Bitcoin Block Reward Halving

 

Bitcoin Block Reward Halving Image

1. What is Block half event?

As part of Bitcoin’s coin issuance, miners are rewarded with a certain amount of Bitcoin every block they are created (approximately every 10 minutes). When Bitcoin first started, miners were given 50 Bitcoin per block in compensation. For every 210,000 blocks mined (approximately every four years), the block compensation is halved, and it continues to be halved until the block compensation per block is zero (approximately 2140). For now, the block compensation is 6.25 Coin per block, which is halved and then reduced to 3.125 Coin per block.

2. What’s the reason for this?

Bitcoin is designed as a deflationary currency. Like gold, the premise of Bitcoin is that its issuance decreases over time, making it more scarce over time. Bitcoin can be used as a hedge against inflation, as Bitcoin becomes scarce and demand increases over time, forcing its price to rise in line with the price balance. On the other hand, the fiat currency (ex.US dollar) expands over time as the amount of money increases, reducing its purchasing power. This is called the debasement of the currency’s debasement caused by inflation.
As a simple example, comparing house prices decades ago shows that bitcoin has increased over time.

3. predictable money supply

Since we all know the amount of bitcoin issued over time, people can rely on programmed supply. This helps us understand what the current inflation rate of bitcoin is, what the future inflation rate is at a certain point in time, how much bitcoin is in circulation, and how many bitcoins remain to be mined.

4. Who controls the issuance of Bitcoin?

The network itself controls the issuance of bitcoin, which is derived by consensus among all bitcoin participants. Since bitcoin was first designed, the following consensus rules exist to this day. These are:

 

4-1. 21,000,000 Bitcoin to be produced

10-minute block spacing goal

 

4-2. Half-life that occurs every 210,000 blocks (approximately every 4 years)

Block rewards that continue to block all half events starting at 50 and ending at zero (until approximately 2140)
To change these parameters, all Bitcoin participants must agree to approve the change.

 

4-3. Past half-life date

 

On November 28, 2012 (UTC), the first half-life occurred at a block height of 210,000.
On July 9, 2016 (UTC), a second half-life occurred at a block height of 420,000.
A third half-life occurred on May 11, 2020 (UTC) block height of 630,000.

 

 

5. Half the price performance of the past

What Bitcoin will do in pricing for half-life is always up for debate. Some people think half-life is already priced in the market, so there’s no expectation that the price will do anything.
On the other hand, others believe that if demand for Bitcoin is the same or higher than before the halving event, the price should rise due to its half-life.

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