Bitcoin halving: When will it happen and what does it mean for the price. #HotTrends #HalvingWithBinance
WHAT IS IT?
The halving is a change in bitcoin's underlying blockchain technology, designed to reduce the rate at which new bitcoins are created.
Bitcoin was designed from its inception by its pseudonymous creator Satoshi Nakamoto to have a capped supply of 21 million tokens.
Nakamoto wrote the halving into bitcoin's code and it works by reducing the rate at which new bitcoin are released into circulation.
So far, about 19 million tokens have been released.
HOW DOES IT HAPPEN?
Blockchain technology involves creating records of information - called 'blocks' - which are added to the chain in a process called 'mining'.
Miners use computing power to solve complex mathematical puzzles to build the blockchain and earn rewards in the form of new bitcoin.
At the halving, the amount of bitcoin available as rewards for miners is cut in half. This makes mining less profitable and slows the production of new bitcoins.
WHEN WILL IT HAPPEN?
There is no set date, but it is expected to take place in late April.
The blockchain is designed so that a halving occurs every time 210,000 blocks are added to the chain. This means it happens roughly every four years.
WHAT'S IT GOT TO DO WITH BITCOIN'S PRICE?
Some bitcoin enthusiasts say that bitcoin's scarcity gives it value.
The lower the supply of a commodity, then all other things being equal the price should rise when people try and buy more.
So reducing supply of bitcoin should lift the price, some analysts and traders say.
Others dispute the logic, noting that any impact would have already been factored in to the current price.
The supply of bitcoin to the market is also largely down to crypto miners but the sector is opaque, with data on inventories and supplies scarce.
If miners sell their reserves, that could put downward pressure on prices.