Bitcoin halving is a popular term when the block rewards for a miner start amounting to exactly half of the current block reward.
What is a block reward? A block is a collection of all of the transactions that are yet to be written on the blockchain. A block needs to be verified and cryptographically secured by solving cryptographic puzzles and submitting the proof of work to the Bitcoin network. People and organizations with modern equipment and high hash power are competing with one another to verify the block before it gets written on the blockchain. For maintaining the integrity of blockchain and securing the Bitcoin network, they are awarded with what is called a block reward.
As you can see from the diagram above, the block reward for each block mined used to be a whopping 50 bitcoin when bitcoin was starting to gain some steam. However, to maintain scarcity, Satoshi Nakamoto envisioned the concept of block halvening. The block reward is halved after 210,000 blocks have been mined, adjusting the difficulty of mining. This process usually takes around four years. The last halving happened in July 2016 and the next bitcoin halving is expected to take place in May 2020.
Bitcoinblockhalf.com is doing a countdown for bitcoin halving and all the metrics associated with it.
Bitcoin halving dates
When bitcoin first started gaining mainstream traction, the block reward was 50 BTC. However, it has suffered two halvings and the current reward stands at 12.5 BTC. After the next halving, the block reward will be reduced to 6.25 BTC.
The dates when the bitcoin halving happened were:
- November 28, 2012
- July 9, 2016
This way, the number of bitcoin will reach 21 million by the year 2140 and when all the bitcoin has been mined, bitcoin will transition from a mining economy to a minted economy.
If you want to follow the progress of the bitcoin halving, you can use the Binance Academy bitcoin halving countdown.
What does the halving mean for the bitcoin economy?
Usually, the bitcoin community gets hyped when the halving is near because if past trends are taken into account, it usually signals a bull run. In the last two bitcoin halvings, pre-halving uptrends have been observed for almost a year before the halving even starts.
Soon after the first halving, the price of bitcoin skyrocketed by almost 8000%. These bull runs, however, cannot go on forever. After this bull run, the market endured a bearish year following December 2013.
The study of charts shows that the pre-halving uptrends started this time around nine months prior to the halving. This time, the halving triggered the bull run which took bitcoin to its all-time high overseeing an almost 2,800% increase in its price in 1.5 years.
If the past signs are to be acknowledged, we may be in for a bull run but many credible sources claim history may not repeat itself. CoinDesk recently reported that bitcoin’s third halving may not be as fruitful for its price hike like the last two times. Doing your own research and analyzing the market sentiment is the best way to go if you are looking to invest in bitcoin before the halving.
What does the next bitcoin halving mean for the miners?
Since the miner’s reward would be cut in half, the competition will be fierce. Marco Streng from Genesis Mining, one of the leading mining hardware manufacturers, believes that less hardware in circulation will serve the industry well in the long run.
“We are going towards a really heavy industry with much longer life cycles of the machines.”
Streng strongly believes the imminent halving will wipe out individual small miners, who amount to almost 20% in today’s mining market. Though it might be a tragic end to independent miners, mining will become more industry-level and help reduce volatility, says Alexander Gavnik, co-founder of mining software company Uminers.
“The market is moving towards the industrial mining, and there won’t be hype like it used to be anymore. There are significantly less crypto enthusiasts on the market now.”
The next bitcoin halving will surely have many things to unravel. What are your thoughts? If you want to buy bitcoin before the halving, visit paxful.com.