Halving - what is it?

Halving is the process of recalculating the number of coins in the system based on the number that was already mined in the previous period. The principles of halving were laid down initially during the introduction of the Bitcoin cryptocurrency system in order to ensure a fair correlation of the value of digital coins, taking into account exclusively commercial reasons for price fluctuations.

The essence of halving

Halvings are cyclical processes that occur every 4 years or when 210 thousand mined coins are reached. This is how inflation is reduced. According to the standard halving scheme conceived by the founder of the Bitcoin ecosystem, there is a 2-fold reduction in the miners' reward for the mined block during halving. At the same time, the cost of the coin and the complexity of computing processes increase. Such conditions allow adequate production rate control, given that the total number of coins is limited to 21 million units.

Prerequisites for halving

Halving is a natural process that is an important condition for developing the cryptocurrency system. The main reasons for the cyclical decrease in rewards and increase in the value of the digital coin itself:

  • complete decentralization of the system, due to which not a single government institution influences the value of crypto money;
  • limited coins available.

The last point is worth considering separately. The point is that miners could mine new blocks much faster if there were no regular increases in mining difficulty, reductions in rewards, and increases in the cost of the digital coin. As a result, the proportions of supply and demand would shift, negatively affecting the cost of crypto money. At the same time, miners could manipulate the number of coins and hold them, which would ultimately affect the price increase and provoke a crisis in the entire ecosystem.

That is why halving occurs every 4 years, and sometimes a little earlier or later, depending on the actual speed of miners' production of new blocks. You can learn about the next date through special services that display information about the current number of mined coins and the current cost.