Bitcoin halving is one of the most crucial aspects to know about, whether you want to buy, sell, trade or even hodle crypto. As a crypto enthusiast there are several aspects that you need to explore and be familiar with. Knowing as many details as possible can help you get a better understanding of the crypto space.
This is a brief guide that sheds light on all the major aspects of the halving concept. It is important for all BTC enthusiasts to know what it is, how it affects the price of the crypto king and when is the next Bitcoin halving going to occur.
The complexities behind the flagship crypto asset can be understood to some extent by understanding the details mentioned below regarding BTC halving.
What is Meant by Bitcoin Halving?
As the term suggests, BTC halving is when the future supply of the crypto king is cut into half. It happens after every four years.
This process greatly benefits the flagship digital asset. Since the future BTC supply keeps getting cut in half, the total supply of new BTC continues to fall. This keeps the crypto asset from inflation and ensures that its price and value keeps surging.
New Bitcoin or any other cryptocurrency is created by the process of mining and people who create new digital coins are called miners.
Total BTC to be Mined
Bitcoin was created by Satoshi Nakatomo who declared that the total number of BTC that should always remain in circulation is 21 million. This means that the number of total BTC mined in the crypto market can never exceed 21 million.
This is one of the reasons why Bitcoin halving is set to occur after every four year, to maintain the number of BTC available and to keep its value and price afloat.
According to this calculation, approximately 900 Bitcoin are generated every day and after the next Bitcoin halving, this number will reduce to 450 BTC per day.
Impact of Halving on the Miners
Since BTC halving is related to the total supply of the crypto king in the market, it most certainly affects the miners. The miners are awarded new Bitcoin when they validate a transaction on the BTC network. When halving occurs the total number of new BTC awarded to the miners are reduced in half.
In other words, the new BTC that is created as a result of the transaction validation drops. Which means the supply also drops while the demand for Bitcoin keeps increasing.
What are the Mechanics of BTC Halving?
There are countdowns that mark when the next Bitcoin halving will occur. One moves little faster than the other because a new block is added after every 10 minutes. However, the block time changes on a daily basis. The estimated time on the countdown changes when the block time also changes.
When is the Next Halving Due?
As mentioned above, Bitcoin halving occurs after every four years. However, since a new block is added after every 10 minutes, the ETA can shift a little up or down.
Therefore, a more accurate way to estimate the next halving is after every 210,000 blocks.
According to this estimation, the first halving process occurred in 2012, which was four years after BTC was created. The block reward was reduced from 50 BTC to 25.
The second halving process occurred in 2016 and the block reward was further reduced to half, amounting to 12.5 BTC per block.
The third BTC halving occurred in 2020, which reduced the block reward to 6.25 BTC per block.
Now, the next Bitcoin halving is estimated to occur in 2024. Which will cut the reward down to 3.125 BTC per block.
This halving process will continue until the inflation for Bitcoin is 0% in the market.
Can you Take Advantage of BTC Halving?
Buying, selling or trading crypto are all risky ventures, especially for people who do not have sufficient information or experience. However, if you take your time and explore different aspects of the crypto space, you can have a better experience of crypto investing or trading.
Experienced crypto enthusiasts often take advantage of Bitcoin halving. One of the best strategies to do so is to purchase Bitcoin and hodle it. This strategy will enable you to buy BTC and wait for it to go through a price surge after the next Bitcoin halving is completed.
Even though the profits are never guaranteed in a crypto space. The above-mentioned strategy has benefited BTC enthusiasts in the past.
Impact of BTC Halving on General Market
Bitcoin is the crypto king and has approximately 60% dominance on the overall crypto space. Therefore, BTC’s price movement greatly affects the altcoins. When the price of Bitcoin drops, investors withdraw their funds from altcoins and invest in BTC in anticipation of a price surge which occurs after Bitcoin halving occurs.