What is Bitcoin Halving?

Cointral Marketing Manager
What is Bitcoin Halving?

Bitcoin Halving is one of the most important features of Bitcoin and is the halving of the mining reward every four years. This process, also called “Bitcoin Block Reward Halving”, can be defined as a Bitcoin supply that will be continuously reduced and hit zero in the period of 120 years.

To date, Bitcoin halving has occurred twice and the third Block Reward Halving is expected to take place in the middle of 2020. For Bitcoin, which produces one block every 10 minutes, such a process is easily predictable. Following the creation of the Bitcoin blocks, the awards began at the level of 50 BTC. After 210,000 blocks were mined, the prize amount was halved.

It will continue to divide after every 210,000 blocks. This system is called “halving”. In early Bitcoin transactions, 50 BTCs were rewarded. The first halving operation took place in November 2012 and 25 BTC was rewarded after the blocks were created.

When 420000th block was formed in 2016, there was once again a halving and 12.5 BTC was given as a reward. By the middle of 2020, the Bitcoin Block Reward Halving will take place once again. The amount of the reward for Bitcoin blocks created after that day will be 6.25 BTC.

Does Bitcoin Block Reward Halving Affect the Value?

When we look back, we can observe that Bitcoin’s value has shown an upward trend during Bitcoin Halving periods. Both the 2012 and 2016 halving prove this. It is likely for it to enter an upward trend in the halving of 2020, although not certain.

Another issue is the increasing difficulty of mining after Bitcoin block reward halving.

Imagine that a large slice of Bitcoin mining power in the network suddenly stops mining; the production of new blocks will slow down considerably. Therefore, processing speeds in the network may decrease. If such a slowdown had occurred, the BTC price would draw in a negative direction, as the transfer of values ​​would halt.

Another situation that will be caused by this event is that users attempt to sell their BTCs. Due to this atmosphere, Bitcoin could lose its value rapidly.

Those who think that the network will be blocked after the halving due to such scenarios are mistaken. Due to the impact of the halving process on the price and the halving of the mining prize, it was thought that it will create a negative atmosphere. This has never happened. Miners continued their mining activities after the halving and there was no decrease in their capacities.

Investment information, comments and recommendations contained herein are not included in the scope of investment advisory. Therefore, making an investment decision based solely on the information and comments contained herein may not produce results that are in line with your expectations.