Bitcoin Halving 2024 – What is it and How it works

Bitcoin halving 2024:

Bitcoin halving happens once every 210,000 blocks in the bitcoin network, which approximately occurs every four years. A single bitcoin block forms every 10 minutes, approximately. The transaction that occurred during the time period will be queued and added to the blockchain based on the gas fee. Each block of the blockchain contains a transaction, timestamp, sender and receiver address, hash of the previous block, and the nonce. Nonce is a modifiable number that will be adjusted to match the targeted hash requirements set by the bitcoin algorithm. Miners who close the block by validating the transactions in it will receive a mining reward.

Bitcoin halving 2024 reduces the rewards released every 10 minutes to their half amount, from 6.25 bitcoin to 3.125 bitcoin in April. This creates a shortage in supply if the demand for bitcoin increases. This will result in a price spike. To understand the concept more, let’s get into the basics of blockchain, mining, and rewards.

What is Blockchain:

Blockchain is a technology to secure data; once stored in blockchain, it can’t be changed and becomes immutable. This data can be anything, but data with a smaller storage volume is feasible to store in the blockchain due to gas fees.

Blockchain is a decentralized platform, and all its data is stored and governed by a digitally distributed ledger. The new transaction data is added to the blockchain once it is validated by the nodes. The nodes are the supercomputers run by miners in order to get rewards. The nodes contain the entire transaction of the blockchain from its genesis block. Though any computer could become a node, in order to become a bitcoin node, your computer should have the storage capacity to store the entire transactions that have happened in bitcoin till now.

What the block Contains:

The block contains transaction information, timestamp, nonce, the sender and receiver addresses, and the hash of the previous block. Likewise, the current block hash will be linked to the next block.

This way, tampering with one block needs to change the data in every block that has formed in the bitcoin network till now, which is practically impossible.

Bitcoin Mining:

Mining, as the name suggests, is a process in which new bitcoin enters circulation as a reward for the miners. Miners play an important role in validating crypto transactions and the formation of new blocks.

Based on the Bitcoin algorithm, the rewards will be halved every 210,000 blocks. Starting in 2009, 50 bitcoins are the block rewards, followed by 25 bitcoins in 2012 and 12.5 bitcoins in 2016. In 2020, the rewards even halved to 6.25 bitcoins. In April 2024, the rewards are going to be halved to 3.125 bitcoins. The rewards decrease consecutively every four years, and in 2140, with the rewards of 0.00000001 BTC and a maximum supply of 21 million bitcoins, there won’t be any more bitcoins to be mined.

Nonce plays a major role in bitcoin mining. Nonce is a 4-byte random number that will be adjusted to all possible values to match the hash prerequisites set by the algorithms.

How bitcoin halving influence crypto market:

Bitcoin price is determined by supply and demand. Since the supply is limited, halving reduces the release of new crypto. There might be an increase in the bitcoin price if the demand remains the same.

Past four halvings prove that halving causes an increase in the bitcoin price six months after the halving and before the halving, as the price rise is anticipated and there will be a fear of missing out.

Since the price is determined by many factors, we cannot predict the price increment in bitcoin.

Bitcoin halving impact on the Individual miners:

The miners received the block rewards and the transactional fee paid by the sender. The bitcoin halving reduces the rewards by half, which resulted in a significant reduction in the miners profit. This resulted in the big entities taking over the smaller ones.

The bottom line:

In the past, bitcoin mining had resulted in a price increase after 365 days of halving. But we can’t be assured about the price, as it is determined by many global factors.

This blog is only for informational purpose and should not be considered as an investment advice. This blog is not a suggestion to buy any cryptocurrency.

Please note that the cryptocurrency market is highly volatile, and you might lose all your investment. We are not accountable for any of your losses. The entire content above is purely for information.