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Bitcoin halving is approaching in a few days. Here is why you should know about this major crypto event.
Bitcoin halving, a term that resonates well with cryptocurrency enthusiasts and traders, is a tailwind event in the world of digital assets. But what exactly is it, and why should you care? With the next Bitcoin halving approaching soon (expected in mid-April), let’s explore the intricacies of this digital phenomenon and its profound implications on the crypto market and beyond.
What is Bitcoin Halving?
Bitcoin, often regarded as the digital gold, operates on a decentralised network without the control of any central authority or government. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, established two fundamental concepts for the Bitcoin protocol:
- It has a limited supply of 21 million Bitcoins.
- The concept of Bitcoin halving.
The halving is a pre-programmed event designed to occur approximately every four years or after every 210,000 blocks are mined. During this event, the reward that miners receive for validating transactions, more commonly known as the “block reward” is halved. This means a 50% reduction on the rate at which new Bitcoin will enter the supply circulation.
This phenomenon will continue until the supply of Bitcoin is fully exhausted, which based on assumptions could be around the year 2140. So far, the crypto industry has gone through 3 Bitcoin Halving events, in Nov 2012 where rewards reduced from 50 Bitcoins per block to 25, then to 12.5 Bitcoins in July 2016 and then finally to 6.25 Bitcoins in the last one in May 2020.
Why Is It Important?
The rationale behind Bitcoin halving is rooted in it’s underlying protocol, which aims to mimic the scarcity of finite resources like gold. By reducing the rate at which new Bitcoins are created, halving events contribute to the asset’s deflationary nature, making it increasingly scarce over time.
This scarcity model not only enhances Bitcoin’s store of value proposition but also serves to maintain its price stability and prevent inflationary…
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