2min video discussing Bitcoin halving https://youtu.be/yI4SZHSFTRE
One cannot escape to have noticed that this week something called Bitcoin halving has happened. We have had a number of readers asking what does this mean?
The theory is that by reducing the number of tokens being created it will counter the impact of inflationary pressures. Thus every 210,000 ‘blocks’, or roughly every four years, the number of Bitcoins (BTC) that are paid to a miner for a Block on the Bitcoin network is halved. So now the block reward is reduced to 6.25 BTC from 12.5 BTC which will mean that the amount of new BTCs that are created each day will fall to 900 from 1,800. Therefore, BTC miner’s total income will, assuming the current BTC price of $8600, fall from $15 million to $8 million each day.
Melem Demirors of CoinShares, believes: “That the past two halving’s cannot be compared to the current one because a robust derivatives market has been established. As a result, Bitcoin as an asset is decoupled from the supply-demand economy”.
There have been 18.3 million BTC mined so far, the intention is that total of 21 million BTC will be finally created by 8th October 2140. Time will tell what the impact of halving will have on BTCs price, but it does once again remind us of the level of detail that went in to creating Bitcoin in the first place.
Therefore, in very simplistic terms:
Assuming the demand for Bitcoin remains the same, the theory is that by reducing the number of Bitcoins being issued every day, the price of Bitcoin will be supported. Furthermore, by halving the number of Bitcoins that are given to a miner, this means it will take longer for the maximum number (21 million) of Bitcoins to be reached.