The Bitcoin halving, How it works, and its significance

In brief :

A Bitcoin halving event is when the reward for mining Bitcoin transactions is cut in half.
Bitcoin’s inflation rate is also reduced as a result of its price increasing after each halving
The final halving will be in 2140 when the number of bitcoins in existence will reach the maximum supply of 21 million.

What is the Bitcoin Halving (Halvening)?

Bitcoin halving is when the reward for mining new blocks is halved or cut in half, meaning miners receive 50% fewer bitcoins for verifying transactions. This event is scheduled to occur once every 210,000 blocks – roughly every four years – until the maximum supply of 21 million bitcoins has been generated by the network.

The halving policy was written into Bitcoin’s mining algorithm to counteract inflation by maintaining scarcity

Brief history

As of August 2022, there have only been three previous Bitcoin halving events.

The first halving took place on Nov. 28, 2012,

New BTC Per Block Before: 50 BTC per block
New BTC Per Block After 25 BTC per block
Price on Halving Day: $12.35

The second halving occurred on July 9, 2016,

New BTC Per Block Before: 25 BTC per block
New BTC Per Block After: 12.5 BTC per block
Price on Halving Day: $650.63

The most recent halving, in May 2020

New BTC Per Block Before: 12.5 BTC per block
New BTC Per Block After: 6.25 BTC per block
Price on Halving Day: $8821.42

There will only ever be 32-bitcoin halving events. Once all of these have occurred, there will be no more halvings and there will also be no more Bitcoin created as the maximum supply will have been reached.

Bitcoin halvings will occur every 210,000 blocks until around 2140 when all 21 million coins will have been mined.

What’s significant about the halving?

By writing a total supply and halving event into the Bitcoin code, the monetary system of Bitcoin becomes practically impossible to change This ensures that the coins will be issued at a steady pace, following a predictable decaying rate. Bitcoin’s inflation rate is also reduced as a result of its price increasing after each halving,