What is Bitcoin halving?
Bitcoin halving cuts or reduces the rate of new Bitcoins being created and also decreases the block rewards miners receive. This event only happens once every 4 years. This year it will be the 3rd Bitcoin halving on May 12th
There are only 21 million Bitcoin in the world. Satoshi Nakamoto, the creator of Bitcoin, hard-coded an upper cap to make sure no one can inflate the supply of Bitcoin. Bitcoin’s inflation rate is controlled and this is one of the main difference between Digital Assets and Fiat currencies where Governments have infinite supply and inflation rate rises everytime new money is printed. Once the 21 million coins are created, the Bitcoin network will stop creating more. This is one of the reason some people associate Bitcoin with the term “digital gold”. It has the same concept. Limited supply, high demand which causes the price to increase too.
Currently, there are around 18 million BTC in circulation, which is roughly 85% of the total cap. Don’t mistaken this as a sign that the supply of Bitcoin will end any time soon. The Bitcoin Network protocol which was coded from the very start, ensures that the coins will be issued at a steady pace, following a predictable decaying rate. For every 210,000 blocks, it performs the so-called Bitcoin “halving” or “halvening,” and producing new coins becomes more difficult. Not only will the production rate of new Bitcoins created are slower, the rewards miners get from verifying transactions is 50% less.
The rewards miners receives happens when a new block is added into the blockchain by them. Each block is around 1MB in size. The data in the block are all the transactions done by various people. For example, M buys Bitcoin, C sends D Bitcoin, these are the type of data that will be in the block that are “solved” or “approved” by the miners to be inserted into the blockchain. It’s basically payment for their job well done.
How many Bitcoin halvings have there been previously? What were the reward amount and Bitcoin price?
Since May 12th will be the 3rd Bitcoin halving event, there has only been 2 previous halving events. The 1st ever halving event was in November 28th 2020, the reward for miners back then was 25BTC (RM941,346.75),* this was cut half from the original reward of 50 BTC. The 2nd Bitcoin halving was in July 9th 2016 and the reward was 12.5BTC (RM470,654.50).* May 12th reward will be 6.25BTC.
During the 1st halving, the price of Bitcoin was only RM52.95 and RM2,796.41 during the 2nd halving. Currently as of May 1st 2020, Bitcoin price is RM37,376.
How many halving events will happen?
Only 64 Bitcoin halving events will happen and once all 32 events has happen, no more new Bitcoins are created as the 21 million supply has been reached and no more halving events will occur.As halving happens after every 210,000 blocks, the 2020 halving will happen on block 630,000. Only 61 more Bitcoin halving events to go!
What happens after all 64 Bitcoin halvings is completed?
No new Bitcoin will be created nor will the miners receive block rewards. Miners will depend on transaction fees instead of the block rewards
- price checked on May 1st 2020
