Bitcoin has already climbed 60% this year, reaching an all-time high of over $72,000 in March. This has been driven by investors flocking to newly launched ETFs<\/a> that allow them to buy Bitcoin in the form of shares on a stock exchange. But it\u2019s also likely because markets know diminished supply from the halving could rally demand, and if history repeats itself, Bitcoin could outdo its 2021 bull run by a significant margin.\u00a0\u00a0<\/p>\n Here\u2019s Fortune\u2019s<\/em> plain English guide to the Bitcoin halving: what it is, why it matters, and how it could affect the price of the original cryptocurrency.<\/p>\n Every time a new block is added to the Bitcoin blockchain<\/a>, the contributor is given some Bitcoins as a reward. This \u201cblock reward\u201d initially consisted of 50 bitcoins but, due to a feature of Bitcoin\u2019s code, that amount is cut in half every four years.<\/p>\n Previous halvings saw the block reward cut to 25 Bitcoins, then to 12.5, then to the current allotment of 6.25. The halving set for April will see the reward cut to 3.125.<\/p>\n #Bitcoin<\/a> Halving is near <\/p>\n 32 days more to go\u2026. pic.twitter.com\/M8HTDu8y5l<\/a><\/p>\n \u2014 Budhil Vyas (@BudhilVyas) March 19, 2024<\/a><\/p><\/blockquote>\n <\/p>\n Blocks are added by miners<\/a>, which typically fall into three categories: retail (individuals with computers), industrial (often publicly traded, operating data farms), and mining pools (groups of miners who combine efforts over a network).<\/p>\n Anyone can be a miner and eligible for rewards\u2014which are issued every 10 minutes or so\u2014if they download the Bitcoin program and run it on their computers.\u00a0\u00a0<\/p>\n Rewards go to whomever is first to solve a complex math problem using trial-and-error calculations on a specialized computer. The mining is an integral part of updating transactions on the Bitcoin blockchain and keeping the network secure.<\/p>\n Halvings occur after 210,000 blocks are created\u2014roughly every four years.\u00a0It\u2019s not possible to predict the exact time because, due the nature of the race to solve the math problems, the new blocks don\u2019t arrive at fixed intervals. But it\u2019s possible to make a good guess, and the current estimate is April 19.<\/p>\n Yes, there have been three: Nov. 28, 2012, July 9, 2016, and May 11, 2020.<\/p>\n No. The reward will continue to diminish until it reaches one satoshi, equivalent to 0.00000001 Bitcoin.<\/p>\n Bitcoin\u2019s source code will only ever produce 21 million coins. The majority\u2014about 19 million\u2014have already been mined. The process is expected to continue until the year 2140.<\/p>\n 2140 and we\u2019re still at it, the final halving\u2026 #bitcoin<\/a> pic.twitter.com\/l21dG1tADm<\/a><\/p>\n \u2014 lanefrog.eth (@lanefrog) March 18, 2024<\/a><\/p><\/blockquote>\n <\/p>\n Bitcoin\u2019s pseudonymous founder, Satoshi Nakamoto, set out the halving mechanism in the currency\u2019s 2008 white paper. Halvings are intended to keep Bitcoin inflation-resistant by slowing the rate at which new coins are created. For instance, currently, 328,500 Bitcoins are created each year, which will soon drop to 164,250.<\/p>\n Bitcoin, celebrates its 11th halving anniversary today. Back in the day, a decade ago, it traded at a mere $12. Today, it\u2019s worth a staggering $37,000.<\/p>\n This milestone prompts reflection on Bitcoin\u2019s journey since Satoshi Nakamoto\u2019s white paper and its inaugural transaction in\u2026 pic.twitter.com\/A15WVuzImT<\/a><\/p>\n \u2014 Guerrier Dexter (@DexterGuer43523) November 29, 2023<\/a><\/p><\/blockquote>\n <\/p>\n \u201cThe current wage inflation rate of Bitcoin is more or less equivalent to that of gold, at 1.8%. But after the halving, it will decline to 0.85% per year, which will act as a timely reminder of Bitcoin\u2019s scarcity,\u201d Vetle Lunde, a senior analyst at K33, told Fortune<\/em>. Because Bitcoin continually becomes scarcer, it\u2019s a deflationary asset, which is attractive to many investors.\u00a0<\/p>\n So far, every halving has coincided with a bull run, Laurence Smith, a senior market strategist at Consensys<\/a>, told Fortune<\/em>.<\/p>\nWhat is a halving?<\/h2>\n
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Who\u2019s adding these blocks to the Bitcoin blockchain in the first place?\u00a0<\/h2>\n
When are halvings?<\/h2>\n
Have they happened before?<\/h2>\n
Will halvings go on forever?<\/h2>\n
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Why does it occur?<\/h2>\n
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What does this mean for Bitcoin\u2019s price?<\/h2>\n
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