Bitcoin halving is an event built into the Bitcoin protocol that happens every four years. During this event, miners' rewards for validating transactions and protecting the Bitcoin network are half. This significantly slows the rate at which new bitcoins are generated.
When Bitcoin was launched in 2009, miners were rewarded with 50 bitcoins for each successfully mined block. In 2012, the first halving event occurred, lowering the prize to 25 bitcoins every block. The second halving occurred in 2016, lowering the payout to 12.5 bitcoins each block. The third halving occurred in May 2020, lowering the reward to 6.25 bitcoins each block.
Halving events serve two purposes :
1. Supply Control : reducing the rate of new bitcoin creation and controlling inflation, which contributes to Bitcoin's value proposition.
2. Predictability : halving events are predictable and built into the Bitcoin protocol, unlike traditional fiat currencies, where central banks can adjust the money supply based on economic conditions.
