What is bitcoin and what does it mean?
Nowadays we talk a lot abouthalve bitcoin, but some people wonder what it is and what it means exactly that term.
Cutting in half literally means reduce by half, And in fact bitcoin cut in half is cut in half.
But to understand what is halved and why it is so important, it is necessary to briefly explain how bitcoin mining works.
When Satoshi Nakamoto launched Bitcoin in 2009, there was still no BTC.
At first, there was only the protocol, published in late 2008, but there was no bitcoin token in circulation.
Indeed, there was not even the blockchain, the first block of which was created, by undermining it, on January 3, 2009.
Satoshi’s choice was to create BTC for the protocol itself, rewarding them for miners who were able to extract a block.
Since about 1 block had to be mined every 10 minutes and since Satoshi had initially decided that this price would be 50 BTC per block, around 7,200 BTC were created each day.
And so by the end of 2009, more than 1.6 million BTCs had already been created, less than the 2.6 million expected because the rate of extraction of the blocks at the time was a little slower.
But if this rate had remained constant, bitcoin would never have become a scarce commodity, and in fact Satoshi decided that, precisely make bitcoin a rare asset over time, for each 210,000 blocks extracted, the price would have been halved.
Here, halving bitcoin is just that, the fact that in the Bitcoin protocol, it says that for each 210,000 blocks extracted, the price of the minor is halved.
Since this parameter is native and entered directly at the code level, it is not virtually editable, except with the possible agreement of the majority of bitcoin users, and in fact has never been changed.
To extract 210,000 blocks at the rate of one block every 10 minutes, it takes about a little less than 4 years, so much so that to halve two have already been done: one in November 2012, which brought the price of the minor to 25 BTC per block extracted, and one in July 2016, which raised it to 12.5.
The third half of Bitcoin
In May 2020 will take place on third half, which will bring the price to 6.25 BTC, while the fourth will inevitably occur among 210,000 other blocks, likely in the first part of 2024.
Proceed this way the creation of new BTC is reduced until the day they are no longer created.
The purpose of this monetary policy is the so-called deflationary natureor rather create a currency whose circulating mass does not continue to increase forever, as happens with traditional fiat currencies, but which at some point begins to increase very slowly, until it stops.
For example, in 2021, when only 6.25 BTC were created every 10 minutes (900 per day), bitcoin money supply inflation will have fallen below 1.8%, which will start to bring this currency closer to the goal of becoming a deflationary currency.
After the third halving, the bitcoin money supply will continue to grow, but very slowly it significantly increase its rarity.
To be precise, in 2020, there Stock / flow ratio bitcoin, which measures the relationship between stocks and production, will become greater than that of silver and in 2021, it will become similar to that of gold.
It is possible that from 2022, the Bitcoin Stock / Debit ratio it will also exceed that of goldtherefore becoming even rarer on the markets precious metal.
The post What is it and what does it mean that halving bitcoin first appeared on The 100Count.