Halving: Everything you need to know

Preamble

Halving is an extremely important property of Bitcoin, the first decentralized digital asset. It arouses misunderstanding and questioning for many people. One of its important properties is called the “Halving”. This is a major event that occurs on average every four years. In this article, we will explore this key Bitcoin phenomenon in detail for readers curious to learn more. Whether you are a novice or an insider, whether you already have some knowledge of Bitcoin or not, we will guide you through the ins and outs of the “Halving”.

Understand the halving

The halving is part of the very foundations of Bitcoin, it is of paramount importance to its adoption curve as well as to maintaining its market value. The halving is a small piece of computer code that is inserted into the source code of the Bitcoin program. It specifies that for every 210,000 new blocks added to the chain, the reward obtained by miners will be halved. Since a new block is added to the chain, on average, every ten minutes, we find ourselves celebrating this event more or less every four years.

History of previous halvings

At the very origin of the "Timechain", the Bitcoin block chain, each miner who had the privilege of adding a block received a generous reward of 50 bitcoins (I'll let you count how many dollars that can represent at the rate of changes at the time). It should be noted that at that time, Bitcoin was only known to a handful of individuals (including Hal Finney ). No price had yet been set for the value of a bitcoin and there was a good chance that the network would fail, malfunction, or simply be abandoned as a failed experiment.

One thing led to another, block by block, the “Timechain” expanded. Thus, on November 28, 2012 , it reached the count of the first 210,000 mined blocks, thus triggering the first halving. After the small piece of computer code was applied, miners now received 25 bitcoins per block, rather than 50. Subsequently, Bitcoin became much more popular, attracting speculators and visionaries.

Several miners joined in and the future of Bitcoin seemed to be taking shape. Many realized that it was possible for this network to become robust enough to survive the times. 210,000 blocks later, on July 9, 2016, the second halving took place, once again decreasing the rate at which new bitcoins are issued. This time, the reward has increased from 25 bitcoins to 12.5 bitcoins for each new block. Recently, on May 11, 2020 , we were able to witness the third halving. It took place on May 11, 2020 and set the reward per block mined at 6.25 units.

What does the future hold for us?

Unlike central banks around the world, Bitcoin's monetary policy is stable, predictable, and boring. The number of units in circulation will never exceed 21 million. The reward given to miners will be halved for every 210,000 blocks. These are two characteristics of Bitcoin that are fundamental and form a solid foundation for its value proposition.

The fourth halving

Given the high predictability of Bitcoin monetary policy, it is fair to assume that the next halving will take place between March and May 2024. Many are having fun speculating on the monetary aspect of this event. It is true that the halving coincides almost flawlessly with significant price movements for Bitcoin, but there is no guarantee that this correlation will continue in the future. However, it must be admitted that this scarcity which is accentuated in all four will indeed have a role in the value if the use of the network continues to increase.

“Tic Toc Next Block” as they say in the industry.

In conclusion

Whether the Bitcoin protocol takes off or fails, one must recognize the beauty behind the execution of its code. To help us visualize the magic that happens, a team of programmers built the Bitfeed tool. It allows you to see, in real time, the transactions arriving on the network and being included in the creation of blocks. We can literally see the “Timechain” come to life before our eyes. I invite you to consult it in order to satisfy your curiosity.