Hello everyone! Today's topic in the crypto circle challenge is 'Bitcoin Halving'. Bitcoin halving is a core mechanism in Bitcoin's design that occurs approximately every four years. This event affects not only the supply of Bitcoin but also has significant impacts on price, mining rewards, and more. Let's take a look at what Bitcoin halving is and how it affects the crypto market!
What is Bitcoin halving?
Bitcoin halving refers to the reduction of the block reward that miners receive after every 210,000 blocks (approximately every four years). When Bitcoin was originally designed, miners would receive 50 Bitcoins as a reward for mining a block, and this reward is halved every four years. With each halving, the rate of Bitcoin supply gradually decreases, with the total supply expected to never exceed 21 million coins.
Fruits of Bitcoin
Bitcoin halving is like 'the fruits in the orchard are becoming fewer' 🍎. Imagine you own an orchard, where the fruit trees were initially laden with fruits, and you could easily pick a full basket every day. But every few years, the rules of the orchard change, and the number of fruits produced by each tree is halved, making fruit picking increasingly rare and precious. The process of Bitcoin halving is like this orchard, where miners could originally obtain abundant 'fruits' (Bitcoins), but as the quantity of 'fruits' decreases, its value gradually increases, because everyone knows that these 'fruits' will become fewer.
Review of past Bitcoin halvings
First halving in 2012: miner rewards reduced from 50 to 25 coins, and the price subsequently rose
Second halving in 2016: rewards reduced to 12.5 coins, driving the bull market once again
Third halving in 2020: rewards reduced to 6.25 coins, Bitcoin price surged significantly, reaching new highs
Fourth halving in 2024: rewards reduced to 3.125 coins
Conclusion
The Bitcoin halving mechanism controls supply, making Bitcoin more scarce and deflationary, attracting more investors. However, with the reduction in supply and price volatility brought about by halving, miners face increased pressure on their earnings and market volatility risks. The halving mechanism endows Bitcoin with scarcity, making it closer to 'digital gold' and one of the asset choices to counter inflation. I hope today's introduction helps everyone better understand the impact of Bitcoin halving! [Accumulated 13/100]
