What is the Bitcoin Halving?

Published on: Jul 20, 2023 1:22:00 PM
Bitcoin, the pioneering cryptocurrency, has a unique event known as the "Bitcoin Halving."  This process, built into the Bitcoin protocol, has a significant impact on the supply of new Bitcoin entering circulation. So, fasten your seatbelts as we embark on a rollercoaster ride to understand what the Bitcoin Halving is all about, why it's a big deal, and how it can rock your crypto investments!

How does it work?
The Bitcoin Halving is a pre-programmed event that occurs approximately every four years. It is designed to reduce the rate at which new Bitcoins are created, ensuring a limited and controlled supply.

The halving works by cutting in half the reward given to miners for successfully mining a new block. The initial reward was 50 Bitcoin, which was halved to 25 in the first halving event, then halved again to 12.5 Bitcoin, and so on. The most recent halving occurred in May 2020, reducing the reward to 6.25 Bitcoins per block.

Halving Rewards 

As the Bitcoin blockchain adds a new block to the ledger about once every 10 minutes, this means that, on average, about 144 transaction blocks are added to the blockchain every day. Because miners are rewarded 6.25 BTC per block, about 900 BTC coins are minted or issued each day.

By reducing the rate at which new Bitcoins are generated, the halving contributes to Bitcoin's scarcity and deflationary nature. This means that there will only ever be 21 million Bitcoins created, and the supply will gradually decrease over time.

Historically, the halving events have had a positive impact on Bitcoin's price due to increased demand and decreased supply as well as market excitement. The next Bitcoin Halving is expected to occur in April 2024.

Why Invest in Crypto, including Bitcoin, Now?
There are a few reasons why you might want to invest in crypto, including Bitcoin, now.
  1. Decreased supply: The halving event will reduce the supply of Bitcoin, which could lead to an increase in price.

  2. Bullish signal: The halving event is often seen as a bullish signal by investors, which could lead to increased demand for Bitcoin.

  3. Historical data: Historical data suggests that the price of Bitcoin has experienced significant upward movements following previous halving events.
However, it's important to remember that the full effects of a halving on Bitcoin's price may not be immediate, and price movements can occur before and after the event as market participants anticipate and react to the event.

Other Cryptocurrencies with Halvings to Look Out For
In addition to Bitcoin, there are a few other cryptocurrencies that undergo halving events. These include:
  • Litecoin (LTC): Litecoin is often referred to as the "silver to Bitcoin's gold." It also undergoes halving events, roughly every four years. The next halving is scheduled for August 2023.
  • Bitcoin Cash (BCH): Bitcoin Cash is a fork of Bitcoin, and it has a halving mechanism similar to Bitcoin's. The next halving is anticipated for around April 2024.
  • If you're interested in investing in crypto, it's important to do your research and understand the risks involved. 

Are you ready to explore the exciting world of crypto?
EasyCrypto makes it easy to get started. You can buy Bitcoin individually or through the equally weighted (ECE10). 

And if you already have an EasyEquities account, you can activate your EasyCrypto wallet in just a few clicks.

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Sources – EasyResearch

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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an employee of EasyEquities an authorised FSP (FSP no 22588) as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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