The Bitcoin halving It is an anticipated event for both cryptocurrency fans and those who invest in them. We see the term halving more and more frequently, accompanied by the fact that it affects the price of Bitcoin and consequently other cryptocurrencies.
But do we know exactly what the Bitcoin halving is? What’s its purpose? What is its impact on the price of Bitcoin? From Buenbit they analyzed the phenomenon and give clues about what may come in the crypto market.
Before talking about the halving itself, it is important to talk about a protagonist of the crypto ecosystem, “The miner”. A miner in the crypto world is a person or entity that uses their computing power to carry out the mining process. This process involves the validation of transactions and their incorporation into the blockchain, which is the public and distributed registry where all the operations of a cryptocurrency are stored.
To explain the concept of “computing power” It is like a computer that solves mathematical calculations. The stronger it is, the more calculations it can solve in less time, leading to greater profit. When a miner solves an algorithm, it proposes a new block of transactions to be added to the blockchain. As a reward for their work, the miner receives a set amount of the cryptocurrency, in addition to the transaction fees associated with the transactions included in the new block.
The mining process is also what introduces new units of the cryptocurrency into circulation, in a process that resembles real-world precious metal mining, hence the term “mining.” This reward mechanism incentivizes miners to contribute their computing power to the network, helping to keep it secure and operational.
Bitcoin: what is halving
Returning to the halving, this event that occurs approximately every four years on the Bitcoin network, It consists of the reduction by half of the reward that miners receive for mining and validating the transactions that occur in the blockchain, they say from Buenbit.
It is designed for control the supply of Bitcoin and maintain its value over time. By halving the amount of new Bitcoins createdlowers inflation and guarantees the scarcity of this cryptocurrency. This mechanism has similar characteristics to the effect of mining precious metals such as gold, where the amount of gold mined and added to the market decreases over time, which can contribute to the appreciation of the value of gold.
The halving has a dual purpose: Ensure Bitcoin’s longevity by limiting its total to 21 million and reduce supply inflation. This policy of decreasing supply is critical to maintaining the value of Bitcoin over time, potentially driving its price to new all-time highs in the context of growing demand.
With the incorporation of Bitcoin ETFs, a new avenue for investing in cryptocurrencies has been opened, especially for institutional investors. This has expanded investment possibilities and added to the halving is expected to have a significant impact on its price to levels never seen before.
It is worth remembering that the last Bitcoin will be mined near the year 2,140. This time horizon underscores the long-term vision behind Bitcoin: a currency designed not only for the present but for future generations.
The Bitcoin halving is more than a technical event; is a reminder of the innovation and audacity behind the first cryptocurrency. As we move towards the 2024 halving, it is clear that Bitcoin remains a disruptive force in the financial world, with the potential to redefine value and economics in the digital age.
Source: Ambito
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