The Effect of Halvings on Bitcoin and The Miningverse | by Nova Miningverse | Coinmonks | Mar, 2023
Bitcoin, the world’s first decentralized digital currency, was created in 2009 by an individual or group of individuals, using the pseudonym Satoshi Nakamoto. One of the key features of Bitcoin is its built-in scarcity, which is achieved through a process called “halving.”
In the context of Bitcoin, a “halving” refers to a pre-programmed reduction in the rate at which new bitcoins are created and added to the Bitcoin blockchain. Specifically, the halving event is triggered once every 210,000 blocks mined, which occurs approximately every four years. When a halving occurs, the reward that miners receive for solving the cryptographic puzzle to add a new block to the blockchain is cut in half, effectively reducing the rate of new bitcoin creation by 50%.
The purpose of the halving is to introduce a deflationary element to Bitcoin’s monetary policy, as the rate of new bitcoin creation gradually slows over time. This is in contrast to fiat currencies, which are typically subject to inflationary pressures due to government policies and economic factors. The halving mechanism helps to ensure that the total number of bitcoins in circulation will ultimately be capped at 21 million, which is the maximum supply that can ever exist.
The first halving occurred in 2012, reducing the block reward from 50 BTC to 25 BTC. The second halving occurred in 2016, reducing the block reward to 12.5 BTC. The third halving occurred on May 11th, 2020, reducing the block reward to 6.25 BTC, and the next one will happen in 2024.
So every four years, the reward for mining a block is cut in half. If you’ve ever heard of bitcoins being mined daily, then you should know that mining rewards are not always paid out. They’re only paid out every 4 years at most and then only when very few blocks have been found during those two consecutive periods
The halving process serves two main purposes:
- To control the rate of Bitcoin’s inflation: As more Bitcoins are mined, the rate of inflation decreases, making the currency more scarce and valuable over time. This is similar to how gold mining becomes more difficult as more gold is mined.
- To incentivize miners: The halvings also act as an incentive for miners to continue to support the network, as the reward for mining a block is reduced over time, the transaction fees associated with each block become more important as a source of income for miners.
Some experts believe that halvings have a positive impact on the price of Bitcoin. The first two halvings both preceded significant price increases for the cryptocurrency.
In conclusion, Bitcoin halvings are a built-in feature of the cryptocurrency that helps to control its inflation and incentivizes miners to continue to support the network, but let’s take those thoughts further:
- Considering that Bitcoin itself is not only a cryptocurrency but a whole blockchain network, thousands of applications are running on it, needing so, an infrastructure of nodes and miners that will grant the needed potential to sustain the workload.
- Nova Miningverse will not be running initially in the Bitcoin network, but together with our partnership with Stacks, who recently show the potential of the Bitcoin Network through the launch of their own NFT series, we pretend to do so in the short term.
- If we consider that the ecosystem is continuously growing through Web3 apps applications and everything that Bitcoin got till now was just based on its intrinsic value, plus the increasing fees in the other Ethereum and other competitors, how high do you think the value will go once the next halving will come?
To sum up, Nova intends to state itself as an also entry door to the new GameFi panorama interested to run in Bitcoin Network, first as validators (nodes) through our mining plant, second as a launchpad for new projects and third as the first Play-to-Mine title that is rewarding its players with Bitcoin.
We have it clear: bear and bull markets are temporary, but Bitcoin is eternal. Halving will only benefit and validate our project value proposal. Save this article for 2024, and see where we are
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