What does mean "halving" actually?

[jmsk1]

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

[LeGaulois]

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

[mk4]

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.

[dothebeats]

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.

[denzkilim]

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.

[coingecko]

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

Hey we have an infographic that explains exactly that!

[Maestro75]

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.

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?

[Krislaw]

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.

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.

[BrewMaster]

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.

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.

[bitmover]

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.

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.

[vycl87]

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.

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?

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.

[20kevin20]

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!


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.

[BrewMaster]

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.

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.

[The Cryptovator]

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.

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.

[amrulshare]

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

[taufik123]

-snip-
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.

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.

[Rimpab472]

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...

[acdc]

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.

[Ridwan Fauzi]

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.

[hulla]

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

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.