What is Bitcoin Halving in the cryptocurrency world?
The latest bitcoin halving happened on 11 May 2020. Before beginning with bitcoin halving, one must be familiar with the network for bitcoin operation.
You might have heard about blockchain technology in the bitcoin world. Blockchain comprises nodes, designed to run the software for bitcoin and computers. Nodes are known to comprise whole or partial transaction history over the network. Node is responsible for a transaction’s rejection or approval status in the network. For this purpose, the node performs different checks to avoid any invalid transactions and keep the valid ones. In simple words, a node ensures that a bitcoin transaction holds valid or correct parameters like nonces and stays within the acceptable length.
Once the nodes present in the bitcoin operating network approves a transaction, it continues only after that. In the next stage, the approved transaction comes over the blockchain network and is broadcast in front of other BTC nodes. Blockchain acts as a transaction record with a pseudonymous identity. In other words, blockchain content is easily viewable by anyone, but there’s no way to catch out to the parties involved in transactions. Since blockchain is a secured technology that employs encrypted content over the transactions, even if someone is not present on the BTC network either a miner or node, then also they can see the bitcoin transactions through Official Site 2021 live using “block explorers.”
Some facts to know:
- The latest halving was performed at 3 pm EST on 11 May 2020.
- Bitcoin halving is an event that occurred when the mining reward is divided into a half portion.
- The inflation rate related to bitcoin also cuts down in half along with the rate of bitcoin (new ones) within the halving period.
- The old bitcoin halving met with “boom and bust” correlation cycles that concluded leaving a high price than the earlier one.
With the addition of more nodes and computers, it raises blockchain security and stability. More than 10,000 BTC nodes exist at present that keeps the bitcoin code operation going on. Any individual can become a part of the network acting as a node until they hold storage space to install blockchain and transactions history.
In the process of bitcoin mining, people rely on using different computers and take part in the blockchain network, acting as a processor. In the bitcoin network, the “Proof of Work” system is used. It means that all the miners need to give proof that their efforts helped to process bitcoin transactions to receive rewards. In this effort, one can reveal the energy and time consumed for running the hardware and reaching a mathematical algorithm solution.
Computers with fast operating speed combined with hardware lead to higher rewards. Many companies released “computer chips” that helps in easing mining activity. All such computers had a specific task of bitcoin transaction processing and received rewards in turn.
Mining term is not referred to in a literal tone but like a reference one. It shows the reference to the gathering of imported metals. Miners find solutions to complex mathematical equations and maintain a transaction’s legitimacy. After this, transactions are shifted towards a “block” and blocks are used to form chains, resulting in “blockchain.” After transactions gather in a block, miners who were indulging in processing transactions with a confirmation receive bitcoin as a reward.
After about 210,000 bitcoin blocks are mined, or within 4-year, bitcoin miners receive a reward for transaction processing that cuts down in half portion. As a result, it cuts the rate of bitcoins (new ones) that come into the circulation phase. It is a method used in Bitcoin as an inflation form of synthetic nature that experiences a halving period every 4-year.
It will go on similarly till 2140. After reaching that phase, bitcoin miners will enjoy rewards combined with charges for BTC transactions that all the users of the bitcoin network have to pay. This charge maintains the authority to miners for holding mining incentives and continuing the network flow.
Halving plays a significant role in bitcoin since it leaves a drop in the dwindling supply of finite bitcoins. The maximum bitcoin supply exists as 21 million in total. On writing time, around 18,361,438 bitcoins were present in the circulation stage, with 2,638,562 in the waiting line to get released through mining rewards.