Bitcoin halving that took place on Monday made the world’s biggest cryptocurrency go through a technical adjustment reducing the rate at which new coins are created. Bitcoin’s reward for “mining” a block has been reduced from 12.5 new coins to 6.25 after the ‘Halving’ event. As block 630,000 has been successfully mined, digital currency experts believe that this year’s historic event could have a long-lasting impact on the price of the cryptocurrency.
What is Bitcoin Halving?
Bitcoin’s developer Satoshi Nakamoto had encrypted Halving in cryptocurrency’s code in an attempt to check increasing prices or inflation. Due to the presence of built-in safeguards such as the halving events, a large number of blocks are prevented from being mined too quickly. Hedge fund manager Paul Tudor Jones has extended support to bitcoin as a hedge against inflation. Bitcoin halving takes place roughly every four years (210,000 blocks), and after Monday’s event, it will take place next in the year 2024. 2020 halving was the third such event after the creation of Bitcoin in 2009. Earlier two Bitcoin halvings took place in November 2012 and July 2016.
Before the first halving, miners were able to get 50 coins, however, following that event, the reward reduced to 25 coins per block. In the second halving, the reward cut down to 12.5 BTC per block. After the 2020 halving, the Bitcoin reward has reduced to 6.25. As per the rules, the halving results in cutting down of reward (revenue) that the miners get per block into half. Miners are key players in the market being responsible for injecting new tokens into the digital ecosystem.
According to media reports, bitcoin has earned over 20 percent since the start of this year and it touched a three-month high last week after touching $10,000. At present, the price of one bitcoin is about $8,868. Since the digital currencies do not have banks to regulate their supply, rewards to miners will continue to halve every 210,000 blocks as per the built-in code of Bitcoin. This will keep happening until it reaches the value zero.