Bitcoin Halving: The Term, Features And Date Of The Next One
Halving is a natural process of limiting coins issue, that has written in the white paper bitcoin since the launch of the cryptocurrency. It was first used in the bitcoin network. It consists in a periodic decrease in half of the reward of the miners for mined bitcoin block in the network.
This distinguishes the project from many altcoins, among which as usual practice the so-called "coin burn".
An alternative process is to periodically buy part of the tokens from holders or to allocate for this purpose a part of their own profit, the destruction of tokens, a reduction in their number in circulation and an automatic increase in the value of coins.
The price of the token against the background of the artificial deficit is growing, relying on a simple economic truth:
"Decrease in supply raises demand, and after that the asset price grows."
How Does Halving Work?
Halving is very simple process. In the bitcoin code the figure 21 is sacral. The cryptocurrency emission, as we already mentioned, is limited at the level of 21 million coins. Each 210 thousand blocks in the network is halving.
To calculate the approximate date of the next event, knowing when the previous halving was, is very simple. With the existing activity on the network, each block is added to the blockchain approximately every 10 minutes. That means that 210 thousand blocks require 35 thousand hours. Thus, each subsequent hatching bitcoin is carried out on 1459 days from the previous one. And this is about 4 years old.
Due to halving, a number of problems are being solved that prevent the currency from growing and developing. Because of unlimited emissions (the ability to always print more fiat money), they are exposed to inflation, which becomes stronger with a decrease in the stability of the economic situation in the country. Due to strictly limited emission and regulation with the help of halving, the cryptocurrency can't die, as a fiat money.
Advantages And Disadvantages
The halving on a global scale has only benefits. This is a guarantee of the absence of inflation, a long life of the digital currency and a great investment potential.
And although halving is one of the main factors influencing the growth of bitcoin in the long run, in turn for miners is a source of constant stress associated with a sharp increase in the cost of cryptocurrency mining.
It is very simple to monitor this process:
- At the existing hash and expenses on energy income of each miner is cut by half.
- To reach the previous level miner need to invest in hardware and increase energy consumption.
As usual, miners choose the second way and modernize the farms. On the one hand, this benefits the bitcoin network, but on the other hand it is a threat of greater centralization.
Already now, due to a constant reduction in reward, small-scale miners can not compete with mining pools. It is not surprising, if in the future there will be several large mining centres in the world that can dictate their "will" to the community. This can result in huge commissions and long delays in transactions.
- The first halving was on November 28, 2012 (from 50 to 25 BTC).
- The second halving was on July 9, 2016 (from 25 to 12.5 BTC).
- The third halving will near on May 28, 2020. The miners reward will decrease to 6.25 bitcoin.
At the moment, 105690 blocks or 1 321 183 bitcoins were left before halving. The total reward at the rate of 7622 dollars per coin is 10 billion dollars.
The reward is worthy, and if the cryptocurrency is more expensive, then the total profit will increase.