Bitcoin Basics

Bitcoin is the world's first decentralized digital currency. Unlike traditional currencies, Bitcoin operates on a peer-to-peer network, devoid of central authority, thanks to blockchain technology. 

This innovative technology ensures security, transparency, and immutability by recording all transactions across a network of computers. Each transaction is verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. 

Learn more about Bitcoin in our complete guide: What is Bitcoin and how does it work? 

What is Bitcoin Mining?

Bitcoin mining is a crucial process at the very center of the proof-of-work blockchain. The mining process confirms transactions to the rest of the network, maintaining Bitcoin's trustless nature. 

Miners use specialized hardware to solve complex cryptographic puzzles in order to confirm transactions and create a new block in the blockchain. 

The first miner to solve each puzzle is rewarded with newly minted bitcoins and transaction fees from the block they've validated and added to the blockchain. This incentivizes miners to contribute computational power, ensuring the network's decentralization and security. 

The rewards are crucial as they not only motivate miners to keep the network secure but also control the supply of new bitcoins, reflecting the digital currency's deflationary design.

Mining is a very interesting concept that has solved crucial problems related to digital currencies. There’s more information and technical details here: Bitcoin mining explained.

What is Bitcoin Halving?

Bitcoin halving is a programmed event in the Bitcoin network that halves the reward given to miners for processing transactions and adding new blocks to the blockchain. 

Occurring approximately every four years, or after 210,000 blocks have been mined (it takes about 10 minutes to mine a block), this event reduces the rate at which new bitcoins are generated. 

The primary purpose of halving is to control Bitcoin's supply, ensuring it remains finite with a maximum cap of 21 million coins. 

Halving affects Bitcoin by potentially increasing its value over time due to the reduced supply of new coins entering the market, aligning with the principles of supply and demand. 

This event is essential to Bitcoin's deflationary nature, making it an intriguing asset that mimics the scarcity properties of precious metals like gold.

How Does Bitcoin Halving Happen?

The halving event is automatically triggered by the Bitcoin network once 210,000 blocks have been mined since the last halving. This count is embedded within the Bitcoin protocol and can not be changed without forking the Bitcoin blockchain and creating a new cryptocurrency. 

The History of Bitcoin Halvings

Three Bitcoin halvings have occurred since Bitcoin’s inception in 2009.

The first halving occurred on November 28, 2012, when the block reward was reduced from 50 to 25 Bitcoins. This event was followed by a notable increase in Bitcoin's price, a pattern that has been observed with subsequent halvings. 

The second halving took place on July 9, 2016, reducing the reward to 12.5 Bitcoins, and was again followed by a significant price surge in the following year.

The most recent, the third halving, occurred on May 11, 2020, further reducing the reward to 6.25 Bitcoins. 

Each halving event has led to speculative anticipation, increased media attention, and considerable price volatility leading up to and following the event.

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EventDateBlock RewardValue One Month PriorValue One Year AfterIntroduction of BitcoinJanuary 3, 200950 new BTC--First HalvingNovember 28, 201225 new BTC$10.26$1,003.38Second HalvingJuly 9, 201612.5 new BTC$583.11$2,608.10Third HalvingMay 11, 20206.25 new BTC$6,909.95$55,847.24

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When is the next Bitcoin Halving?

The next Bitcoin halving is expected on April 20, 2024 after block 740,000 has been mined. It will reduce the block reward from 6.25 BTC to 3.125 BTC.

This will be the fourth halving in Bitcoin history. The fifth halving is expected to occur in 2028, after block 850,000 has been mined.