The Bitcoin (BTC) halving (also known as "the halvening") is an event that occurs roughly every four years. It's the scheduled halving of the reward miners receive for verifying blocks of transactions on behalf of the BTC network. These "block rewards" act as a mechanism to increase the supply of Bitcoin gradually. On average, one block is "mined" every 10 minutes. Here's a quick refresher on how Bitcoin gets mined.Traditional fiat currencies, such as the dollar, are centrally-controlled, meaning banks such as the Bank of Canada can control inflation by printing cash at their will. In contrast, the creator of Bitcoin set its absolute maximum supply at 21 million BTC. Additionally, the rate of inflation, the rate at which new BTC enters the network, is fixed to a schedule and halves every 210,000 blocks (Approx. 4 years). In November 2012, the first of these halving events brought the reward from 50 to 25 BTC per block. In July of 2016, rewards halved again to 12.5. Today marks only the third halving of BTC rewards and will see the reward cut in half again to 6.25 BTC per block.Why Does Halving Matter?In simplest terms, when Bitcoin mining rewards halve, the rate at which new bitcoin is added to the network is slowed. There are a few scenarios where this could bode well for miners/vendors, and it can be explained in simple supply-and-demand terms:If the growth bitcoin demand stays constant while the supply of new Bitcoin decreases, the excess demand will put upward pressure on the price to rebalance demand and supply.If the growth of bitcoin demand increases, which research and surveys have shown that it has, then this supply disparity will require the price of Bitcoin will increase drastically.Historically, the price of Bitcoin has increased after each halving. According to Forbes, Within a year of the 2012 halving, the price of Bitcoin jumped from $11 to a high of $1,000. In 2017, a year after the second halving, Bitcoin went from $700 to $20,000.How Does Timing Work?It may seem like the halving events scheduled every four years, but in actuality, the halvings occur every 210,000 mined blocks. As you now know, the first halving occurred in 2012 at 210,000 blocks. The second halving occurred at 420,000 blocks. Today's halving will occur at 630,000 blocks, and sometime in 2024, the fourth halving will occur at 840,000 blocks. Although pinpointing the exact date and time of a future halving event is not possible, we can estimate when it will occur by looking at the nummber of blocks that need to be mined and multiplying that by the average time it takes to find a block( 10 minutes). In 2140, after 32 halving events, 21 million Bitcoin will have been mined, and new minting of coins will cease. Currently, 18.3 million Bitcoins are in existence, representing over 87% of all bitcoin that will ever exist.In short, although the timing and impact of halving events are not certain. If history is to repeat itself, as many believe that it may, Bitcoin could be on the verge of its next bull run. The recent run-up on bitcoin prices may evidence this belief.Create a Coinsquare account or download ouriOSorAndroidapp to get started.ReferencesShimron, Leeor. "Bitcoin's Third Halving Will Be Its Biggest Test Yet." Forbes, Forbes Magazine, 30 Apr. 2020, www.forbes.com/sites/leeorshimron/2020/05/01/bitcoins-third-halving-will-be-its-biggest-test-yet/#32c2c4022e6e.
