What is Halving BTC?

September 14, 2022

The term halving as its own meaning says is to halve, now what factors do you halve. The rate and reward for mining bitcoin, this event occurs approximately every 4 years and is applied to regulate Bitcoin production and keep the inflation rate as low as possible, making the asset more valuable.

By limiting the miners reward to half, the event generates complexity in the mathematical algorithms for its solution, as well as controls the frequency of creating new Bitcoin.

What is mining?

Mining is a process involving network validators who use powerful computers to solve complex mathematical problems and in turn verify transactions. A transaction is added as a new block to the blockchain after verification.

What is Proof-of-Work (PoW)?

The mechanism used to secure the network and prevent the system from being burst and is known as Proof-of-Work.

How does Proof-of-Work (PoW) work?

This protocol works on the concept of requiring a job from the client, which is then verified by the network.

These operations are then verified by the network. Once they are approved, the client is given access to use the network resources. This is to prevent malicious clients from consuming all the resources in an uncontrolled manner. A situation that can end up denying the service provided to the rest of the network�s clients.

How does the PoW protocol work?

The client or node establishes a connection to the network. At this point, the network assigns it a computationally expensive task. This task must be solved in order to receive an economic incentive.

The solving of the puzzle begins. This involves the use of a lot of computing power to solve the given riddle. This process is called mining.

Once the computational task is solved, the client shares it with the network for verification. At this point, it is quickly verified that the task meets the requirements. If it does, access to the network resources is provided. If it does not, access is denied and the submitted solution to the problem is rejected. It is at this point that the double-spending protection checks are performed. A protection that prevents a task already assigned and verified by the network from being submitted more than once.

With the confirmation that the task has been completed, the client accesses the network resources. Thanks to this, he receives a profit for the computational work performed.

The blocks of a blockchain contain the record of all transactions that have taken place in that network. Thus, as transactions on the network increase, more blocks are added to the block chain.

The miner is rewarded with newly minted Bitcoins as compensation for their effort in validating a transaction, which tells us that they are always competing for the solution to the problem, the greater the computational resource the greater the chance of being the first validator.

Halving BTC stories.

Although we already mentioned that it happens every almost four years it is not entirely true since this change actually occurs every time 210,000 Blocks are created in the network.

The total number of halving in the Bitcoin algorithm will be 33, once this point is reached the mining or compensation for each block will be equal to 0 and the amount of bitcoin to be created is 21,000,000 BTC, after that, the only reward for the miners will be the commissions for the transactions included in the block.

In the beginning the reward for adding new blocks to the network was 50 BTC.

The person who mined the first block was the creator of the coin known as Satoshi Nakamoto and it was mined on January 3, 2009 until that time.

the currency had no value in the market was after 2011 where the price exceeded 1 dollar.

Bitcoin Halving 2012.

The first halving occurred on November 28, 2012. At first, it had no appreciable effect on the Bitcoin price. However, in early 2013, ending up above $1,100. Finally, in October 2015, 9 months, it began to grow again.

The miner�s compensation to 25 BTC.

Bitcoin Halving 2016

The second halving took place on July 9, 2016. The uptrend soon continued and became exponential growth. This growth peaked on December 17, 2017, the price reached an all-time high as high as $19,800. After this, a long downtrend was established with a low price of $3,276 on December 17, 2018.

The miner�s compensation at 12.5 BTC.

Bitcoin 2020 Halving.

The third halving, which occurred on May 11, 2020, like the previous Bitcoin halving, did not trigger an immediate price increase. But by April 14, 2021, BTC had hit new highs, soaring to $64,507.

miner compensation to 6.25 BTC.

They represent important data of the event, amount of BTC created per day before each halving and the price at the beginning,100 days and per year.

Although the miner�s compensation drops by half with each halving, it is still attractive to those who carry this practice, as the same cut runs the inflation equilibrium in the market making the coin gain value, that value still represents an attractive profit and above investment.

Positive points of Halving BTC?

-Limit the frequency with which the decentralized asset is released.

-Decrease the inflation rate of the asset.

-Maintains long-term value.

-Increases the difficulty of algorithms by increasing the layer of security in the network.

-By reducing the amount of BTC in circulation, the increasing demand drives the price of the asset up.

-This process somehow generates security in investors.

There are many factors to be able to compare each of the halving executed to date, however, after a while the value of the BTC tends to skyrocket.

In particular, the algorithm is a mathematical structure well designed for the project and with economic bases that allow the stability of this asset.