Bitcoin Forum

i have seen too many places about bitcoin halving but nowhere found a good understanding. so wanted a clear explanation.

It's like if your boss says "I was paying you $20 per hour, but starting from the next week you will be paid $10"

To make it simple, miners receive a reward every time they mine a block, at the beginning they received 50 BTC per block. With the years passing and the previous halving the reward was reduced, with the next event, it will be 6.25 BTC.

With Bitcoin the 'pay rate' (the miners' reward) changes every 210 000 blocks, this change is what we call "halving"

You can find literally thousands of  explanation on search engines

Currently, 1,800 bitcoins are generated per day(through mining) and enters the market. After the halving, which occurs every approximately 4 years, the bitcoins being generated per day halves. So in the next halving, which is in approximately 11 days, the bitcoins being generated per day goes down to 900 bitcoins per day.

It's basically cutting the mining reward into half, as was programmed to happen every 210000 blocks. On plain paper this sounds like a stupid idea to scare away miners from running their machines in order to profit, but theoretically this should still make the miners continue to use their machines for profit since by design, bitcoin only has 21M supply cap. And since it's getting rare as time goes by, its value would increase as was dictated by a deflationary model.

Why is this done in the first place and why not place a static pay rate to everyone who solves a block? This is done so as to not exhaust the supply cap in a short span of time. Imagine if the protocol still gives out 50 bitcoins per block mined to miners, we would have exhausted our 21M supply cap in 2017 and there's literally no incentive that keeps the miners hashing out on their machines to continue process tx which will result to the end of bitcoin.

The answer can be easily found on google and also Coinmarketcap has and info tab about that too.
To make it simplified it's like you work in a certain company and you get a normal salary and with the event called halving they will make your salary 50% less than what you get before the halving and this will continue every four years.

Hey we have an infographic that explains exactly that!

https://assets.coingecko.com/infographics/bitcoin-halving-2020-infographic-coingecko.jpg

If we go by your last sentence that means we will one day have an end to bitcoin? Because no matter how often the halving keeps happening every four years it will one day come to a day bitcoin will get exhausted out of the 21 million supply?

Bitcoin halving can't be compared with salary because it's a crypto mining reward and price always to increase and circulation too.
As a miner, you get rewarded based of your contribution(mining power) in a mining pool. The more your mining power, the more your reward.
Reason why it can't be really compared with salary.

in many ways it actually can be compared with what you are paid. and mining reward is literary paid for the work a miner does not their contribution. that is where the name "proof of work" comes from. the miner does a hard work and when they find the resulting hash, they publish it as a proof that they have done a certain amount of work to find it.

I agree that it is not like a salary, because miners may just cut-off their hash rate.

Additionally, hash rate may even drop, as the reward for their service will be smaller. We will probably have a peak of hashrate now (just before the halving) to see its value drop.

If bitcoin prices continue to raise, then hash rate may grow again.

Wrong!
Bitcoin's block reward will gradually decrease and one day will end. But mining will continue on the basis of transaction fees. In other words, miners will receive transaction fees in return for continuing to work.

I think it would be better to explain it from the beginning.
Today, miners approve transactions on the blockchain network and receive 12.5 BTC + transaction fees. This figure will continue as 6,25BTC + transaction fees after halving. And the next halving will continue as 3,125BTC + fees.

What is expected is this; Even if the reward decreases with halving, the number of transactions on the network will increase so much that the miners will continue to do this with the return of the fees.

I feel like there is enough explanation on the Internet about this but anyways.. I'll give it a go - a different, more creative one.

Story time!

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Imagine that upon the creation of Earth, there was one particular creature (Bitcoin) that God has created. It could only produce 50 gold nuggets (coins) every approximately 10 minutes all around the world. This creature was very picky: every 10 minutes, their favorite food combination (the solution for a new block) changed. The first to give it exactly its favorite food combination (to solve the block) would get all 50 nuggets (Bitcoins) as a reward while everyone else would get.. nothing!

Some nugget owners lost a few of them, there were even nugget thieves!

There is a popular story wandering around that one day, for 10 minutes, this creature had a favorite combination of food consisting in chicken strips and french fries. Two strangers (miners) from different parts of the world found this creature. One stranger gave it chicken strips, the other gave it french fries (each had done exactly 50% of the effort to solve the block). Because it was exactly the favorite food combination of the creature, it rewarded 25 nuggets to each stranger. Everyone else in the world received, again, nothing.

But God thought this creature would not receive much attention if it had produced 50 nuggets every 10 minutes forever. Hence, God thought it would be a good idea to set a limit: after every approximately 4 years, the creature would start cutting its nugget production worldwide in only half (halving), leaving a maximum supply of only 21 million nuggets.

Therefore, exactly 4 years after its birth, the same two strangers were lucky to find the creature again. For 10 minutes, the chicken had a favorite combination of two foods: peanut butter and pancakes! One of the strangers opened their backpack only to find a pancake in it. The other stranger loved peanut butter, so he always carried a little with him. The creature received a pancake and a little peanut butter which was the perfect combination, but the strangers were left surprised: this time, the creature gave each only 12 nuggets and a half!

The strangers then told the world that the creature is now producing 25 nuggets every 10 minutes - half of what it used to, as 4 years have already passed! Therefore, as the nuggets became more scarce, the world started valuing the creature and each of its nuggets more every time the production was cut in half, just like God planned.

that is true but also we should not forget another very important factor and that is the price. for the entire history of bitcoin which is around 11 years price has continued rising and each time block reward halves the amount of money the miners make are A LOT higher compared to last time it halved.
for example when reward was cut from 25 to 12.5 they were only making $14500 for 25 bitcoin. and now they are making $110000 for 12.5 bitcoin!
and in 4 years from now they will be making about $2000000 (2 million) for 6.25 bitcoin.
so in so many ways the fees don't even mater.

