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Saturday, May 18, 2024

What is the halving? What Will The Next One Do for Bitcoin?

Key Takeaways:

  • The Bitcoin halving is a pre-programmed event that occurs approximately every four years, or more precisely, every 210,000 blocks.
  • The upcoming halving, set to take place on April 19th, 2024, will see the block reward drop from 6.25 Bitcoins to 3.125 Bitcoins per block.
  • During Bitcoin’s history, the halving has happened three times since its inception in 2009.

Bitcoin’s Halving on April 19th

As the world of cryptocurrency eagerly awaits the upcoming Bitcoin halving, set to occur in approximately a little over 24 hours, it is important to understand the significance and its potential impact on the future of digital currencies. With Bitcoin’s current price sitting at an impressive $63,400 USD, the halving is expected to bring about significant changes to the blockchain, miners, and the overall use case of Bitcoin.

Bitcoin 1-Minute Price Data 4/18/2024

The Bitcoin halving is a pre-programmed event that occurs approximately every four years, or more precisely, every 210,000 blocks. During the halving, the block reward is reduced by 50%, effectively decreasing the rate at which new Bitcoins are introduced into circulation. The upcoming halving, set to take place on April 19th, 2024, will see the block reward drop from 6.25 Bitcoins to 3.125 Bitcoins per block. This reduction in the supply of new Bitcoins is designed to mimic the scarcity of precious metals like gold, and it plays a crucial role in maintaining the value and stability of the cryptocurrency. 

During Bitcoin’s history, the halving has happened three times since its inception in 2009. In 2024, this will mark the fourth halving since Bitcoin’s inception. In order to show how significant the Bitcoin halving is take a look at the price during the last three halvings:

Source: https://www.coindesk.com/learn/bitcoin-halving-explained/

Crazy right? But why does this happen? Essentially, the bitcoin halving fights inflationary measures. This is what differentiates Bitcoin from the U.S. dollar where the value of your dollar will decrease over time, the value of a bitcoin is expected to increase over time as supply becomes scarce and demand increases. However, it’s not perfect. There is an issue of Bitcoin being extremely volatile, most likely due to the lack of liquidity.

Other countries have also experimented with using Bitcoin as a cryptocurrency. El Salvador is one of the major countries that has accepted Bitcoin as a means of payment. You can read more about it here.

What will the next Bitcoin Halving do for Bitcoin? Supply will decrease/slow and demand is likely to be around the same. Bitcoin would likely increase over the long term as time goes on.

What Are The Core Fundamentals of Bitcoin?

Now let’s go over what the blockchain is. At the core of Bitcoin lies the blockchain, a decentralized and unchangeable ledger that records all transactions across the network. The blockchain is composed of a series of blocks, each containing a set of verified transactions. These blocks are linked together chronologically, forming a chain that stretches back to the very first block, known as the genesis block. The blockchain is maintained by a global network of computers, or nodes, that work together to validate and record transactions, ensuring the integrity and security of the system.

The process of adding new blocks to the blockchain is called mining, and it is carried out by specialized computers known as miners. These miners compete to solve complex mathematical problems, a process known as proof-of-work, in order to validate transactions and create new blocks. As a reward for their efforts, miners receive a certain number of newly minted Bitcoins, known as the block reward. Currently, the block reward stands at 6.25 Bitcoins per block, but this is set to change with the upcoming halving. Instead of receiving 6.25 Bitcoins per block miners will now receive 3.125 Bitcoins per block.

Cryptography and New Technology

One of the key features of Bitcoin is its use of advanced cryptography to secure transactions and protect user privacy. Each Bitcoin transaction is signed using a private key, which is a unique string of characters that proves ownership of the associated Bitcoin address. This private key is used to generate a public key, which serves as the address to which Bitcoins can be sent. The use of cryptography ensures that transactions cannot be altered or reversed, providing a high level of security and trust in the system.

Since its inception, Bitcoin has been touted as a revolutionary technology with the potential to disrupt traditional financial systems. Its decentralized nature, combined with its ability to facilitate fast, low-cost, and borderless transactions, has made it an attractive alternative to fiat currencies. Bitcoin has found use cases in various industries, from online payments and remittances to serving as a store of value and a hedge against inflation. As more businesses and individuals adopt Bitcoin, its use case continues to expand, solidifying its position as a legitimate and valuable asset.

Bitcoin’s White Paper in 2009

No discussion of Bitcoin would be complete without mentioning the visionary white paper submitted by its creator, Satoshi Nakamoto. Published in 2008, the white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” laid the foundation for the world’s first decentralized digital currency. In the paper, Nakamoto outlined the core concepts behind Bitcoin, including the blockchain, proof-of-work, and the incentive structure for miners. The white paper also addressed the double-spending problem, a critical issue in digital currencies, and proposed a solution through the use of a timestamp server and a consensus mechanism.

With the reduction in the block reward, miners will face new challenges, but the scarcity created by the halving is expected to drive up the value of Bitcoin in the long run. The vision outlined in Satoshi Nakamoto’s white paper has become a reality, and the upcoming halving shows the potential of using Bitcoin as a currency.

Lazarus
Lazarushttps://ljlnews.com
Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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