The Bitcoin Halving
When? April 19, 2024
Why? To guard against inflation
What?!? Let’s explain…
Bitcoin is created by mining. Instead of using a shovel to dig in the dirt for gold, computers on the Bitcoin network verify and process Bitcoin transactions, in exchange for a payment in Bitcoin.
This serves two main functions:
1. Maintaining a verified record (or ledger) of all Bitcoin transactions ever made.
2. Keeping the network stable by ensuring that each and every Bitcoin transaction occurs with real Bitcoin (not fake or hacked coins).
The first Bitcoin block was mined on January 3, 2009, resulting in a payment to that miner of 50 Bitcoins. Today there are over 19.65 million Bitcoins. (A "block" is basically a unit of data that serves as a permanent record of the history of all the individual Bitcoins in existence. Send some bitcoin from one person to another and that gets recorded in the next block, forming a chain of blocks, or "blockchain.")
Right now, roughly 900 Bitcoins are mined daily. However, on April 19, 2024, that number will drop to about 450, effectively cutting the block reward in half, or “the halving.” Furthermore, the amount of Bitcoins mined every day will be reduced by half every 4 years until there are no more halvings, set to happen around the year 2140.
Technically speaking, there is a Bitcoin reward paid to miners for processing a block - aka “the block reward.” The block reward was 50 back in 2009, and every 4 years the Bitcoin code reduces the block size in half until the block reward is zero, at which time the network will reach it's final capacity - only 21 million total Bitcoins. Then miners will get paid transaction fees to secure the network and process transactions. A list of prior block rewards is below.
Bitcoin (btc) Block Reward history:
2009 = 50btc
2012 = 25btc
2016 = 12.5btc
2020 = 6.25btc
*2024 = 3.125btc
So what does this really mean?
Put simply, the Bitcoin supply is fixed to guard against inflation, and certainly can’t be modified or diluted to grow larger (unlike many government currencies that can be expanded infinitely). Satoshi purposely made the Bitcoin supply finite. So if more people want Bitcoin in the future, and it's a fact that the number of Bitcoin addresses do keep increasing, the only way to get it might be to pay more.
In Summary
The next Halving will be on April 19, 2024. Check the exact date here.
Bitcoin adoption is underway. (Wallet addresses keep going up, and the U.S. approved public trading for Bitcoin Exchange Traded Funds, with record volume of inflows.)
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Stay tuned in Q2 for updates on how to open your own self custody wallet with My Uncle Satoshi!