Bitcoin is one of the most popular cryptocurrencies out there. The concept of cryptocurrency was introduced a few years ago. Since then it has only increased in popularity. People nowadays are more aware of the benefits associated with bitcoins and therefore, they are investing in it. Despite that, it is not yet accepted by the society completely. A large portion of society is still left to accept the use of bitcoins in their daily lives.
Speaking of bitcoins, in this guide, we will tell you what is bitcoin halving and everything else related to it. If you are looking for Bitcoin halving FAQ, then you are in the right place.
What is Bitcoin halving?
Bitcoin is different from fiat currency. They have a finite number of coins that will be ever released in the market. Currently, around 18 million coins out of 21 million coins are released in the market.
As the reward for bitcoins gets reduced, the number of bitcoins released is also reduced. This happens every 4 years and is called bitcoin halving.
Many of you may see this as a negative thing, but this is needed to prevent inflation in the cryptocurrency market. The amount is reduced to half after every 21000 blocks are mined.
The first bitcoin halving took place in 2012. At that time, the reward was reduced to 25 bitcoins/block. Now that we are in 2020, we can expect another bitcoin halving to take place.
How bitcoin halving affects the price?
For those who don’t know Bitcoin halving is a very big thing. But strangely, it doesn’t have any effect on the price of bitcoins.
Bitcoin has a market of its own and it is hard to predict. Even the most knowledgeable investors cannot predict the bitcoin market. They make use of logic to study the changes in the market. By checking its history, they can arrive at conclusions.
When the reward of bitcoin is reduced, it means that the earnings will be reduced to half as well. By half, we mean that there is a 50% drop. This is enough for companies to throw out of business. But thanks to the crypto market because they have always been very generous to the miners and others related. They increase the price and this helps them to cover up for their losses.
This means, as the reward is reduced, the price is increased to balance the whole thing.
Bitcoin halving is an interesting concept. One should learn more about it before they start mining or investing in bitcoin. The next bitcoin halving is expected to happen in 2020. For those interested, they should keep a check on it.