Understanding Bitcoin Halving

Over 100 million people around the world actively use crypto exchanges. Bitcoin is the leading cryptocurrency across many of these exchanges. Bitcoin Halving is one of the most anticipated events in the crypto trading world for some important reasons. In this post, we are going to explain Bitcoin Halving and its effects across the crypto world.

What is Bitcoin Halving?

Bitcoin Halving is an important event that involves cutting the rewards for mining bitcoin in half. On top of that, this occurrence cuts the rate at that bitcoins enter circulation. It also halves the Bitcoin rate of inflation.

Bitcoin Halving is always a promising event. For instance, the previous Halvings resulted in high Bitcoin services. The last Bitcoin halving event took place on May 11, 2020. And a  6.25 BTC reward emanated from it.

How Does Bitcoin Halving Work?

Bitcoin is created through a rigorous mining process that relies on high-powered computer systems. Usually, miners are tasked with solving cryptographic puzzles. The puzzles not only verify but also validate the legitimacy of the resulting transactions in the Bitcoin ledger.

The Bitcoin ledger is commonly referred to as the blockchain. Bitcoin miners receive newly created bitcoins as a reward for their efforts.

Bitcoin mining is a competitive exercise. Miners compete to add new blocks to the Bitcoin blockchain. For instance, if you are a Bitcoin miner, you get a defined number of bitcoins for each block you add. You can check out here to understand more.

The original programmers of the Bitcoin infrastructure designed the system to halve Bitcoin once in a while. Bitcoin Halving happens after every four years. According to Bitcoin experts, after miners create 21 million bitcoins, no more coins will be possible and the process will be brought to a halt.

Why Does Bitcoin Halving Occur?

The identity of the person who created Bitcoin remains a mystery. However, he intended to build a currency that would shake off inflation once in a while. Hence, Bitcoin halving was conceived. Also, this individual wanted the purchasing power of Bitcoin to keep rising.

Implications of Bitcoin Halving

Bitcoin Halving undoubtedly decreases the mining rewards. As a result, the process of creating a new bitcoin becomes extremely expensive. As a result, a single bitcoins value increases even more. This makes Bitcoin more formidable than the fiat currency, which continues to lose its purchasing power over time.

However, experts continue to debate whether Bitcoin Halving beats inflation. Some argue that if it was legal to use Bitcoin to pay for products and services, then it could be deflationary. Currently, the value that Bitcoin has comes from the respect of its users. But from the normal economy of the fiat currency, it is still not a major player. Hence, Bitcoin users can say it is under-appreciated.

Other rumors say that Bitcoin’s creator had a different intention. Some believe Bitcoin halving was an event created to attract more people to mine Bitcoin after the unveiling of this cryptocurrency.

Nonetheless, these are unproven theories. The fact is that Bitcoin Halving continues to make it the most formidable crypto. On top of that, it is a proven mechanism that has a good record in protecting Bitcoin against inflation. As the trends show, it will remain so, unless an unprecedented change occurs in the future.

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