What is a halving?
A halving, also known as a halving, is an event that occurs every 210,000 blocks (approximately every 4 years) for the Bitcoin (BTC) blockchain. During a halving, the BTC reward awarded when mining each block is divided by 2.
The main goal of this halving is to keep inflation under control by reducing the amount of bitcoins that are created over time. This event being periodic and known, it is in no way random.
Historically, halvings have also had a positive impact on the price of #Bitcoin , as they reduce the supply of new BTC available on the market.
What are the consequences of a halving on Bitcoin?
The first consequence of a halving is quantitative. Half as many new BTCs arrive on the market every 10 minutes.
In theory, halving triggers a chain reaction that goes like this:
The BTC reward when mining a new block is divided by 2;
BTC inflation halved;
The new available offer is reduced;
Demand for BTC is growing*;
The price of BTC increases*;
The incentive for miners is maintained even if they receive 2 times less BTC for them, because the price of Bitcoin increases*.
*Please note, this is a scenario that has played out in the past, but this in no way indicates that future halvings will bring the same fate to Bitcoin. Macroeconomic events taking place in parallel with a halving could completely cancel the positive impact on the price of Bitcoin
Conclusion on halving
The next Bitcoin halving will take place on April 20, 2024 according to estimates.
This major event for the cryptocurrency industry is causing a lot of discussion and many are trying to project the Bitcoin price trend in the months before and after this event.
