Why halfving of Bitcoin happens?

[Crypto123 0]

I want to ask members here why halving of bitcoin happens?
And how long will this happen? I mean the duration between each halving
Why did Satoshi make this division within the Bitcoin configuration algorithm? What's the point and what's the benefit from Halving?

[kyoukage01 3181]

You can read all about the "whys" and "hows" of Bitcoin halving in this article:

https://blockonomi.com/bitcoin-halving/

If you do not want to bother yourself clicking on the link, here is the full article:

Spoiler

What is Bitcoin Halving? Complete Guide to this Mining Change

Every four years or so, bitcoin undergoes an important event known as the “bitcoin halving”. This first happened in 2012, and again in 2016. Likewise, it will happen again sometime in 2020 and 2024. What is the bitcoin halving? What impacts does it have on the economics of bitcoin? In this article, we’re going to go over what the bitcoin halving is, and why it’s so important to bitcoin.

Understanding Bitcoin Mining Rewards

Each day, many untold thousand watts of electricity are committed towards bitcoin mining. People mine bitcoin because they hope to earn bitcoin, which has value and can be bought and sold in various markets.

Without going into too much detail, mining is the process by which the network is secured and transactions are processed. In order to encourage people to mine bitcoin (or other cryptocurrencies that also use proof of work mining), each block contains a reward. That reward is released to the miner that successfully solves the block. This reward needs to be high enough so as to be a strong incentive. But the reward also cannot be too much. A large reward would cause an oversupply and lower the value of the currency.

What is the Bitcoin Halving?

When Satoshi Nakamoto created bitcoin, he wanted to create a system that would be self-sustaining and that would in some ways emulate gold-mining. That being, over time, mining would become more difficult and the rewards collected would slowly reduce so as to control the supply. Specifically, Nakamoto writes:

“The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.”

Nakamoto’s solution to this problem is to institute a bitcoin halving system. Here’s how it works. When bitcoin started, the block reward was a whopping 50 bitcoin every 10 minutes. The bitcoin code includes a statement which says that after every 210,000 blocks (or about four years, given 10 minutes per block) this reward should drop by half. Following the last two bitcoin halvings, the current block reward is now 12.5 bitcoin. In the year 2020, it will be 6.25, and so on.

 

In this way, the bitcoin halving has a number of important effects on the network.

 

First, it extends the life of the reward system. If we were still releasing 50 bitcoin every 10 minutes, then we would reach the maximum supply cap of 21 million bitcoin rather quickly. In fact, mining rewards would cease in about 8 years. Reducing the reward rate over time slowly means that there will be a longer period of time in which mining results in receiving a block reward.

 

Secondly, bitcoin halving helps bitcoin see steady price increases over time. This is because the number of new bitcoin that appear each year will be decreasing. This limited supply causes bitcoin prices to increase, as their scarcity also increases proportionally.

 

Finally, the bitcoin halving increases the cost of mining each individual bitcoin. As the network difficulty increases over time, and the reward rate drops, the actual cost of mining each bitcoin increases, which then causes the trading price of each bitcoin to increase as well.

The Day the Mining Stops

With this in mind, this leads us to a logical question. What happens when the bitcoin reward drops to zero? Will everyone simultaneously stop mining bitcoin, causing the network to come to a complete stop?

 

To address this concern, we have to consider a few different things.

 

First, at the current mining rate and factoring in for future bitcoin halving events, it is estimated that the final block containing bitcoin will be mined sometime in the year 2140. Considering that the network started operation in 2009, this means that the network will have a total of about 130 years before this event occurs. By that time, the economic conditions of cryptocurrency could be so fundamentally different that the need for a block reward may not even exist.

 

The second thing to consider is that bitcoin miners have a secondary source of income aside from the block reward. Specifically, miners also earned transaction fees. Each day, many hundreds or even thousands of bitcoin are paid in transaction fees (depending on network conditions). So by the time 2140 rolls around, it is entirely possible that mining purely for transaction fees could be profitable enough for miners to continue mining indefinitely, regardless of their being no block reward anymore. In his widely reviewed white paper, Nakamote describes it like this:

“Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.”

Another point to consider is the release of new projects that plan to coexist alongside the bitcoin blockchain. One example of this is the RSK platform. RSK is a smart contract platform that is intended to run on top of the bitcoin network. It will allow for smart contract and decentralized application execution while making use of the bitcoin blockchain itself. It is intended to be a competitor to Ethereum.

 

One of the selling points of RSK is that miners who choose to participate in processing root stock transactions can do so while at the same time mining bitcoin as normal, with nearly no loss of efficiency. This means that in the distant future, miners could not only earn transaction fees from the bitcoin network itself, but they could also potentially earn transaction fees from these additional layer networks that may exist on top of the bitcoin network, such as RSK.

Conclusion

With all that in mind, let’s go over what the bitcoin halving really means for bitcoin. First and foremost, it’s a means of controlling the amount of new bitcoin that hits the markets each day. It’s intended as a way to prevent hyperinflation from ever occurring.

