What Exactly Is Bitcoin Halving?

Bitcoin's code contains many characteristics, including the allocation of a total maximum supply of 21 million BTC. Bitcoin's fixed supply and decreasing block rewards, which occur every four years, are two of its most important features. #bitcoin halving refers to the periodic decrease in the rate at which bitcoins are issued into circulation.

The reward was 25 bitcoins per block in 2012, but it was reduced to 12.5 bitcoins per block in 2016. Miners are rewarded 6.25 bitcoins per block mined as of March 2023.

How Is Bitcoin Halving Related To Bitcoin Mining?

The number of newly issued bitcoins is cut in half for every 210,000 blocks. This translates to every four years, depending on how quickly blocks are mined, which takes about ten minutes on average.

Mining is a process that adds blocks to the Bitcoin blockchain by using custom-made computers called Application-Specific Integrated Circuits (ASICs) — computers designed to hash compute as quickly as possible.

Mining is used to add transactions to the blockchain indefinitely and without the intervention of any centralized entity. Miners are incentivized to secure the network by spending resources (mining) and are then rewarded with Bitcoins.

How Many Bitcoin Halvings Have Occurred?

There have been three Bitcoin halvings so far: the first occurred in November 2012, when the block reward was reduced from 50 bitcoins per block to 25 bitcoins per block; the second occurred in July 2016, when the reward per block was reduced again, from 25 bitcoins per block to 12.5 bitcoins per block; and the third occurred in May 2020, when block rewards were reduced from 12.5 bitcoins per block to 6.25 bitcoins per block.

When Will The Next Bitcoin Halving Take Place?

Bitcoin's #hashrate has increased since its inception, resulting in block times that are now less than 10 minutes on average. Because these fluctuate, predicting the exact date of the next halving is difficult.

A future halving is expected in 2024, when the reward will be reduced from 6.25 to 3.125 bitcoins per block mined; a fifth halving is expected in 2028, when the reward will be reduced to 1.5625 bitcoins per block mined.

Is The Bitcoin Price Affected By The Halving?

The halving of the BTC price can have the following effects:

The network's rewards are halved, promoting healthy and sustainable growth. The halving ensures that Bitcoin's supply remains limited and finite by reducing the rate at which new Bitcoins are generated, which can help maintain its value over time.

Bitcoin's inflation rate falls after halving, implying that the supply of new coins entering the market is reduced.

This is a hotly debated topic among market analysts and participants alike. Some believe the halving will result in a significant increase in Bitcoin's price, as lower inflation rates will lead to increased demand and a corresponding increase in value. Others argue that the halving has already been priced into the market and that the event will have no effect on the cryptocurrency's price.

Bitcoin's price is ultimately determined by a number of factors. These include changes in market demand and sentiment, as well as regulatory developments. It's hard to say how the halving will affect its value.

What Does The 'Halving' Mean In The Bitcoin White Paper?

Interestingly, the term "halving" is not used in the Bitcoin white paper, so it is not mentioned directly. The paper does, however, discuss Bitcoin's limited supply and the mechanisms in place to control the creation of new coins.

The white paper specifically states that the maximum number of bitcoins that can be created is 21 million, and that the rate at which new coins are created or mined will be halved every four years. This is the mechanism behind the halving process.

Don't just take our word for it. It is described in Section 6 of the Bitcoin white paper as follows:

"The constant addition of new coins is analogous to gold miners expending resources to add gold to circulation." In our case, CPU time and electricity are consumed."

Section 4 of the Bitcoin white paper also states:

"In addition, the proof-of-work solves the problem of determining representation in majority decision making." If the majority was based on one-IP-address-one-vote, it could be manipulated by anyone with access to a large number of IP addresses. One CPU equals one vote in proof-of-work. The longest chain with the most proof-of-work effort invested represents the majority decision."

Additionally:

"The proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour to compensate for increasing hardware speed and varying interest in running nodes over time." The difficulty increases if they are generated too quickly."

Should Bitcoin Owners Be Concerned About Bitcoin Halving?

Bitcoin halving is a pre-planned event designed to reduce inflation by reducing the number of new bitcoins created. The impact on value varies and is influenced by a variety of factors.

As a result, it is critical to recognize the halving as one of many factors influencing the value of Bitcoin, while also considering other factors.

This news is republished from https://coinaquarium.io/

A hashed timelock contract (HTLC) is a distinct feature in the form of a time-locked escrow that is mainly used while creating smart contracts which enable the creators to modify the payment channels.

In basic terms, it is an agreement in which the receipt must be confirmed by the receiver or the beneficiary before a preset date or deadline, and failing to do so will result in the receiver losing the ability to claim the payment. The receiver must acknowledge the payment before the deadline.

There are two main terms that you should know in a hashed timelock contract:

Timelock - It is a function that limits any transacting from the funds of the contract until the receiver affirms the payment before a pre-decided time. This is enabled using Bitcoin commands. If this is not done, the paying party can claim a refund.

Hashlocks - This is a passphrase to claim the funds. The recipient must input the correct phase to gain access to the funds.

The hashed timelock contract feature is used for safe transfers through bidirectional and routed channels, the contract functions without any trust from either party.

How Does the Hashed Timelock Contract Work?

The hashlocks and timelocks are the most pivotal and important components that come into play while settling the contract.

Firstly, the paying party generates a code or password phase and hashes the code. This is known as the hashlock phase which is the restricting mechanism. The hash is protected until the final transaction takes place.

Next, the timelock mechanism is used by setting a set of timelocks to restrict future transactions. One of the timelocks is called a Check Lock Time verify. This sets a base time to release and limit the funds. The next timelock is known as Check Sequence Verify, this timelock keeps a count of the number of locks created to aid with finalizing the transaction.

Application of Hashed Timelock Contract

HTLC is mainly used in the Bitcoin Lightning network to allow users to transact through interconnected channels. The main issue that users face in p2p transactions is trust. This is solved by using the Hashed Timelock Contract as it requires no level of trust from either party. This allows two users to transact without being directly connected with one another through a payment channel - a process known as network routing. HTLC enables other users to aid the transaction and the hashlock and timelock prevent other users from impeding the transaction.

Advantages

Reduced Risk 

The main problem that HTLC solves is the risk of transacting. The contract greatly reduces the counterparty risk through hashlock and timelock mechanisms. 

Atomic Swaps 

Going by the name, these swaps are smart contracts that remove the need for any intermediaries or exchanges with the help of hashed timelock contracts.

Reduced Delays 

With the help of the timelock mechanism, the contracts are settled on a pre-determined deadline which eliminates the chances of a delay in the settlement of the contracts.

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