Hey guys!
I hope you are all well. Here, we are closely monitoring the market, which currently Bitcoin is around 30K (on 04/16/23), and we are already making a profit in some operations.
Today, we are going to give you a brief explanation of what the BTC halving is.
First of all, as we talk to many people who are starting out in the world of financial markets, let's give a brief background.
To explain the Bitcoin halving, it is important to understand what Bitcoin is.
What is Bitcoin?
Bitcoin is a decentralized cryptocurrency that uses blockchain technology to record and verify transactions. Unlike traditional currencies, Bitcoin is not issued by a central bank or government authority. Instead, it is created through a process called mining.
What is Bitcoin mining?
Bitcoin mining is the process by which new Bitcoin units are created. Miners use powerful computers to solve complex mathematical problems and validate transactions on the blockchain. As a reward for their work, miners receive new Bitcoin units. The amount of Bitcoin a miner can receive depends on several factors, including the network hash rate, mining difficulty, and block reward.
halving
The Bitcoin halving is a process that takes place every four years, halving the amount of Bitcoins offered as rewards to miners, until the 21 million Bitcoins available have been mined. This should happen around 2140.
The goal of the halving is to make Bitcoin a scarce resource and resistant to inflation. The Bitcoin protocol is based on two concepts related to scarcity: the amount of Bitcoins is limited to 21 million and the amount of new Bitcoins added to the network is reduced by half every four years, by halving. The reduction in the amount of Bitcoins issued over time increases the probability of an increase in the value of Bitcoin, as long as demand remains stable. Unlike fiat currencies, whose value often declines over time due to inflation, bitcoin is a scarce and valuable asset.
The halving is one of the ways in which the bitcoin protocol maintains this scarcity, which is one of the reasons for the great demand for cryptocurrency.
UNDERSTAND HALVING IN 9 MINUTES! Presented by Felipe Escudero Felipe BitNada
The bitcoin mining process is done electronically by a global network of computers that compete to verify transactions made with this cryptocurrency.
Whoever does the mining receives rewards in bitcoin, and with each halving, the reward for mining bitcoins is halved every 4 years. In 2020, the reward was 12.5 bitcoins every ten minutes, rising to 6.25 bitcoins after the halving. Bitcoin supply prediction is known and verifiable: there will be only 21 million of these cryptocurrencies. At the end of 2020, less than 2.5 million were available for mining. In 2024, the reward will be reduced to around 3,125 bitcoins. And this process will continue until all 21 million bitcoins have been mined.
Scarcity
The exact scarcity of bitcoin is one of the reasons why it is compared to gold, as both are scarce and valuable assets that would resist inflation. However, while the amount of gold still existing on Earth is unknown, bitcoin is finite and its amount is well defined. The bitcoin halving is an important mechanism to ensure the scarcity of the cryptocurrency and make it resistant to inflation. This process will continue until all 21 million bitcoins are mined, at which point, the bitcoin miners' income will only come from transaction fees on the network, rather than earning new bitcoins directly. The halving is one of the reasons why bitcoin is an increasingly popular option for investors looking for a hedge against inflation. Tips for preparing for the halving:
- Stay informed: Follow cryptocurrency market news and be aware of any changes that may affect the price of Bitcoin.
- Diversify your investments: Don't put all your eggs in one basket. It is important to diversify your investments into different cryptocurrencies and other assets.
- Have a risk management strategy: Define your investment objectives and loss limit, and follow your strategy in a disciplined manner.
- Don't invest more than you're willing to lose: The cryptocurrency market is highly volatile and can be risky. Never invest more than you are willing to lose.
I hope these tips help you prepare for the upcoming Bitcoin halving. Remember that success in the cryptocurrency market depends on a disciplined and informed approach.