To be honest, I believe OP have got answer from first reply. You will be more confuse since everyone repeating same thing. If you want to know more briefly I will suggest to read this article, what is halving (https://www.coindesk.com/bitcoin-halving-explainer?amp=1).

Just for your information, halving isn't something related with bitcoin price. Don't mixup each others. The price we are encountering lately due to FOMO, nothing else.

basically, every 4 years or has reached 210,000 blocks the mining rewards will be reduced by half as written in the bitcoin algorithm. You can see the code here : https://github.com/bitcoin/bitcoin/blob/332c6134bb15384e5b91c631e821fe52a591d3bc/src/validation.cpp#L1007
honestly you do not need to know thoroughly about halving if you are not developing a new protocol about bitcoin. all this about technical programming

yeah because FOMO bitcoin prices are starting to go up now.
People began to follow to buy bitcoin because prices continue to rise and also approaching the halving period that will soon happen.

The FOMO is usually created by people who really want to take greater advantage.

today Bitcoin is able to open the price of $ 9,000.

Every 210,000 blocks, or roughly every four years, the total number of bitcoin that miners can potentially win is halved. In 2009, the system started at 50 coins mined every 10 minutes. Two halving later 12.5 bitcoins are currently being dispensed every 10 minutes. after three halving miners will get 6.25 Bitcoin every 10 minutes, as a mining reward. This process will end with a total of 21 million Bitcoin...

Half the amount can be understood that the reward is only half of the current time and the difficulty of mining remains the same.
I can give an example: You still work every day but the pay is only 1/2.
In the past, halving the price of bitcoin would increase, so many people thought that the price of bitcoin would rise after halving this time.

Bitcoin supply is limited, there will be 21 million on this world.

Other than that you have to know how to get bitcoin first in order to know what halving event is.

Especially how to get bitcoin through mining, if you are miner bitcoin you will get a reward when you are successfully break up a block then you will get 12.5 bitcoin as of now. But when another halving event come (happened for every 4 years) your reward will be reduced by half.

Halving is the cutting down of the miner's block reward into half which will cause the reduction of the allocation rate of new coins generated daily and miners reward but halving was the technique used in crypto to current price/market inflation and for the betterment of the market price.

I hope the OP already read the post of coingecko as the graph will give him a clear understanding on what is happening during halving. But would be nice to see also the corresponding price on the graph so we will see how much bitcoin's price changes during those times of halving. Though we already know that the price really increased after halving but this time, I don't think the performance in terms of increase will be similar in previous halvings.

I think actually fro halving to see bitcoin back to higher price, what for waiting more than four years if bitcoin keep the same in lower price. Halving become good moment to get much profit by investing one week before halving and selling one day before halving time, never waiting for selling after halving because price can dump.

it is not going to be similar cause it can surpass the past increase?  :D  If you are going to look at the chart and see the history for halving there's always a pump every halving and this time it's actually happening again! If you are updated at the price of bitcoin is jumps from 6900 to 8700 in just one week! So I am sure that the halving this year is gonna be awesome and will actually surpass the past halving's when it comes to bitcoin price.  :D

I also believe this halving market not to be similar with the previous halving market but before making any conclusion i think we also need to put into consideration the thing that may hinder the increase in the price of the market after halving but i still expect/believe the price will increase and may not be as we thought about.

things are actually very similar to the previous two times but only on a smaller scale because currently there still is a lot of fear in the market otherwise the pre-halving manipulation and accumulation phases were executed the same way and currently we are on a similar rising path too. in about 10 days if we see a drop then the cycle would be complete until (1-2 days later) halving itself happens and then after a couple of weeks the big rises begin for good.

In general terms, it must be seen as a reduction to the mining reward, in economics it can be interpreted as trying much more to not lose the income that had been brought over 4 years ago, as it is limited in number, you must continue working much more to get benefits.

According to PlanB:


And the evolution can be taken into account like this:

[img] https://i.imgur.com/RKUzyUt.png [/ img]

Source: https://cointelegraph.com/news/bitcoin-on-chain-data-suggests-miners-expect-halving-to-pump-btc-price

Which for many miners if not enough can represent losses, but this may be an opportunity for some more miners, it is all a matter of seeing what opportunities there are for profit opportunities.

I do not intend to break your optimism about the halving that will occur next week, the past halving which occurred last 2016 is very different especially to the price, the price of bitcoin back then is less than a thousand dollars so it won't be surprising at all to reach it around $1000 to $15000 after a year which is I'm skeptical right now, if we base our speculation from that then we are suppose to have a new ATH this year. Nevertheless I'm hoping that this year's halving will result in greatness which is what we need in times where its neighbor market is down, it's time to shine for bitcoin.

Ok but if the cycle you claimed complete while the fear in the market is strong enough to cause panic sell there's still chance that this year halving maybe disappointed. Besides, i read a thread on this forum acouple of days back which stated that some whales believe this year halving be a nonevent.

Simple search would be needed but i would do it for you;

https://www.coindesk.com/bitcoin-halving-explainer
https://www.youtube.com/watch?v=nPIQdoIEGVc

These are good places for you to read and watch about bitcoin halving which do explains it all.Hope you would able to get clear explanation from them.