What is Bitcoin Halving? Bitcoin Price History with Halving
Bitcoin halving refers to the process of cutting down or halving the rewards given to the miners for validating or processing transactions. This is a pre-set feature in Bitcoin and it occurs every 4 years.
While the total number of Bitcoins that will be mined is fixed, i.e. 21 million but the reward given to the miners for mining the Bitcoin is not fixed.
It reduces after every four year to cut down the circulation of Bitcoin in the market. The idea of Bitcoin halving has been implied since the beginning of the creation of Bitcoin. And it all goes down to Bitcoin mining and the miners.
Understanding Bitcoin Halving in Detail
Bitcoin is created through mining. Bitcoin Miners are people who use their computer and hardwares to participate in the Bitcoin Blockchain network by recording or verifying transactions.
Due to the Proof of work system, the miners have to prove their efforts in verifying and recording transactions in order to be receive rewards. These miners have to solve complex mathematical problems in order to complete their creation of blocks, and chain of blocks.
Only after the block is filled with confirmed transactions, that the miners are rewarded.
But after every 2,10,000 Bitcoin blocks mined, or mostly after every 4 year, the reward given to the Bitcoin miners for creating and processing blocks is halved. This incentive affects the circulation of Bitcoins in the market.
There will only be 21 million Bitcoins that will be circulated in the market and as of July 12, 2021 there are about 18.75 million Bitcoin already in circulation which leaves behind only 2.25 million Bitcoins to be mined.
Bitcoin Halving Dates
|First halving||28th Nov, 2012||25|
|Second halving||9 July, 2016||12.5|
|Third halving||May 11, 2020||6.25|
When did the first Bitcoin halving take place? 28th Nov, 2012
When is the next Bitcoin halving? Somewhere in 2024.
Impacts of Bitcoin Halving
Bitcoin Halving has a great impact on the market, as well as other currencies. Let’s have a look at it :
- The reward is halved: The incentive that the Bitcoin miners are paid for their services by creating blocks and maintaining them is halved every 4 year.
- The supply of Bitcoin is reduced: Halving the Bitcoin rewards also leads to creating less Bitcoins and thus, reduced availability of the coins.
- The demand is increased: As economical as it can get, when the supply of Bitcoin in the market reduces, the demand automatically increases.
- The price of Bitcoin goes higher: After every halving, when the supply of Bitcoin is low, the price goes higher.
- The value of Bitcoin increases: Even though the miners get less readers rewards and the supply is less, people start valuing Bitcoin more due to its unavailability.
Bitcoin Halving Price History
As mentioned earlier, this feature is pre-set and has been applicable since the beginning of creation of Bitcoin blocks.
- In 2009, the Bitcoin miners were awarded 50 Bitcoins for mining the chain.
- After the first halving, which occurred on November 28, 2012 when 2,10,000 Bitcoins blocks were already created, the rewards went down by 50%. This means the miners were rewarded only 25 BTC. This led to a price increase of Bitcoin from $12 to $1207 by the end of a year.
- The second halving occurred on July 09, 2016 when 4,20,000 blocks were created. The rewards were further halved from 25 BTC to 12.5 BTC. The prices soared from $647 to $19345 in a year.
- The most recent Bitcoin halving occured on May 11, 2020 when 6,30,000 blocks were already created. The rewards halved from 12.5 BTC to 6.25 BTC. But the Bitcoin prices went from $8821 to $63,558 in a year.
- The next Bitcoin halving is expected to occur in 2024 which will lead to the miners reward halving from 6.25 BTC to 3.125 BTC.
Bitcoin halving not only affects Bitcoin users but also affect the prices of other cryptocurrency like Ethereum. With a rise in the demand of Bitcoin, the entire crypto market seems to go up. It plays a very important role in Bull run cycle.
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