Author Topic: What Is Bitcoin Halving: Procedure And Predictions  (Read 3 times)

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What Is Bitcoin Halving: Procedure And Predictions
« on: June 13, 2019, 02:13:31 AM »
In 2009, Satoshi Nakamoto, a shadowy figure who remains anonymous, created the code that would become Bitcoin and sparked the crypto revolution. The decentralized ledger and blockchain tech that is at the heart of Bitcoin was unlike anything that came before it. The decentralized nature of Bitcoin took the banks’ role as intermediary in financial transactions and redistributed it to a community of users, taking the power out of the hands of the few and giving it to the many.

Bitcoin Protocol

All transactions using Bitcoin take place between users and their Bitcoin wallets using a series of verification tools – hash functions, public and private keys – to ensure security. These new transactions are broadcast to all nodes on the network and are then grouped into lists called “blocks”. In order for these blocks to be validated, a mathematical puzzle utilizing the current and previous transactions must be solved. This is called Proof of Work, which is used as the consensus mechanism. The node that successfully solves the puzzle updates the new block to the network. All other nodes then validate and accept the new block and begin work on the next one. One block is added to the network roughly every ten minutes.

Why Mining For Crypto?

Central to the entire Bitcoin ecosystem is this action of mathematical verification. It is no coincidence that the term mining is used in relation to Bitcoin: by design, Bitcoin resembles a rare commodity like gold much more than any other fiat currencies currently in use around the world. Similar to gold, Bitcoin cannot be counterfeited, faked, or have it's supply artificially increased. The term mining also references the rewards that users receive for completing the mathematical puzzles used to verify new blocks.

Proof Of Work

Satoshi solved this in an elegant way. As the computational power of the overall network increases, so too does the difficulty in solving the Proof of Work. As more and more people joined the network and began mining Bitcoin, it became more difficult to mine them. This helps to self-regulate the amount of BTC entering the market and also maintains a steady stream of new coins. The analogy of Bitcoin as digital gold holds true, as the number of gold miners on a claim increases the more difficult it becomes for each miner to get his share.

Bitcoin Mining Hardware

GPUs, or graphics processing units, are special components added to computers to increase their ability to solve complex calculations. These were originally designed for gaming computers that needed high computing power to run games with intense graphical requirements. It wasn’t long before they were adopted by miners to gain a competitive edge over each other.

New Ways To Mine Crypto

Miners have also found the benefit of joining forces. Groups of miners combine their resources into a pool to increase their productivity and compete more effectively. This can increase their overall computing power as well as open the doors to small scale miners to compete. Small scale miners can join a large pool and receive a portion of the Bitcoin reward commensurate to the computational power they contributed.

With the growing number of dedicated miners and the huge increases in the tech required for mining, it would be easy to assume that the scarcity of Bitcoin was in jeopardy. However, Satoshi created one more ingenious device to ensure the continued rarity, and thus guarantee the value of Bitcoin.

Block Halving Dates

The “halving” refers to the fact that after these events the reward for generating a new block is cut in half. At the birth of Bitcoin, the reward was 50 BTC and after the first halving, the reward was reduced to 25 BTC per block mined. The code is written such that after every 210,000 blocks a halving event will occur, and with a block being created roughly every ten minutes these events take place every four years.

When Is The Next Halving?

The next halving is due to take place in May of 2020 after the 420,000th coin is mined. No one is sure what will happen to the market and Bitcoin’s price on it, although based on the last two halving events some argue that there is a pattern.

While no one knows for sure what the future of Bitcoin will look like after the halving, there are many traders and analysts who make the argument that a similar pattern will repeat. Some of these predictors claim that, since it is now about one year out from the third halving, now is the time to buy and accumulate Bitcoin in preparation for the “inevitable” pump after the halving. Only time will tell. But what is certain is that Satoshi’s ingenious development of Bitcoin as a rare digital element will ensure its scarcity and value well into the future.