What is Bitcoin Halving and when will it happen again?

Stanislav Palamar / Getty Images

Bitcoin halving is an important event in the life of the cryptocurrency and cuts the number of bitcoins in circulation in half. This cuts the reward for bitcoin mining in half and reduces the inflation rate by the same amount. It also slows the entry of new bitcoins into circulation, which often leads to inflation by reducing the supply. The halving occurs approximately every four years on a predetermined schedule.

See: 3 Things to Do When Your Savings Hit $50,000

What is Bitcoin Mining?

Bitcoin mining is the process of independent, third-party verification of every transaction on the blockchain using cryptography. Bitcoin miners have machines built to manage transaction data through a cryptographic algorithm. This creates a hash, or string of random numbers and letters, that does not reveal transaction data.

According to TechTarget, hashing is designed to get harder over time. Over time, solving cryptographic algorithms requires more computing resources and energy. Miners are rewarded with bitcoins for using their computers, bandwidth and energy so that every Bitcoin transaction is verified in the ledger. Large transactions may require six or more confirmations, while some smaller transactions require only one confirmation.

This means that according to the project, Bitcoin mining will become more difficult, especially after each halving event.

What is Bitcoin Halving?

When Bitcoin is halved, miners receive half of what they previously earned for each confirmed transaction. For example, when the first bitcoin was mined in 2009, miners were paid 50 BTC per block.

Halving occurs when 210,000 blocks are mined, which happens every four years. Experts predict that this will continue until around 2140, when the entire supply of 21 million coins will be exhausted.

Currently, according to Decrypt, 90% of the total supply of Bitcoin has been mined since inventor Satoshi Nakamoto minted the first million coins in 2009. Between now and 2140, less than 2 million new bitcoins will be created.

A Brief History of Bitcoin Halving

In 2012, nearly four years after the first bitcoin was mined, the mining reward dropped to 25 BTC. In 2016, miners received only 12.5 BTC per block. In 2020, the rewards decreased to 6.25 BTC.

Future Bitcoin halving dates are expected to occur every four years in advance – 2024, 2028, 2032, 2036, 2040 and 2044.

This scarcity tends to make BTC more valuable for a while. But, of course, the price of BTC does not exist in a vacuum, and the rest of the economic climate, the stock market, consumer demand for BTC, and consumer confidence in investing all affect BTC prices.

Is Halving Good for Bitcoin?

In general, “Is Halving Good for Bitcoin?” the answer to the question. the resounding “yes”. Although it is more difficult for miners to obtain bitcoins after a halving event, this shortage often makes the BTC they already hold more valuable.

In 2020, the price of bitcoin rose 40% from its historical low of 85% just before the halving event. However, this event has been overshadowed by economic fears caused by the downturn in the economy and the COVID-19 pandemic. 2020 will always require a record for statistics.

However, the halving events of November 2012 and July 2016 also boosted the price of Bitcoin. “This deflationary event historically marked the beginning of bitcoin’s most dramatic bull run in several years, although not before a short selloff,” Reuters reported.

According to Reuters, between 2012 and 2014, BTC increased by 10,000%. From mid-2016 to the end of 2017, it increased nearly 2,500%.

Bitcoin Halving and Value Increase: There’s more to the story

Experts note that the price increase after a bitcoin halving event is usually not immediate. As their BTC value increases, investors will sell what they hold for multiple times the profit. That’s why a halving event often creates a sell-off before a bull run.

This happened in both 2012, 2016 and 2020, despite other economic factors.

In addition, some experts say that halvings are already “priced in” to the value of the coin, which means that the halving event and Bitcoin’s price increase cannot be directly related.

“Historical events do not necessarily predict future events,” Binance founder Changpeng Zhao told Reuters reporters. Noting that there is a psychological side to every halving event, Zhao noted that in 2020, miners may be less willing to sell their existing crypto investments because “it will cost miners almost twice as much to produce bitcoin.”

However, by May 2021, the value of bitcoin had increased by 533%. In fact, the latest halving event exceeded investors’ wildest expectations for the bitcoin bull run. In November 2021, the cryptocurrency reached an all-time high above $68,000.

The effects of the Bitcoin halving event cannot be expected to last forever either. A general market crash, record high US dollar inflation, rising interest rates, supply chain issues, and other pandemic-related factors have driven down the price of bitcoin in 2022, plunging the market into cryptocurrency winter.

On what date does Bitcoin halve?

Experts predict that the next bitcoin halving event will take place on March 18, 2024, after 840,000 blocks have been created on the Bitcoin blockchain. This means that Bitcoin is more than half of its previous halving event on May 11, 2020.

It is important to note that halving events are not based on a specific time table, they occur after a certain number of bitcoins have been mined. Therefore, the halving dates are approximate.

What will happen when Bitcoin halves in 2024?

After the next halving event in 2024, miners will receive a total of 3,125 BTC for each block mined. Experts estimate that if the daily average number of mined blocks remains constant, 450 coins will be released every day after the March 2024 halving event.

Last Shot

The next Bitcoin halving event, which is expected to happen on March 18, 2024, could end the current crypto winter unless other factors send Bitcoin on a rally by then.

Frequently asked questions

Some quick answers to common questions about Bitcoin halving.

  • When is the next Bitcoin halving in 2024?

    • The next Bitcoin halving will probably happen around March 18, 2024. However, since the halving happens every time 210,000 blocks are mined, it is possible that the halving will happen before or after today. – In July 2022, the next Bitcoin halving date was set for May 4, 2024.

  • How many bitcoin halvings are left?

    • There will be another 29 bitcoin halvings. Since Bitcoin halves every 210,000 blocks, the halving will only happen 32 times. There have been three halves in the past, so there are 29 left.

  • Will Bitcoin Halve?

    • Yes, Bitcoin will be halved every time 210,000 blocks are mined. The next split is expected to take place on March 18, 2024.

  • Is there a bitcoin halving in 2028?

John Csiszar contributed to the reporting of this article.

This article originally appeared on GOBankingRates.com: What is the Bitcoin Halving and When Will It Happen Again?

Source link