Do you know the phenomenon of halving? It is an event that occurs once every four years in the world of cryptocurrencies, especially the world of Bitcoin. Halving is defined as a drastic reduction that goes up to half the reward that users receive in this virtual currency, in exchange for their contributions to the smooth functioning of cryptocurrency . This article provides an update on the implications of this phenomenon.
What is halving?
When we go on a direct interpretation from French to English, we recognize that the word “ halving ” would mean a halving reduction . Thus, on November 28, 2012, the world had its first halvingand then experienced another halving on June 9, 2016 . So the next one will have to be soon.
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Indeed, in the aim to properly manage transactions through a very smooth operation, the Bitcoin infrastructure needs a fairly large computing power . Those who provide this type of power are called miners. Thus, the more miners , the better the system would be considered fairly secure . As a result, in order to reward these miners for the work they slaughter, the system again creates Bitcoins , which it distributes to miners who have validated what is called the “ data block ”, a resource that contains the latest transactions made .
Therefore, to choose the minor who will have the privilege of validation , the system will have to solve a computer puzzle . In doing so, it gets the right to validate the block and then receive the Bitcoins. As a result, in order for the miners to get there, they work in cooperation and share the gains when they get the reward. By the way, it should be noted that this reward was 50 Bitcoins, the Bitcoin currently being at 9000 dollars. Today the reward has risen to 12.5 Bitcoins and will be 6.25 Bitcoins soon.
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Why is the reward reduced?
From the launch of Bitcoin, it was intended to be the opposite of conventional currencies , which lost their values over time, because of the unlimited power of central banks to create money . The creator of Bitcoin, Satoshi Nakamoto, whose real identity remains a mystery, decided that the number of outstanding Bitcoin will not exceed 21 million units. To do this, he opted for a declining emission rate .
Therefore, halving occurs every 210,000 blocks generated, with one block every 10 minutes . And as a result we have a halving almost every 4 years. Then, figure out that when we add 50 Bitcoins, in more than 25, in more than 12.5, in more than 6.25…, we are gradually approaching 100 Bitcoins. And when you multiply 100 Bitcoins by the 210,000 blocks provided for each reward before halving, you find a result of 21 million Bitcoins , according to this study.
In terms of the impacts of halving on Bitcoin price there is none in theory. On the other hand, it is generally observed that after a halving, the value of Bitcoin multiplies madly by 14 times , 54 times , or even more. So this is definitely the time to take the Bitcoin course.