Have you heard of Bitcoin halving? Bitcoin halving is a protocol-driven event occurring approximately every 210,000 blocks in Bitcoin Blockchain. Bitcoin has a built-in system to control its supply.
What Is Bitcoin Halving?
Bitcoin halving is a process that occurs approximately every four years. During this event, the reward given to miners for processing transactions is cut in half. This reduction decreases the rate at which new bitcoins are introduced, potentially driving up their value due to increased scarcity, assuming market demand stays consistent.
Ever wondered how Bitcoin mining works? Miners validate transactions and add new blocks to the blockchain. It’s like a big competition where they race to solve a tough cryptographic puzzle. The first one to figure it out gets a prize: new bitcoins. That’s what we call block rewards!
Once a miner cracks the puzzle, their block is added to the blockchain, and they earn their reward. Then it’s back to square one—the network starts a new race! Meanwhile, all the miners check the new block’s data and dive into solving puzzles for the next block, even though the reward keeps shrinking.
Bitcoin halving is usually seen as a good thing because it limits supply, which can increase scarcity and potentially raise market value. However, not everyone agrees, as some aspects, like the impact on miners or market stability, can make it less favorable for certain participants.
Why does bitcoin halve?
So, why does Bitcoin halve? Well, that’s all thanks to the software created by the mysterious ‘Satoshi Nakamoto’. While we don't know exactly why Satoshi designed it this way, some people think the idea was to quickly distribute coins at first to get more people mining and using the network.
The idea is that as the network grows, the value of each coin would go up, which makes sense when you look at the regular halvings. Another theory is that halvings were introduced to make Bitcoin deflationary, kind of like how we wish our money didn’t lose value due to inflation.
The fixed supply of 21 million coins is a way to avoid that, unlike the endless printing of money by central banks. That said, some people criticize Bitcoin because it encourages hoarding—people save their coins, hoping they’ll go up in value, which leads to boom-and-bust cycles. A few even compare it to a Ponzi scheme, saying that the early adopters are the ones who’ve profited the most.
How does a bitcoin halving work?
Have you ever wondered how Bitcoin keeps track of new coins? Well, it’s thanks to the network’s software! Miners use this software to compete and verify transactions, and when they succeed, they’re rewarded with new bitcoins. But here’s the catch—every 210,000 blocks, the reward they get for verifying transactions is cut in half! This process is known as halving, and it keeps Bitcoin’s supply under control.
Bitcoin Halving Dates
In 2028, Bitcoin will halve again, and the reward will drop to 1.625 BTC. Back in 2009, miners earned 50 bitcoins per block. Since then, there have been four halvings: in 2012 (25 BTC), 2016 (12.5 BTC), 2020 (6.25 BTC), and 2024 (3.125 BTC).
In May 2024, the majority of Bitcoin’s supply was already in circulation, with 19.7 million bitcoins mined and only 1.3 million remaining to be released through mining rewards.
Here’s a quick timeline of Bitcoin halvings: bitcoin halving dates history
First one was on November 28, 2012, cutting rewards to 25 BTC.
Then, on July 9, 2016, it dropped to 12.5 BTC.
By May 11, 2020, it was down to 6.25 BTC, and
On April 19, 2024, it’ll hit 3.125 BTC.
The next one? Mid-2028, down to 1.5625 BTC!
When Was The Last Bitcoin Halving?
On April 20, 2024, the Bitcoin network experienced its latest halving at the 840,000th block.
Miners' rewards were cut in half, from 6.25 bitcoins to 3.125 bitcoins, marking a significant event in Bitcoin's journey.
How Many Bitcoin Halvings Are Left?
As of 2024, there are 29 Bitcoin halvings left. Bitcoin can be divided into tiny units called satoshis (0.00000001 BTC). Block rewards will drop to one satoshi by 2136, and the final satoshi will be mined before the last halving in 2140.
Why is Bitcoin Halving Important?
So, why does Bitcoin halving matter? Well, it serves two main purposes: economic and sustainability.
It makes Bitcoin scarce by reducing how much gets supplied into the market.
As demand for Bitcoin grows, the supply rate decreases, pushing up its value.
This ensures Bitcoin remains valuable, even as more people want it.
The need for scarce items drives their value, and halving plays a big part in that.
Did you know around 3 million bitcoins are lost? That's because people forget their wallet details or misplace hard drives.
This makes Bitcoin a deflationary currency, and halving makes that scarcity even worse.
Miners are the key players here—they validate transactions and secure the network.
Halving keeps miners interested because it increases Bitcoin’s value and keeps the blockchain safe.
Conclusion
Bitcoin halvings are key events that reduce the reward for mining blocks by half, directly affecting how new bitcoins are distributed. This reduction will continue until the total supply reaches 21 million in 2140. In 2009, miners were rewarded with 50 bitcoins for each block, but after the first halving, this dropped to 25, then 12.5, 6.25 in 2020, and 3.125 bitcoins in 2024. With the decreasing reward, some miners, especially smaller ones, may no longer find mining profitable, which could result in consolidation among mining operations.
