This is a must-read if you are new to bitcoin and want to know what the expected upcoming “halving” event means:
Part of what makes bitcoin valuable is the fact that there is a finite supply of 21 million bitcoin. No more will ever be created. This was done to make bitcoin similar to a natural resource like gold. When bitcoin’s creator built the system, he (or she, or they) knew that if bitcoin took off and there was an abundance of miners, that cap would be reached quickly. Currently, there are almost 16 million bitcoin in circulation and about 3,600 bitcoins are created each day.
So, to slow things down, Nakamoto did two things. First, in the bitcoin code, Satoshi made miners compete with one another to win the block reward. As more people are attracted to mine bitcoin, it gets progressively more difficult for any single miner to win the reward. As competition increases, miners load up on processing power, turning bitcoin mining from a bedroom hobbyist activity to one that requires the computing power of entire data centers today.
The second change? After every 210,000 blocks, the mining reward is cut in half. This is known in the bitcoin industry as a halving event. As of now, it looks like the 420,000th block will be mined on July 9th, at approximately 11:23 UTC.
I am slowly learning more about bitcoin and am thoroughly intrigued by the technology powering the currency, as well as the ideas set forth that make this such a compelling idea. Until this article, I had no idea such things like “halving events” existed.