Bitcoin halving is one of the most anticipated events of the year 2024. It takes place when the mining reward of Bitcoin is split in half. About four years are required for the blockchain network to open over 210,000 or more blocks. This is a standard set by the creators of the blockchain to incessantly decrease the rate at which it is introduced.
The next halving of the bitcoin is expected to take place in April 2024. At this time, the block reward will decrease to 3.125 BTC.
As of the month of March, over 19.65 million bitcoins were actually in circulation. This left only over 1.35 million bitcoins to be released through mining rewards.
Understanding the Bitcoin network better
The underlying technology of Bitcoin is blockchain. It comprises a network of computers that operate the software of Bitcoin. They contain the full history of transactions held on the network. Every full node of the network comprises of the complete history of transactions on Bitcoin. The node is accountable for assenting or rejecting a transaction in the network of Bitcoin. In order to do that, a check is conducted by the node to make sure that the transaction is actually valid. These checks include making sure that the transaction carries the right validation parameters and more.
Every transaction is approved individually. This takes place only after all the transactions in a block are approved. Once the approval i done, the transaction is then appended to the blockchain and is broadcasted to the other nodes of the network.
The stability and security are increased by increasing the number of nodes (or computers) in the blockchain. Approximately 18,830 nodes were estimated to run the code of Bitcoin on 5th March 2024.
The effects of Bitcoin halving
One important concept behind Bitcoin halving is to cater to the concerns of inflation. Bitcoin Halving is done to counter the effects of inflation on Bitcoin by decreasing the reward amount and sustaining scarcity.
Another effect of bitcoin halving is on the demand. Bitcoin halving decreases the number of new Bitcoins. the demand for the new Bitcoins automatically surges.
Bitcoin halving also impacts the consumers.
Why does Bitcoin halving occur in less than 4 years?
The mining algorithm of Bitcoin is actually designed with the aim of fine new blocks once every 10 minutes. There are a few blocks that take more than 10 minutes as well. Some blocks can even take less than 10 minutes. Now, this can either increase or decrease the time it takes to hit the next halving goal. Therefore, bitcoin halving takes place in less than every four years.
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