulation. which are used to pay the miner for its effort, known as a block reward.

Once transactions are validated, these transactions are added to a block, and that new block is added to the blockchain.

This process maintains and secures the Bitcoin ledger.

For their part, miners receive rewards, currently in the amount of 6.25 BTC.

The halving reduces the rate at which new bitcoin is created, specifically reducing these block rewards, and in effect, reducing the incentive for miners to continue their work of securing the network.

Lower rewards mean lower incentives, which results in fewer miners and lower network security.

The next halving, determined to occur sometime in 2024, reduces the block reward from 6.25 BTC to 3.125 BTC.

There will be a total of 32 halving events, which is a limit hardcoded into Bitcoin’s core code.

Halvings play their part in controlling Bitcoin’s rate of monetary inflation.

The halving policy counteracts inflation by maintaining Bitcoin’s scarcity.

If demand for Bitcoin stays the same, the slow pace of Bitcoin issuance should result in bitcoin’s price increasing.

Related Terms

Genesis Block

The very first block or first few blocks recorded on a blockchain or blockchain-based protocol. The genesis block is often called Block 0 or Block 1. The genesis block sets the foundation for the rest of the blocks that are added to form a chain of blocks. That’s where we get the word “blockchain”. The most famous genesis block, and the very first Bitcoin block, called the Genesis Block, was created on January 3rd, 2009, by Bitcoin’s infamous and mysterious creator, Satoshi Nakamoto. Some consider this date to be the start of the cryptocurrency revolution – the start of it all!

Bitcoin (BTC)

Bitcoin (BTC) is most well known as a digital decentralized cryptocurrency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries, such as payment gateways or banks or routing services. Think of bitcoin as Internet money, that you can send and receive directly, to and from anyone, and you can use it to pay for stuff.

Block Reward

Incentives or prizes given to miners after they use their computing resources to successfully validate a new block of transactions and add them to the blockchain.

Immutability

A core feature of blockchains that makes their ledgers, the data record of transactions, unchangeable and unalterable. Immutability drives the trustworthiness and integrity of blockchain data as chain transactions and rulesets are protected from fraud, hacking and other wrongdoing.

Blockchain

Blockchain networks are at the heart of cryptocurrencies. A blockchain is a database, or digital ledger, made up of a series of interconnected blocks containing transaction data created on the network over some period of time. Each block in a blockchain also contains a unique identifier unlike any other block in the chain called a hash. Think of the hash as a fingerprint identifying that block for all other blocks. Distributed ledger technology (DLT) is another name frequently used in relation to blockchains.