They are some historic event taking place in the world of cryptocurrency. It made lots of changes in the world of “Bitcoin.” The occurrence is named as “Bitcoin Halving.” To know more about halving, we need to know about Bitcoin Mining first.
What is Bitcoin Mining?
Bitcoin Mining is an essential part of Bitcoin. Mining is a process done by the miners by solving the mathematical algorithm problem. As they keep on solving problems, the chains keep on joining and then form a block. This mining consumes lots of electricity and uses ASIC (Application Specific Integrated Circuit Chip) to solve their problems more comfortable and faster. The Bitcoin network would automatically change the difficulty of the math problems.
As the problems were getting thought, more individual miners were having problem to solve those mathematical problems. That is when the miners started pooled mining. Pool Mining is a combined work done by the miners to work towards a goal. This job is more comfortable and faster. And that is when the miners are rewarded propitiated to the amount of work they have done. After all this process, we get to have Bitcoin Halving.
What is Bitcoin Halving?
This is a pretty simple concept. After the mining is completed, the miners are rewarded with bitcoin blocks. Those rewards are distributed using the two simple rules provided by Santoshi Nakamoto, the Bitcoin founder. The first rule is the supply of Bitcoin is limited and finite to 21million per miners.
The second rule depends upon the law of economics. The rules state when the demand increases, the supply decreases. This rule is known as “The Law of Supply and Demand.” In this case, when the miner reaches 2,10,000 blocks, those attached to the blockchain. The rewards will be decreased by 50%. This is known as Halving, Block Halving.
This rule was created because the miners eventually solve a mathematical problem in every ten minutes. After the hard research, it is found that block is mined every 10minutes, six blocks every hour, and so on. As the mining is done so quickly and thus, there would be no end to the number of bitcoins created.
So, they created bitcoins to lose their value. Eventually, if many bitcoins are circulated, then the cost would surely decrease. Sometimes back, a block had an amount of 50 bitcoins. So, in every 10 minute, the miner used to receive a block for 50bitcoin. Due to the quick solving capacity of the miner, bitcoin had to decrease the value of bitcoin from 50 to 12.5. They have a program featured in BTC, where it cuts the block reward in half ever 2, 10,000 blocks. The 2,10,000 block have already mined after November 2012 and July 2016.
So, the good news would be Bitcoin Halving 2020 will be done this year in May.
