Here is an anthology of information to shine during the Bitcoin halving party.
Why are there Halvings?
Halvings halve the number of bitcoins paid to miners as rewards for each block of transactions. They are the originator of the absolutely finite money supply of bitcoin.
The famous limit of 21 million, or more precisely 20,999,999.9769 (due to non-spendable bitcoins), is made possible by Halvings. The bitcoin code predicts that there will be 33 in total. The very last one will take place at block number 6,930,000, in the year 2140.
From this block, it will be mathematically impossible to cut the reward. The reason being that each block will only yield one satoshi which happens to be the smallest amount of bitcoin that can exist (1 satoshi = 0.00000001 bitcoin).
As a reminder, half of the 21 million bitcoins were created before the first Halving. Then another 25% over the next 210,000 blocks. And another 12.5% during the third epoch.
Here is the evolution of the rewards per block:
-Halving of November 28, 2012: From 50 to 25 BTC
-Halving of July 9, 2016: From 25 to 12.5 BTC
-Halving of May 11, 2020: From 12.5 to 6.25 BTC
-Halving of April 19, 2024: From 6.25 to 3.125 BTC
Bitcoin will now be twice as difficult to create as gold, whose inflation rate is 1.4%, compared to 0.8% for bitcoin:
Halving = NGU (Number Goes Up)
Historically, halvings have been accompanied by significant increases in the price of bitcoin. Here is its evolution during previous editions:
Halving #1 (November 2012)
The price of BTC was around $12 on the day. A year later, it reached $1,100, an increase of almost 10,000%.
Halving #2 (July 2016)
Bitcoin was trading at nearly $670. In December 2017, we were approaching $20,000, an increase of almost 3,000%.
Halving #3 (May 2020)
The BTC price was hovering around $9,500. A year and a half later, it reached $69,000, jumping 725%.
The bullish impact of Halvings can only diminish over time. The reason being that the supply of bitcoins via miners is becoming more and more trivial compared to the volumes traded.
In fact, almost 30,000 bitcoins change hands every day as Halving reduces the daily supply by just 450 bitcoins.
But it's not nothing. Imagine that a group of billionaires decides to buy 450 bitcoins every day with a promise to never sell them. The impact is the same.
After a year, the bitcoins not mined due to halving will virtually represent $12 billion (at current prices). This is as much money as ETFs have absorbed since January 11 with a 60% increase in bitcoin as a result.
The 5th Bitcoin Halving
The next Halving is scheduled for April 2028. The block reward will then increase from 3,125 BTC to 1.5625 BTC.
To tell the truth, the event will probably take place a little earlier. The explanation is that blocks are mined faster as the number of miners increases.
Mining bitcoins is an inherently probabilistic activity. Blocks are not mined exactly every 10 minutes. Some are found in seconds, others require more than an hour. But on average, and taking into account that the difficulty is adjusted every 2016 blocks, there is one block every 10 minutes.
In other words, the perpetual increase in the number of miners and technological advances in ASICs mean that blocks are on average found in less than 10 minutes. The next halving will therefore probably take place in March 2028.
And after 2140?
All 21 million bitcoins will be mined by 2140. Halvings will continue until the block reward is 1 satoshi (0.000000001 BTC).
After this date, miners will have to make do with transaction fees which, by the way, still represented around 5% of miners' income in March.
That said, a good portion of these charges come from the slow DoS attack that has been hitting the network for over a year now. In question, the famous “registrations” backed by shitcoin casinos and other NFT scams.
Don’t miss our two articles on this subject:
-Bitcoin hit by DDoS attack
-Bitcoin Core Devs under fire
Skeptics doubt whether transaction fees can maintain a sufficient level of security. But while this concern cannot be dismissed out of hand, the continued growth of Bitcoin demonstrates that it is entirely possible.
Currently, over 19.5 million BTC have already been mined, leaving less than 1.5 million available for the bitcoin “security budget”.
This is why the “big blockers” were wrong across the board. Blocks must remain small for transaction fees to one day replace rewards. Not to mention the rebound effect…
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