What is halving Bitcoin and What Does It Mean? When does it happen? How does it affect the value of bitcoin? In this post, we will answer these questions in an easy way with an article from the 99bitcoins website.
Summary of halving Bitcoin
On average, every four years (after 210000 blocks in bitcoin blockchain), the amount of new bitcoin production halves abruptly, or more precisely, the bonus is given to miners for adding a block to the China block decreases by 50%. Finds. halving is coded by Satoshi Nakamoto, the anonymous creator of Bitcoin, for the purpose of controlling bitcoin inflation.
Since the halving event actually halves the bitrate of the new bitcoin or the same one, experts believe the event has a significant impact on bitcoin prices and can increase bitcoin value over time.
This is a summary of the event for those who do not have much time to study, but if you are looking for more detailed information, you should continue reading.
What does halving Bitcoin mean?
To understand the concept of bitcoin halving, you must first understand the basic concepts of bitcoin mining. In summary, it can be said that volunteers known as extractors or “miners” to validate bitcoin transactions and maintain their security give their hardware processing power in a process called extraction, which requires power consumption and equation solving. Advanced math. The network generates bitcoin as a bonus and gives it to the extractors. SHOWING HALFS EXTRACTORS HALF EVERYWHERE every four years
When Satoshi Nakamoto set out to determine the rules of the bitcoin protocol, he emphasized two rules:
- Bitcoin holdings are finite and limited to 21 million units.
- The number of bitcoins generated per block is reduced by 50% after every 210,000 blocks.
Halving or Having?
In the pronunciation of the term halving, the word “L” is not pronounced. So although the term “Halving” is also used among Persian-speaking users, Having is more correct.
How often does Bitcoin occur every few years?
Given that on average there are 6 blocks per hour and the halving event occurs after every 210000 blocks, it can be roughly said that halving occurs once every 4 years.
At the beginning of Bitcoin activity, every 10 minutes would generate 50 Bitcoin units, or more precisely the first miner to reach the block equation response would receive 50 Bitcoins. In the year 2012, after the first halving, the extraction bonus reached 25, and in the year 2016, after the second Hawking, the extraction bonus reached 12.5. As of this writing, today, about 12.5 bits per minute are generated. This figure will be reduced to 6.25 bits after the next halving, which will take place on May 1, 2020.
What is the philosophy of the halving event?
You may also be asking yourself why this change in the miner’s rewards was needed and why the rewards rate for the miners should not be kept constant. Will this event does not end to the detriment of the miners?
The answer lies in the law of supply and demand.
If new bitcoins are produced quickly, or if the number of infinite bits is infinite, then the high number of bits in circulation will gradually decline.
“The main reason for doing so is inflation control. One of the biggest flaws of traditional Fiat currencies controlled by central banks is that they can print as much as they want and if they print too much, the value of the government currency is falling rapidly under the law of supply and demand.
Bitcoin is designed to act like a precious commodity, like gold, in contrast to common currencies. The amount of gold available in the world is limited, and extracting every gram of it will make it harder to extract the remaining gold.
It is because of this limited supply that gold has been able to consolidate its footprint as a means of exchange and a means of storing value over the past six thousand years. Something we hope Bitcoin can do, too. “
On what date will the next halving happen?
Given the average time required to produce a block (10 minutes), the next hovering should occur in May or June of 2020.
The truth is that bitcoin block time is not exactly 10 minutes, and it takes an average of ten minutes. Since the creation of Bitcoin, the average time required to create a block has been 9 minutes and 20 seconds, not the full 10 minutes, which is about 7% faster than our estimated time.
How does halving affect the price of bitcoin?
The most important question people are asking about whether this is going to affect bitcoin prices is that no one knows. In fact, on paper and, in theory, assuming demand is constant, if supply is halved, the price must be twice as high as to respond to demand, but demand cannot necessarily be said to remain constant and not decrease.
There was little change in bitcoin prices in the year 2016 and a week after the halving event. At that time, bitcoin was priced at about $650, and a week later it was $675, which was not a significant change. But more than a year later in the Year 2017, the bitcoin price reached its highest historical high of $20000.
The first bitcoin halving happened on 2012 November 28 and after the extraction of the 210,000th block. Bitcoin was priced at $13.42 at the time, and it seemed that halving had little effect on the price. It is true that bitcoin’s price reached $230 shortly afterward, but many attribute the increase to the financial crisis in Cyprus.
However, there are still arguments that either the price will rise or no change will occur.
Many believe that the halving event is known only to members of the Bitcoin community and therefore cannot surprise anyone or cause a significant change in Bitcoin prices.
No one in the world believes that halving can in any way reduce the price of bitcoin.
Frequently Asked Questions about halving Bitcoin
2140 According to estimates from the halving event, the final number of bitcoins will reach about 21 million (20999999/9769) units per year.
No, as long as bitcoin exists, its extraction will necessarily continue. Once all bitcoins are extracted, the miners will be rewarded through transaction fees.
On average, 144 blocks are extracted per day, with this account (24 hours a day *60 minutes per hour / 10 minute per block) averaging the number of bitcoins extracted prior to 2020 May 1 (halving ) 1800 Bitcoin per day.
Bitcoin was created with the purpose of remaining valuable, and halving was built for that very reason. There will only be a certain number of bitcoins (21 million) and with halving, the inflation of bitcoin supply will be controlled by slowing the distribution rate.
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