by Wieke Beenen
The so-called ‘bitcoin halving’ was completed in the night from Friday to Saturday. This halving takes place once every four years and aims to counteract bitcoin inflation by making the currency scarcer. During the halving, rewards for creating a new bitcoin (also known as mining) are reduced. This has a slowing effect on the rate at which new bitcoins enter the market. It makes the cryptocurrency scarcer, which drives up the price.
Miners play a crucial role in the Bitcoin network. They use powerful computers to solve complex mathematical problems, adding new transactions to the blockchain, which is like a global ledger for Bitcoin.
Miners are rewarded in two ways: through transaction fees paid by users for faster transactions and through mining rewards, which are newly created bitcoins. Currently, miners receive 6.25 bitcoins for their work, worth around $437,500. After the latest halving, which occurred between April 18 and April 21, this reward will reduce to 3.125 bitcoins.
This reduction in rewards slows down the rate at which new bitcoins are created, ultimately decreasing the total supply. This scarcity is important because it maintains Bitcoin’s value proposition as digital gold.
In the past, halvings have led to a significant increase in the currency’s value. Cryptocurrency investors were therefore looking forward to the fourth halving.
One bitcoin is now worth about $64.800. The value of the cryptocurrency has more than doubled in the past six months.
The current halving is not exprected to affect the price of bitcoin in the short term, but many investors are expecting big gains in the months ahead. These expectations are based on the cryptocurrency’s performance after previous halvings in 2012, 2016 and 2020.
Currently, 19.6 million bitcoins have been mined. Ultimately, there should be a total of 21 million bitcoins on the market. This sets the digital currency apart from fiat money like the euro, which can be printed in unlimited quantities.
#blockchain #crypto, #decentralized, #distributed, #ledger