Bitcoin

What is Bitcoin Halving? Does it Affect Bitcoin’s Price? Satoshi Nakamoto 2021

Published

2 years ago

December 3, 2021

What is Halving Bitcoin… No, not having bitcoin… halving Bitcoin. What does this imply? When is it going to happen? What will happen to bitcoin’s value if this occurs? So, stay tuned to cryptocurrencysimple.com to learn everything there is to know about Bitcoin Halving!

Table of Contents

How are Bitcoin Halving & Bitcoin Mining linked?

Satoshi Nakamoto wanted fresh bitcoins to be distributed without a single or group of individuals selecting who should get them when he launched Bitcoin in 2009. The concept behind bitcoin mining was to reward users with new bitcoin in exchange for their computing labour in validating recent transactions into new blocks.

Okay, I know I lost a few of you there. Read our blog post “What is Bitcoin Mining?” to understand mining better.

Nakamoto’s rule on a Reward system ( Bitcoin Halving )

Miners that verify blocks in the network are rewarded with new Bitcoin. When bitcoin first began, the reward for each block was fixed at 50 coins. But Nakamoto put into the protocol a rule where every 210,000 blocks, or roughly every four years, the reward would be cut in half, and so is named a ‘halving event.’

Bitcoin Halving Events happened in Bitcoin History.

The first Bitcoin Halving occurred in late 2012, where block number 210,000 rewarded 50 coins to the winning miner, but block number 210,001 only awarded its winning miner 25 coins.

The second halving event occurred in mid-2016, halving the block reward again, so the reward for block number 420,001 came in 12.5 coins. And thus, it will continue until somewhere around the year 2140, when all 21 million bitcoins will have been mined and distributed to users.

Why Bitcoin Halving?

So what’s the deal with the change? Why don’t you keep the prize the same? Isn’t that a bit harsh on the miners? The law of supply and demand provides the solution to that issue. If the coins are made too rapidly, and there is no limit to how many bitcoins may be created, there will soon be so many bitcoins in circulation that they will be worthless.

Vitalik Buterin, the Ethereum project’s chief developer, released an op-ed post for Bitcoin Magazine in which he argues why bitcoin distribution should be slowed by halving: “The primary purpose for this is to keep inflation in check.

One of the primary flaws of conventional, “fiat” currencies controlled by central banks is that they may create as much money as they want if they issue too much. The laws of supply and demand assurances that the currency’s value begins to depreciate rapidly.

On the other hand, Bitcoin is designed to mimic the value of a commodity such as gold. There is a finite quantity of gold on the earth, and with each gramme extracted, the gold that remains gets increasingly difficult to remove.

Gold has maintained its worth as an international means of exchange and store of value for over six thousand years as a result of its restricted supply, and it is hoped that Bitcoin will do the same.”

Does Halving affect Bitcoin’s Price?

Okay… but I’m sure you’re asking… what will happen to the value of my bitcoin? The short & Quick answer is that no one knows! Yes! The exchange rate of bitcoin versus the US dollar did not move a week substantially after the halving event in 2016. Bitcoin was trading at roughly 650 US dollars at the time of the event, and it was around 675 a week later, so there wasn’t much of a difference.

Many people felt that the predicted price increase occurred between three months and a year before the event, with bitcoin trading about $300 a year ago and $430 three months before the Halving. That was, however, a different era.

When you factor in the media attention and subsequent public awareness spike in 2017, the exponential growth of initial coin offerings (ICOs) and new coins in the marketplace, government regulations and restrictions, not to mention futures and derivative offerings opening up doors for institutional investment, predicting the impact of the next halving event on global exchange rates becomes a difficult task.

To get more depth info on ICOs, check this article right now!

What Is Tokenomics? Introduction To ICOs, Blockchain And Tokenomics 2021 ( Basics of Tokenomics included )

Bitcoin is Valuable by design.

The most crucial & Important thing to remember is that Bitcoin was created to become valued. The first is that there will only ever be 21 million of them and that inflation in bitcoin’s economy is kept in control by delaying its distribution through the halving process.

I hope this clarifies what bitcoin halving is and why it’s critical in determining its value. You might have a few more questions now. If you have any, please share them in the comments area below. Till then, Stay in touch with Cryptocurrencysimple.com for more updates and knowledge all over from the Crypto world!