 

If we look at countries that experienced hyperinflation, one thing that often happened is the rampant and uncontrolled printing of new money. Each time a country prints more money, it is reducing the value of each individual of currency already in circulation. The bitcoin halving makes sure that not only will the rampant production of new but coins never happen, but in fact, it is mathematically required that the reverse should occur.

 

The bitcoin halving was also intended to emulate gold-mining, as gold-mining inevitably becomes more expensive and difficult over time, as more and more of the Earth’s gold reserves are mined out. Not only does it get more expensive, but less than mask new gold enters the gold marketplace each year. This is led to a predictable and steady rise in gold prices over the last century.

 

Since the launch of bitcoin, many other altcoins Liberland proof-of-work mining have their own implementations of bitcoin halving. For example, Vertcoin recently underwent its own halving event, as did Ethereum Classic, which dropped its reward from 5 to 4. While other cryptocurrencies like Ethereum don’t have quite the same model of supply reduction, they do employ their own methods of ensuring that the amount of new tokens hitting the market each year is slowly on the decline.

 

Finally, the bitcoin halving keeps bitcoin prices steadily moving upward over long periods of time. If it were not for the bitcoin halving, bitcoin today might only be worth 50 or hundred dollars each instead of the thousands that it’s worth now.

That article covers most of the aspects of the Bitcoin halving. There are quite a lot more of them from the Web where they came from. Enjoy reading.

 

[TimopheyKa 3900]

The great collapse of bitcoin begins, it looks like 2020 will be quite historic in the history of bitcoin, and I think it will be time to buy it under the hold for several years. I think it will be very promising. In General, in connection with what is the fall of bitcoin, it is quite strange, perhaps it is the emergence of new currencies and other things in the crypto market, from the same China

[setifien 1016]

Halving happens every time that 210000 blocks are found  (in average it takes around 4 years) and this is the explanation : a block is mined every 6 hours, 6*24*365*4 = 210000.

why this happens : let me quote the answer of Vitalik Buterin who said : "The main reason why this is done is to keep inflation under control"

 

[Slavish 74]

Probably due to the fact that most people now bottom them. Thus reducing their value.
 

[AL SHAIMON 1293]

Bitcoin is a very good project. Satoshi made it with a algorithm. Which has been use for mining bitcoin. This algorithm is too hard to break. There is no halving in this algorithm. Please clear your topic.   

[jawadtahmid 16]

Very interesting topic. As im very new in this crypto thing i dont have much knowledge about this situation but one thing i can say that this is time we should invest or buy coins for future if we have enough lazy money for it 

[Sumayya 493]

The benefits of halving is to make the price to be stable and not to keep falling. He designed the algorithm for mining so that supply will not be too much

[Agios 1763]

Bitcoin Halving - An event where the reward block is reduced by half, which occurs every 210,000 blocks. Bitcoin Halving will occur when half of the supply of coins is already in circulation. Bitcoin Halving will be repeated again when half of the remaining supply of coins is in circulation. Bitcoin Halving will occur every 4 years, the first in 2012 and the upcoming 2020.

[Crypto123 0]

Thank you for all these responses that were helpful and your interaction with the topic, but I read an article mentioned their are disagreement for the Halving of Bitcoin and the main dispute is "block size", there are two teams differ in opinion One team sees the need to increase the size of the block and other team with reducing the size of the block.

[yifnt 666]

I think halving bitcoin is there to keep inflation in the market, by reducing the amount of bitcoin for miners. Now making bitcoin down and right to buy

[Thekingcallme 1975]

This is in order to regulate Bitcoin and rehabilitate it to become stronger and increase its price, which is a correction by bitcoin in order to go for the better

[Crypto123 0]

 

On 11/23/2019 at 12:15 PM, yifnt said:

I think halving bitcoin is there to keep inflation in the market, by reducing the amount of bitcoin for miners. Now making bitcoin down and right to buy

 

6 minutes ago, Thekingcallme said:

This is in order to regulate Bitcoin and rehabilitate it to become stronger and increase its price, which is a correction by bitcoin in order to go for the better

 

5 minutes ago, laska smrtici said:

This is done in order to raise the price of bitcoin in order to maintain its value and does not deteriorate or be controlled by whales

Yes, tank you all, I think that this view is really true. Satoshi was very smart and economical expert because he knows that increasing the amount of anything will reduce the price, and therefore make this mandatory every four years to reduce the amount of bitcoin extracted and thus maintains the price of bitcoin by reducing the amount. What a genius man.

[Gusion 321]

I don't really know why the halving occurs but all I know is that it gives us benefit by occuring a bull run. With the coins getting split, the prices could go up and we can earn a lot from it.

[Crypto123 0]

On 12/5/2019 at 7:44 PM, Chy944 said:

Halfving of Bitcoin will not happen because the price is very low .but I can say that it will not go to that extend and rather it will increase within the beginning of this year.

