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Bitcoin halving is a major event in the history of Bitcoin. It refers to the process of reducing Bitcoin mining rewards by 50%. The next Bitcoin halving is expected to occur in 2024, and this event will have an important impact on the future development of Bitcoin.
The creation of Bitcoin is based on a decentralized digital currency that can be generated by anyone through a digital mining process. Miners use powerful computers to decipher complex mathematical problems or encrypted hashes through a proof-of-work (PoW) process, verifying transactions and adding them to the blockchain. In return, successful miners receive a pre-determined Bitcoin reward.
However, due to Bitcoin's block reward halving event, the block subsidy reward miners receive is reduced by 50%. Satoshi introduced the halving event to control the inflation rate of Bitcoin. As miners' rewards decrease, it will reduce the incentive to mine, thereby increasing the scarcity of Bitcoin and improving the stock-to-flow ratio. In addition, creating scarcity in Bitcoin makes it more valuable and helps maintain and appreciate in value over time, especially as demand continues to grow.
Bitcoin halving history
Since its launch in 2009, three halving events have occurred. The first halving took place in 2012, the second halving took place in 2016, and the most recent halving took place in 2020. Therefore, the fourth halving will occur in 2024 at block height 840,000, with the fifth expected to take place in 2028.
Bitcoin halving cycle
The Bitcoin halving cycle is almost impossible to determine because it depends on the completion of 210,000 blocks. Since it takes about 10 minutes to confirm or add a new block to the Bitcoin network, the halving schedule occurs approximately every four years.
The impact of Bitcoin halving on miners
The Bitcoin halving is a double-edged sword for miners. On the one hand, it will reduce the issuance rate of new Bitcoins, creating scarcity, which may drive Bitcoin price appreciation. However, on the other hand, the Bitcoin halving will reduce profitability, meaning that miners will receive half the revenue for confirming new blocks while spending the same amount on computational and energy costs. The halving may also have a negative impact on the security of the Bitcoin network, as fewer miners will continue to mine due to reduced profitability. In theory, this could expose the network to a 51% attack, as mining power will be concentrated among fewer participants.
The Bitcoin halving event has an important impact on the future development of Bitcoin. As Bitcoin's popularity and value continue to rise, the consequences of the halving event will become more apparent in the coming years. However, it is important for ordinary investors to remain rational and not overly rely on the halving event as the only basis for investment decisions.
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