What is Bitcoin Halving and how does it impact the price?

The event which halves the rate where new bitcoins are created. It happens once every four years. As many of you know that the supply of Bitcoin is finite. Whenever 21 million coins are produced, the network will stop creating more. This is the main reason Bitcoin is known as the “Digital Gold” which is just like the yellow metal- and it has a limited amount in this world.

Just now, there is 18 million Bitcoin in circulation that is around 85% of the total cap, but it does not mean that the cryptocurrency is going to reach the limit of the time very soon. The protocol is the reason that has been coded into the blockchain from the beginning. Every 210,000 blocks, it performs the halving event of Bitcoin and creates new coins that become harder.

Just similar to Gold mining, new deposits become more challenging every time. The protocol cuts the reward of the block in half. Thus, every time the having event of Bitcoin happens, and the miners receive 50% less Bitcoin for verification of the transactions.

What is the block reward?

In short – the BTC amount, the miner receives for every new block they add to the blockchain. For the concept explanation, let us go in brief go back to the bitcoin roots – that is blockchain. In simple words, blockchain is the digital ledger which is storing information about the transactions in the blocks that are around 1MB in the size. For example, when the first person sends bitcoin to the second person, the transaction will get stored on the block with the other 500 transactions that occurred at the same time.

The block reward is the cryptocurrency amount that the miners receive when they mine the new block successfully to solve the high complicated mathematical issues with the hardware of mining.

How does the halving event affect the price of Bitcoin?

By using the past events as the yardstick, bitcoin halving event brings the surge in the price of bitcoin, but all in all, the ratio of supply and demand plays the most important role to find out what becomes the price. Taking the consideration of supply and demand, after the having event successfully, the asset scarcity will raise. Today, there can be a rise in its price, there is the highest demand for the asset.

The industry has shown the raising in activity in all the things that are related to cryptocurrency for the last four years. Bitcoin has seen media timing and has become the most essential part of

the various sectors. As the halving event is approaching, it is assumed that many people will be taking the chances with the resources by hopes of cashing out very huge. So what happens to the price of bitcoin? By considering past halving events to happen again, then we may see the mad rush by traders to buy the asset to be part of the rising price of bitcoin. These actions trigger the rising demand for the asset of cryptocurrency which leads to the rising of the price.

Historical bitcoin halving dates

First Bitcoin halving is in 2012, where the reward per block dropped from 50 to 25 bitcoins. Following this, another halving occurred in 2016, where the reward per block dropped from 25 to 12.5 bitcoins and next in 2020 where the reward per block dropped from 12.5 to 6.25 bitcoins.

The amount of bitcoin mined and the block reward drops by half at every halving event. By 2032, over 99% of bitcoin will have been mined and it is estimated to take up until 2140 until 100% of the total bitcoin is mined