WHAT IS BITCOIN HALVING? Bitcoin Halving is a fundamental event in the cryptocurrency world, occurring approximately every four years. It is a process embedded in the Bitcoin protocol that reduces the reward miners receive for validating transactions by half. This mechanism is put in place to control the rate at which new bitcoins are created and introduced into circulation.
Each halving event decreases the reward miners receive, thereby slowing down the rate at which new bitcoins are mined. Initially set at 50 bitcoins per block, the reward is halved every 210,000 blocks, or roughly four years, until it reaches zero. As a result, the total supply of bitcoins is capped at 21 million, ensuring scarcity and maintaining the digital currency's value proposition.
Halvings play a significant role in Bitcoin's monetary policy, as they contribute to its deflationary nature. The diminishing supply over time contrasts sharply with traditional fiat currencies, which can be subject to inflationary pressures due to central bank policies. Consequently, halving events are closely watched by the cryptocurrency community, often sparking discussions and speculation about their potential impact on Bitcoin's price and market dynamics.