Bitcoin: What is halving and what is its significance for the digital currency?


Bitcoin – What Is Halving?

One of the key events in the world of cryptocurrencies, especially Bitcoin, is the so-called halving. It is the moment when the reward for miners for mining a block on the Bitcoin blockchain is drastically reduced. The halving cycle occurs approximately every four years, every about 210,000 blocks, until a total of 21 million bitcoins are mined, estimated to be around the year 2140.

Upcoming Halving in 2024

The next quarter reduction in the block reward on the Bitcoin network is scheduled for around April 19, 2024. The reward is set to be reduced from the current 6.25 BTC to 3.125 BTC. Interestingly, each previous reduction in the block reward in Bitcoin’s history has usually preceded a significant increase in the value of Bitcoin itself.

Impact of Institutions and the Cryptocurrency Market on Halving

The current development of the cryptocurrency market, with a special focus on the proliferation of new Bitcoin ETFs and the increasing institutional interest from investors, plays a significant role in the context of the upcoming halving. The emergence of a large and liquid market for derivatives enables hedging against price risk, which is an important aspect for Bitcoin miners.

Technical and Long-Term Aspects

The growing number of Ordinals BRC-20 tokens impacts chain activity and increases transaction fees, which can ultimately lead to higher miner revenues. From a long-term perspective, Bitcoin is increasingly viewed as digital gold, with tremendous growth potential in the context of subsequent halvings and evolving central bank policies.

Summary

Analyzing the changes in the cryptocurrency market, especially in the context of the upcoming Bitcoin halving in 2024, it is important to monitor the development of both institutional and retail situations. According to experts like Payal Shah from CME Group, keeping track of changes in the Bitcoin ecosystem, including the block reward decrease and the growing investor interest, is crucial for understanding the cryptocurrency’s development prospects in the coming years.