My dear, halving is not optional but it is mandatory, this is found in the basis of bitcoin in the equation or algorithm set by Satoshi himself, no one can change that and says I do not want to make a halving now, this is inevitable to happen and happens every four years according to what was set by Satoshi and no one can Stop it. We do not discuss whether or not it will happen. We are discussing why it happens or what is the benefit of it happening.

[zhaazure27 524]

On 11/20/2019 at 9:22 PM, Sameer25 said:

I dont know about this subject because its a new matter to me hope to leanrn about it in upcoming days and will b able to ans it propelry

What is the purpose of half the Bitcoin happening? I just heard, understand I am a layman and do not know much about Bitcoin and others. I only know the basics and how to get started.

[Emma 611]

I also heard about the upcoming bitcoin halving will happen in 2020. But i really do not know any thing about it but i think the price will rise after it.

[Crypto123 0]

5 minutes ago, zhaazure27 said:

What is the purpose of half the Bitcoin happening? I just heard, understand I am a layman and do not know much about Bitcoin and others. I only know the basics and how to get started.

 

1 minute ago, Emma said:

I also heard about the upcoming bitcoin halving will happen in 2020. But i really do not know any thing about it but i think the price will rise after it.

Satoshi has determined the Bitcoin Halving Equation every four years or at every 210000 Bitcoin blocks. what does that mean? Bitcoin comes mainly from mining and from the rewards miners get, Satoshi and his extraordinary intelligence. Think that if the reward remains large, the amount of bitcoin will increase in the world and thus its value will decrease and its price will be higher. The market is not affected by the price, but the opposite increases the price, and this is called halving. 

To fully understand this, you can read the following article:
https://99bitcoins.com/bitcoin-mining/halving/

[zhaazure27 524]

7 minutes ago, Crypto123 said:

 

Satoshi has determined the Bitcoin Halving Equation every four years or at every 210000 Bitcoin blocks. what does that mean? Bitcoin comes mainly from mining and from the rewards miners get, Satoshi and his extraordinary intelligence. Think that if the reward remains large, the amount of bitcoin will increase in the world and thus its value will decrease and its price will be higher. The market is not affected by the price, but the opposite increases the price, and this is called halving. 

To fully understand this, you can read the following article:
https://99bitcoins.com/bitcoin-mining/halving/

Wow I just found out about this, thank you for the information. Maybe I need to read in more detail this very important information to increase my knowledge.

[CryptoMaxim 3829]

On 20.11.2019 at 15:42, Crypto123 said:

I want to ask members here why halving of bitcoin happens?
And how long will this happen? I mean the duration between each halving
Why did Satoshi make this division within the Bitcoin configuration algorithm? What's the point and what's the benefit from Halving?

I don't know exactly why halving did it. But as a result of halving, bitcoin will be mined more than without halving. Perhaps there are other reasons. Maybe the price increase depends on it.

[akmal1984 103]

I think to increase the value of bitcoin itself. Because he has the amount of supply. In the early days there was a lot of bitcoin that we could get per block. However, over time bitcoin has become more popular and has begun to be used by many people around the world. Maybe this is a vision that can be seen by a satoshi nakamoto first when he created the blockchain and bitcoin. So he made a reward system every 4 years would be reduced to maintain the value of the bitcoin

[Crypto123 0]

2 minutes ago, akmal1984 said:

I think to increase the value of bitcoin itself. Because he has the amount of supply. In the early days there was a lot of bitcoin that we could get per block. However, over time bitcoin has become more popular and has begun to be used by many people around the world. Maybe this is a vision that can be seen by a satoshi nakamoto first when he created the blockchain and bitcoin. So he made a reward system every 4 years would be reduced to maintain the value of the bitcoin

Yes, thank you, this is the correct answer, I think, and your analysis is very good. Satoshi was a very brilliant genius and a economical brilliant to think about this careful thinking and calculate the future and put an answer for every possibility. Indeed, he is a wonderful man who made a real revolution.

[akmal1984 103]

1 hour ago, Crypto123 said:

Yes, thank you, this is the correct answer, I think, and your analysis is very good. Satoshi was a very brilliant genius and a economical brilliant to think about this careful thinking and calculate the future and put an answer for every possibility. Indeed, he is a wonderful man who made a real revolution.

That is why bitcoin and crypto have been phenomenal until now. Because they are made by people who are so visionary. We are all very lucky people to be in the crypto community.

[Jimmy 437]

Why it happens? I think satoshi original idea and satoshi design it to keep bitcoin inflation on the good way and under control for all community and bitcoin block halving happens every 4 years if i'm not wrong. That's so far i know and halving it's really affecting the price as we know from previous halving.

[Benjamin 84]

To be honest i didn't know the halving, i just know on that is just helping the bitcoin to increased its price, can someone tells the real answer by tgis topic to know the other members what is the purpose of that.