BITCOIN HALVING FOR BEGINNERS

The Bitcoin halving is an event that occurs roughly every four years, where the reward for mining new Bitcoin blocks is cut in half. This event is a part of Bitcoin's design to control the inflation rate and scarcity of the cryptocurrency. When Bitcoin was first mined in 2009, the reward for adding a block to the blockchain was 50 BTC. After the first halving in November 2012, this reward was reduced to 25 BTC per block. The second halving in July 2016 cut the reward to 12.5 BTC per block, and the most recent halving on May 11, 2020, reduced it to 6.25 BTC per block. The next halving is expected to occur in April 2024, when the block reward will fall to 3.125 BTC.

The halving mechanism is designed to control the supply of new bitcoins entering the system, maintaining a controlled and decreasing supply over time. This scarcity is intended to mimic the extraction of precious metals like gold, for example. As of March 2024, about 19.65 million bitcoins were in circulation, leaving just around 1.35 million to be released via mining rewards. The final halving is expected to occur in 2140, when the number of bitcoins circulating will reach the theoretical maximum supply of 21 million.

The halving has historically had an impact on the price of Bitcoin, although the exact effects are not predictable.

After the first halving in November 2012, the price of Bitcoin fluctuated from $11 to $1,100. Following the second halving in July 2016, the price of Bitcoin saw significant increases. However, the immediate impact of a halving on the price of Bitcoin can vary.