What Should You Know About Bitcoin Halving?
If you are interested in buying or trading the flagship crypto asset then you need to know what Bitcoin halving is. This is an important concept to learn about as it heavily impacts the general market and even provides some opportunities to make profits.
However, before you move to the profits part (which are never guaranteed), you need to know what halving means, how and why it occurs and more.
Bitcoin is the largest and first digital currency in the world and therefore, it naturally has a lot more significance and dominance in the industry than any other crypto asset.
This is why, it is important to know about the halving process as it makes a significant difference in the kind of experience BTC enthusiasts have if they invest in it.
Here are all the details from introducing halving to determining when the next Bitcoin halving will take place.
Defining What Bitcoin Halving Is
As the term ‘halving’ suggests, this process is where the future supply of the crypto king BTC is slashed in half. This means that the availability of Bitcoin or the number of BTC in circulation is noticeably reduced.
In other words, the supply is cut in half while the demand for the asset keeps surging.
Why Does Halving Occur?
Now since there is a reduction in the number of Bitcoin in circulation but the demand remains the same, the cryptocurrency will remain safe from inflation.
The halving feature is basically carried out to ensure that the digital asset is kept safe from inflation, as the supply falls but the value and price of the crypto king keeps increasing.
Are BTC Miners Affected?
Bitcoin halving is such a process that affects all areas of the crypto space. This also includes the miners.
Since the new BTC coins are created through the process of mining, the people who mine them (miners) are affected when halving occurs.
BTC mining basically is a process that digitally adds transaction records to the blockchain. When a transaction is validated on the BTC network, the miners are awarded new BTC. However, when BTC halving occurs, this reward for the miners is reduced in half as well.
Is the General Crypto Market Affected?
As mentioned above, Bitcoin is the pioneer of the crypto industry. Therefore, it has more than 60% dominance in the crypto market.
This means that any price fluctuation noted for the flagship crypto asset will also cause the price of ETH and other altcoins to fluctuate. What mostly happens is that when Bitcoin is in a bull run, crypto investors majorly draw their investments out from other altcoins and focus them on Bitcoin instead. This causes the altcoins to underperform.
Now since the price of the crypto king increases after the halving process is complete, investing in BTC or accumulating the crypto king generally becomes beneficial for the investors.
Mechanics of Halving
Bitcoin halving occurs after every four years. The ETA is generally calculated by keeping a track of two countdowns. However, one countdown may be a bit slower or faster than the other because a new block is added to it after every 10 minutes. This is why the block time for one of the countdowns keeps changing on a daily basis.
Since the addition of new blocks can cause the ETA to fluctuate, a more accurate way of calculating the next Bitcoin halving is after every 210,000 blocks.
Dates of BTC Halving
Bitcoin was created by Satoshi Nakamoto in 2009. At the time, the block reward was 50 BTC per block.
Four years after Bitcoin was created, the first halving took place in 2012. This reduced the block reward down to 25 BTC per block.
According to the ‘four year mark’, the next Bitcoin halving took place four years later in 2016, This was the second halving and reduced the block reward to 12.5 BTC per block.
In 2020 the next and third halving process took place. According to this, the block reward was further reduced and came down to 6.25 BTC per block.
According to this timeline, the next Bitcoin halving is set to occur in 2024. This cut the block reward down to 3.125 BTC per block.
Can you Benefit from Halving?
It has been mentioned above that the price of the crypto king increases after Bitcoin’s halving is complete. This presents an opportunity for people who are looking to invest in the flagship digital asset.
Therefore, one strategy that people often opt for is to purchase Bitcoin until after the halving process is done and the price surges.
Bitcoin halving is a crucial concept to know about, especially if you are a BTC enthusiast. If you want to buy, sell or trade Bitcoin then you need to know the details mentioned above.