As a BTC enthusiast, you should know about Bitcoin halving before you start buying or trading the flagship crypto asset. This is an important concept to know about as it is a popular term among the crypto traders.
BTC halving does not only have an impact on the crypto king but the overall crypto market as well. Therefore, it is crucial to know what halving is, how it works and other relevant details.
If you are interested in buying or trading Bitcoin then you need to know the following details about halving and also take a look at the timeline for the next Bitcoin halving.
Here is what every Bitcoin enthusiast should know.
Definition of Bitcoin Halving
Halving is a process where the future supply of Bitcoin is reduced to half. As the term suggests, the number of new BTC coins that are in circulation in the market will keep reducing due to this process. However, the demand of the asset will keep increasing. This will keep the flagship digital currency from reaching inflation, which is the purpose of this process.
Even though the supply is kept in check, the price and value keeps increasing.
Impact of Halving on Miners
One of the ways halving impacts the crypto space is by the impact it has on the miners. New digital coins are created through a process called mining. This is a process that digitally adds transactions to the blockchain.
Mining requires high computational power and the people who create new digital coins are called miners. When a transaction is complete and validated by the miners they are awarded newly minted BTC coins.
Now, due to Bitcoin halving, the digital coins awarded to the miners are slashed in half.
Bitcoin was created by Satoshi Nakamoto in 2009 and for some reason he specified that the total number of BTC coins to be kept in circulation will remain 21 million.
How Mining Affects the General Crypto Market?
Bitcoin is the largest cryptocurrency in the world. It is the pioneer of the crypto industry and has a high prominence in the crypto space. It also has more than 60% dominance in the market and greatly impacts the price movement noted for the altcoins.
In other words, if you see any ups and downs in the price movement of Bitcoin, you are highly likely to see a fluctuation in the altcoins as well.
When the price of Bitcoin falls or is in a bullish trend, the altcoins mostly underperform. This is because, a great number of investors prefer to make use of the low price of BTC and therefore, they take their funds out from the altcoins and invest in the crypto king instead.
When the Bitcoin halving process is completed, the price of the flagship crypto asset surges, which is why, a lot of people invest in it before the halving is complete.
Basics of Halving
Before taking a look at the timeline for the next Bitcoin halving, it is important to understand the basics of the process.
There are two countdowns that keep a track of the next BTC halving. One countdown can move faster or slower than the other because a new block is added to a countdown after every 10 minutes. Therefore, even though a common idea is that halving occurs after every 4 years, the up and down movement of the countdown can change this timeline.
Therefore, a more efficient way to get an idea of Bitcoin halving is that it occurs after every 210,000 blocks.
Timeline of the Halving Process
Bitcoin was created in 2009 and at the time the block reward was 50 BTC per block.
In 2012, four years after the creation of the crypto king, the first halving occurred. This not only slashed the total supply of BTC in the market but also reduced the block reward to 25 BTC per block.
The next and second BTC halving occurred in 2016. After it was completed, the block reward was further brought down to 12.5 BTC per block.
The third and next Bitcoin halving took place four years later in 2020, after which the block reward was reduced to 6.25 BTC per block.
Now, according to this timeline, the next and fourth Bitcoin halving is set to take place four years later in 2024. Once it is completed, the block reward will be brought down to 3.125 BTC per block.
Buy and Hold Strategy
Since the price of the crypto king surges after BTC halving, many traders take advantage of this process and make use of the buy and hold strategy to get some profits. According to this strategy, the traders invest in BTC and accumulate and then hold it until after the halving process is complete.