Bitcoin halving is a special event that shakes up the world of cryptocurrencies and always generates a lot of media attention. Beyond that, it is also an important event that has an impact on the price of bitcoin. Hence, if you’re looking to trade online, get BTC, or start mining, you need to be aware of what is biotin halving and how it might affect you. In this article, we explore more about what bitcoin halving is and the consequences of previous events.

What is Bitcoin Halving

Before we explain what bitcoin halving is, we are going to explain how the blockchain network operates. The blockchain network is distributed on thousands of computers, or nodes, around the world. 

As this is a peer-to-peer network, the users of the network are accountable for approving the transactions. In the blockchain network, the miners validate a new block of transactions, add them to the blockchain, and ensure that the network is safe.  

For this purpose, they have to have great equipment, and as the number of miners increases, this means that the network is more stable and less susceptible to attacks. So, it’s safe to say that their role is indispensable, and they get a ‘block reward’ for what they do. But, the block reward is cut in half every four years. This was Satoshi Nakamoto’s idea in order to cut in half the inflation rate and to minimize the number of new BTC that enter into circulation.   

Price of Bitcoin After a Halving

Because the supply is already restricted, when the reward decreases, it also decreases the available supply of bitcoin. Therefore, as the demand is high, the price of bitcoin goes up. At least that has happened with the last halving because no one can predict for sure that will be the case in the future. 

The first halving took place in 2012, and before the halving happened, the price was approximately $11. When it happened, it increased insignificantly from $11 to $12, but just a year later, in 2013, it soared to $1,150. This was the first notable rise in the price of bitcoin. 

When the second halving occurred, the price has risen from $576 to $650. Consequently, a year later, the price of bitcoin spiked and reached nearly $20,000. This brings us to the last halving in May. The price has climbed to $9,500. But, also, as some have predicted, the price achieved a massive rise by the end of November and has increased to $17,000. It is also estimated that it will carry on with an upward trend, and by the end of the year, will approach $20,000. 

This is one of the reasons people flock to exchange sites and want to start trading. An excellent site is Bitcoin Digital, where you can earn up to $1,500 on a daily basis. To register on the site, you need to deposit $250. If you want to learn more, you can see the full details here. Plus, the trading platform also is available for download as a mobile app on Apple and Android devices. The software is powered by machine learning algorithms and has won many awards for its features and performance. 

Limited Supply

But, Satoshi Nakamoto ( the unknown creator of bitcoin) limited the number of BTC that will exist to 21 million BTC. So, actually, there is a cap on BTC, which makes it a scarce, valuable asset. Before the first halving happened, it was easier for miners to get BTC, and their block reward was set to 50 BTC. But, after four years, in 2012, the reward was cut in half to 25 BTC. Next, in 2016 it decreased to 12.5 BTC, and now after May 11, 2020, it’s 6.25 BTC.

Because there is a restricted number of BTC, when they are gone, miners won’t get any more block rewards. It is predicted that the remaining 3 million BTC will be mined in 2140, as currently, every 10 minutes, a new block of transactions enters the blockchain network. But, there’s is a solution that will motivate the miners to keep mining, which is transaction or processing fees. They exist even now, but currently, the block reward is the main incentive.  

Summary

In conclusion, bitcoin is valuable as we know there won’t be any new BTC. Therefore, for a lot of people, this period is a digital gold rush which motivates them to learn more about crypto and start trading. But, we don’t know everything that will happen in the future in the bitcoin community and the blockchain network, and how the price will be affected, but undoubtedly bitcoin halving as an event is crucial for the users and their investments.