How interesting is the Bitcoin Halving phenomenon?
Since the beginning of last year, news of the upcoming Bitcoin Halving in May 2020 has been widely talked about among digital currency traders. Especially in terms of impact on prices. But for many People may not be very familiar with this phenomenon. Today, this article will explain this phenomenon in a succinct way.
As we all know Bitcoin's transaction system is decentralized. Everyone who holds this cryptocurrency will have the same copy of every transaction that has taken place, every bitcoin sent or transferred to any digital wallet. If the transaction is successful (By verifying transactions with the resources of Bitcoin miners), those transactions are stored in a box-like document. These boxes will be covered with lids and placed in line with the previous boxes. When there is a specified number of transactions stored, it is called data storage using the blockchain system.
In the world of Bitcoin, every time a new block is created, (After successful confirmation of a block transaction) Miners use their own energy to compete to verify transactions. You will receive a Block Reward, for example, if your Bitcoin transaction is successfully confirmed. Miners will receive Bitcoin coins as a reward.
Bitcoin mining in the past
and the number of rewards per block decreased.
The more there are miners, (or known as transaction confirmers) with a large number of distributed and powerful processing tools and resources. It means that the security of the network is increased accordingly.
But Satoshi must also consider the balance between the “value” of the blockchain and the integrity of the system. Not only should the distribution of data verifiers be large. The cost of mining and making the value of coins difficult to acquire are equally important.
Typically, a new Bitcoin transaction block is created approximately every 10 minutes. If anyone can verify and confirm transactions before other miners. You will receive a share of Block Reward.
In the past, when Bitcoin was first born in 2009 and was still not widely known, the number of miners was relatively small. At that time, Bitcoin's Block Reward period was still considered Phase 1, with the reward that miners would receive per block as high as 50 BTC/Block, as shown in the table below.
Information and statistics on the Bitcoin Halving phenomenon from the Bitcoin wiki website.
As mentioned above In general, the Bitcoin transaction verification system takes approximately 10 minutes per block to confirm. 10 minutes, but with huge returns, there are many new miners entering the market. It is possible that with such a large amount of mining power, will be able to allow miners to create Block Reward with an even shorter period of time 10 minute
This is the reason to bring the system into balance. Bitcoin mining therefore creates value. Difficulty up, or what is called another way "The difficulty level of mining Bitcoin."
The more hashing and mining power, the more The mining problems will become even more difficult. This results in each miner having to spend more resources confirming transactions. (Whether it is using more quality mining specs. Coding in mining or even the number of mining machines) As a result, miners with insufficient quality resources will begin mining that is not cost-effective and will eventually leave the market.
When the number of miners in the system is less The Bitcoin system will adjust accordingly. Difficulty Reduced to make it easier for miners with enough high quality resources remaining to solve the problem. This cycle is a cycle.
Why does it have to be Halving
As time has elapsed since the first block of Bitcoin was created, due to Block Reward that will happen every 10 minutes, resulting in the number of bitcoins being mined increasing as well.
the Halving The first time happened during the year. 2012 Emission range Block Reward of Bitcoin began to enter "stage 2 " after blocking that 210,000 Happens, as we talked about above. During the period 1 The miners will receive a high reward. 50 BTC/Block and counting the capabilities of various models of mining machines The more and more There are many new miners trying to enter the mining industry. If the system still rewards per block so high like this In the short term, there may be "Bitcoin inflation" This will affect the price and stability of the system in the long run.
the Halving Therefore it is like creating balance in the system. It automatically manages the value of Bitcoin to prevent future Bitcoin inflation problems. The Bitcoin system will reduce Block Reward that miners receive decreases with every 4 That year
From the picture you can see that when entering the 5th year in 2012, Block Reward was reduced to only 25 BTC/Block.
What happened after Halving in the past
during the year 2012 After the Halving first time
during the year 2012 Before Halving Bitcoin is valued at $2.01 which after Halving First, the price of Bitcoin rose to as high as $ 270.94 (Prices rose as high as 13,480%) After that, the price gradually dropped to 70 % until the value should be
during the year 2016 After the Halving the times 2
during the year 2016 Before Halving Bitcoin is valued at $664.44 After the Halving The second time, in the beginning the price was not very noticeable. But when the time has almost passed 3 Last year, Bitcoin hit a record high price. $20,000
for Halving the times 3 that is about to happen (enter Block Reward stage 4) From the calculation, it will happen on the day. 22 May 2020 That will arrive here. Whether this will affect the price or not, we have to wait and see.
Including anyone who is wanting to start investing in digital currency. We recommend that you carefully and carefully study the information about the coins you are about to invest in. Including planning Cut Loss Give it well
