The halving affects the issuance of bitcoin, whose supply is limited to 21 million coins. The next halving will be in April 2024 and is usually a bullish event for Bitcoin. The introduction of new coins into circulation is an increasingly slow process
The Bitcoin halving is a key concept that concerns the functioning of the cryptocurrency itself (and that has an impact on the market). It is likely that this word has sounded more strongly lately, since it is an event that occurs every four years and the next halving will take place very soon.
What It Is and When Exactly the Bitcoin Halving Will Happen
Before delving into this concept, it is necessary to know some of the basic fundamentals of bitcoin. Bitcoin is a cash and electronic money system between two peers and the cryptocurrency on which it is based. This means that blockchain technology, with which everything works, allows money to be exchanged between two people immediately (as when someone pays with bills or distributes coins) and electronically. That is, face-to-face and intermediaries in the transmission of cash are eliminated thanks to this technology.
Bitcoin is at the center of everything, as it is the cryptocurrency used in this system (the system itself is also called bitcoin). The supply of this ‘crypto’ is limited and there will only be 21 million bitcoins in total. That is, currency cannot be minted at will, as a central bank could do, since there is a limit. Since Satoshi Nakamoto created all of this in 2008, more than 19.6 million bitcoins have already been issued and are in circulation, as of this writing. The minting of cryptocurrency is a technological, automated and progressive process. It has its own times and rules.
Blockchain is the technology that makes this system work and on which the creation of new bitcoins also depends. The blockchain is a kind of public and unalterable database, in which all transactions are recorded. As its name indicates, it is made up of blocks. These are created little by little, thanks to the miners who participate in their validation. A block is created every ten minutes.
Each block is mined every ten minutes, that does not change. Therefore, 144 blocks are mined every day and 210,000 blocks take 1,458.3 days or 3.99 years to create. Therefore, this event is quadrennial and, this year, it will occur in mid-April. For the next one people will have to wait until 2028.
Why the Bitcoin Halving Is Important
The bitcoin halving controls the amount of cryptocurrencies that can circulate freely in the market. The issuance is slowing down and, therefore, the number of bitcoins that are created and released is decreasing over time.
The halving is conceived as a bullish event for the market, since the supply of bitcoin is limited to 21 million and the 1,335 million that currently remain to be mined will take a long time to wait and their release will be increasingly slower.
The first halving occurred in 2012, when bitcoin was worth around $25. A year later, its price rose to $1,003, a revaluation of more than 8,000%. The halvings of 2016 and 2020 represented, 12 months later, gains of 284% and 423%, according to data from CoinLedger. Their calculations project a 420% rise for bitcoin after this same event occurs in April, which would lead the crypto to exceed $360,000 (taking $69,000 as a starting point).
By Audy Castaneda
