One of the most important features of bitcoin is setting a limit for the amount of bitcoin that will be in circulation. The creation of new bitcoins is predictable and transparent for everyone. So what is halving and why is it important? We will explain in detail in the rest of our article.
To explain what the halfway of a bitcoin block means, it is first necessary to talk about how new bitcoins are created. Bitcoin production is limited and a total of 21 million bitcoins will be produced. The amount of circulating bitcoin is predetermined by the bitcoin protocol. All bitcoins are released at a predictable pace via block rewards. The block reward is a bitcoin that miners earn in return for their work.
Miners protect and secure the bitcoin network by adding new transaction-filled blocks to the blockchain, where mainly existing blocks are located. This is a very important task and miners are rewarded for this reason.
The reward per block currently produced is 12.5 bitcoins. The block reward halves about every four years, which is called halving. Bitcoin halving is a very important event for investors because the number of new bitcoins generated by the network decreases. This limits the new bitcoin supply, so if the demand remains strong, prices may go up.