Bitcoin Halving

ELI5 - What is the Bitcoin halving and why does it impact the price of Bitcoin?

The Bitcoin halving, a design implemented by its creator Satoshi Nakamoto, controls the influx of new Bitcoin by halving the block reward every 4 years or 250,000 blocks on the Blockchain. This method aims to cap Bitcoin's total supply at 21 million, mirroring gold's scarcity to avoid inflation and motivate miners to maintain network security via transaction fees rather than just block rewards. Here's how it works: Miners solve a complex puzzle to add a block to the Blockchain, earning Bitcoin as a reward. Initially set at 50 Bitcoins per block, this reward halves every 210,000 blocks. Starting in 2012, it reduced to 25, in 2016 to 12.5, and in 2020 to 6.25 Bitcoins. This halving continues until all 21 million Bitcoins are mined, a process autonomously governed by Bitcoin's source code without external interference.

By Alex 8 months ago