Bitcoin halving is one of the most significant events that occurs after every four years. This is an interesting and important concept you should be familiar with if you want to step into the world of crypto.
There are several aspects about the crypto market that you need to know about. These aspects make it slightly challenging to buy, sell or trade digital assets. Even though a Bitcoin halving countdown would not specifically cause any interruptions in your crypto investing or trading, it is an important factor that you should know about.
Events such as halving, can affect the price of Bitcoin, which can have some kind of ripple effect on what you have invested in. Therefore, if you are interested to be a part of the crypto world then BTC halving is one of the things you need to know about.
Here is what you should know about the event, its impact on the price of the digital asset, its process and more.
Defining Bitcoin Halving
The term “halving” means to cut something in half. As the term suggests, BTC halving means the cutting of the Bitcoin created in half. This process is done every time a set of 210,000 blocks are mined.
The halving of the flagship cryptocurrency takes place to make sure that it is not circulated rapidly but instead the circulation is more regulated. It also helps in boosting the price of the digital currency.
How Does Halving Work?
After the mining of every 210,000 the reward for mining is reduced to half. When Bitcoin was established, the reward for every block was 50 BTC. The first Bitcoin halving occurred in 2012 and the reward was reduced to 25 BTC.
The most recent halving reduced the reward to 6.25 BTC per block and by the next Bitcoin halving, this will further decrease to 3.125 BTC.
The halving occurs after every four years as it takes this much time for 120,000 blocks to be mined. The most recent halving took place in 2020 and according to the calculation, the next one is set to be in 2024.
Dates of the BTC Halving
Since the establishment of the flagship crypto asset, it has undergone halving thrice.
Here are the Bitcoin halving dates as mentioned above as well.
- The first halving occurred on November 28, 2012. A total of 10,500,000 BTC had been mined at the time.
- The second halving occurred on July 9, 2016.
- The third halving occurred on May 11, 2020.
- The next halving event is set to take place in the spring of 2024.
Purpose for the Halving
One of the most important questions every BTC enthusiast asks is what is the purpose of the Bitcoin halving.
The halving takes place in order to boost the value of the flagship cryptocurrency. The number of blocks that can be mined is set at 12 million, as mentioned above. When the blocks mined reaches this specific number, the creation of new BTC is stopped.
The halving makes sure that the BTC that is mined with each block reduces, which will make the digital asset quite scarce and valuable.
The Bitcoin halving usually results in a significant increase in BTC’s price, which provides a greater incentive for the miners to mine more.
However, if the BTC is halved but its price is not increased it can decrease the motivation miners have to continue working. Therefore, in such a case, if the price does not increase after the halving, the reward remains small but the difficulty of mining is reduced to a great extent.
Effects of Halving on BTC’s Price
Another major aspect you need to know is how much the halving has affected the price of the flagship cryptocurrency.
- Let’s take a look at the impact halving had on the price of BTC after the Bitcoin halving events that have occurred up till now.
- After the first halving, the price of BTC went from $11 to $12 and was as high as $1,100 within a year.
- After the second halving, the price of BTC was between $500 to $1,000 for a few months. However, by December 2017 it surged as high as $20,000.
- After the third halving event, the price of BTC went from $9,000 to approximately $20,000 by December 2020.
Considering these facts, the next Bitcoin halving is also expected to take the price of the flagship digital asset to new heights.
Bitcoin halving is a major event that occurs after every four years. It is one of the aspects of the crypto space or investing in BTC that you should know if you are a beginner. In order to develop some understanding about what the halving event is and how it affects the price of the largest cryptocurrency, you should know the details mentioned above.