Get ready for Bitcoin ‘Halving’ Bitcoin! Here’s What It Means: QuickTake

Russia's Largest Bitcoin Mine Is Turning Water Into Cash

Photographer: Andrey Rudakov / Bloomberg

Bitcoin is highly volatile, prone to sudden price surges and rapid reversals that can wipe out millions of dollars of value in just minutes. Those changes are often mysterious to market observers, given the lack of the fundamentals of digital currency, or connections to the real economy. Bitcoin has another quirk, one that was incorporated into the code that gave birth to it: every so often, the formula governing the rate at which new tokens are created changes. As another such event – known as halving – Bitcoin’s methods, supporters and skeptics discuss what kind of impact it could have on the value of the coin.

1. Where does Bitcoin baby come from, anyway?

One of the features that led to his interest in Bitcoin is the way his pseudonym creator, Satoshi Nakamoto, tying the creation of coins to the work needed to prevent counterfeiting. Bitcoin is produced by so-called miners whose computers perform complex calculations that validate the transactions on the so-called blockchain, a public digital ledger. The miners compete with each other to win newly announced tickets known as block reward.

2. What is Bitcoin halving?

A. halving – sometimes referred to as halving – in a a proposed reduction in the rewards that miners receive (the season is mentioned in Bitcoin code). Halving occurs about once every four years – more precisely, every 210,000 blocks of transactions. As the name implies, each cuts the amount of Bitcoin miners receive per block reward in half. At the launch of Bitcoin in 2009, miners received 50 Bitcoin per block, but that reward was reduced to 25 in the first halving, in 2012, to 12.5 in 2016, and will fall to 6.25 tokens in the next.

Return of Forms

Miners reap fewer Bitcoins with each halving


3. What’s the point?

Bitcoin publishing is limited in many ways. For one thing, according to its set-up protocol, only 21 million will never be in circulation. That appeals to many who fear that fiat money – the kind issued by governments – may lose its value to inflation if too much is printed. Supporters argue that Bitcoin, by contrast, will no doubt increase. Hi, too suppresses inflation by acting to periodically slow down the speed at which Bitcoin is created, so as not to exceed demand. For other observers, halves can act as a rush-and-buy signal by suggesting that slower growth could come with a fall in price.

4. When does Bitcoin halving happen?

The next one is expected to happen in May 2020 and the internet is repeat with countdown clocks. The exact date is generally difficult to predict due to the time it takes to produce new blocks can slow down or accelerate depending on the number of factors. Passing most estimates, 64 halves of Bitcoin will reach that maximum of 21 million sometime around 2140, at which time halving will stop. Once that happens, miners will no longer collect rewards and are expected to rely on charging transaction handling fees, similar to what credit card companies do.

5. Do halves always boost the price of Bitcoin?