The next bitcoin (BTC) halving is predicted to take place in April 2024 and could have an impact on the price of the cryptocurrency market. In this article, let's explore what you need to know about the next bitcoin halving.
What is Bitcoin halving?
Bitcoin halving or “halving” is an event in which the rewards for mining new blocks are halved, meaning miners receive 50% less bitcoin for verifying transactions. Bitcoin halvings occur each time 210,000 blocks are reached – approximately every 4 years – until the maximum supply of 21 million bitcoins.
Bitcoin halvings are important events for traders because they reduce the number of new bitcoins created by the network. This limits new supply, so prices could rise if demand remains strong.
While this has occurred in the months before and after the halving, causing the price of bitcoin to increase rapidly, the context surrounding each halving is different and demand for bitcoin can fluctuate unpredictably.
When is the next bitcoin halving?
The next halving is expected to take place in April 2024, when the number of blocks reaches 740,000. Block reward reduced from 6.25 to 3,125 bitcoins. The exact date of the halving has not yet been determined because the time needed to create new blocks varies, on average a new block every 10 minutes.
Bitcoin halving: Key timelines
Event Date Number of blocks Block reward Total number of new bitcoins between events Bitcoin launch January 3, 2009 0 (genesis block) 50 new BTC 10,500,000 BTC first halving November 28, 2012 210,000 25 new BTC 5,250. 000 BTC Monday halving July 9, 2016 420,000 12.5 new BTC 2,625,000 BTC Tuesday halving May 11, 2020 630,000 6.25 new BTC 1,312,500 BTC Wednesday halving Expected April 2024 740,000 3,125 new BTC 656.2 50 BTC halving Thursday Expected 2028 850,000 1.5625 BTC new 328,125 BTC
This list is not complete. Bitcoin halvings will occur every 210,000 blocks until around 2140, when all 21 million coins will be mined. What happened at the last bitcoin halving?
The most recent bitcoin halving event took place on May 11, 2020 when the block reward decreased by 50%, from 12.5 bitcoins to 6.25 bitcoins. Tight supply caused bitcoin's price to increase from $6,877.62 on April 11 (one month before the halving) to $8,821 at the time of the event. Despite significant volatility, the price continued to increase throughout the following year and peaked at over $68,000 in November 2021.
A similar scenario played out in previous halvings in 2012 and 2016, the period with the strongest increase was the halving, despite a significant decrease in value about 12-17 months later, the price was still often much higher than the halving. before halving.
How does halving impact the price of bitcoin?
It is still unclear how the next halving will affect bitcoin prices. Many commentators believe that the price will follow a similar pattern to the three previous halvings, namely that the price will increase when supply is limited.
However, any price increase will depend on how demand for bitcoin builds during the halving. Demand is by no means certain to increase, it may even stand still as the market has matured significantly since the halving at the end of 2020 and there are now more cryptocurrencies being created providing more choices for investors.
How does Bitcoin halving work?
Bitcoin halving is integrated into the network's underlying blockchain software, determining the rate at which new bitcoins are created. The software asks computers in the network to compete to verify transactions through a process called 'mining', and rewards them with some new bitcoins when they can prove that their chosen transactions is valid. Verified transactions are called ‘blocks’ and the network is encrypted to halving the reward miners receive every 210,000 blocks.
How are miners affected by bitcoin halving?
Some users claim that their mining operations will no longer be profitable due to electricity and hardware costs. Some miners may stop mining altogether if bitcoin prices do not increase, reducing processing power in the network. Whatever happens, the speed at which blocks are mined will not be affected because the software automatically adjusts the difficulty of verifying transactions to maintain a steady pace.
What happens when all 21 million bitcoins have been mined?
Once the maximum supply of 21 million bitcoins is fully mined, users will no longer receive new bitcoins when verifying blocks. However, they will continue to receive transaction fees contributed by those making payments – as an incentive for them to verify transactions. It is estimated that the last bitcoins will be mined in 2140.
Why bitcoin halving?
Bitcoin halving due to its software design, was created by a mysterious person or group using the pseudonym ‘Satoshi Nakamoto’.
While Satoshi did not clearly explain the reasons behind the halving, many have speculated that the system was designed to distribute coins faster to encourage people to join the network and mine new blocks. According to this theory, block rewards are programmed to be halved periodically because the value of each coin rewarded is considered likely to increase as the network expands.
Another theory is that halvings act similar to deflationary measures for BTC, so the amount of new coins rewarded per block is predetermined. Unlike a fiat currency system where overprinting money by Central Banks can lead to a decrease in the value of the currency, the total available fixed supply of bitcoins and the rate of new bitcoin creation are determined. identified from the beginning to combat this risk.
One criticism of bitcoin's design - including the halving and its finite supply of 21 million coins - is that it encourages users to hold rather than spend in the hope that bitcoin will increase in value over time.
Some have also compared bitcoin to a Ponzi scheme for similar reasons, arguing that the system's design fails to adequately reward users who participate early.
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