With the third halving of the Bitcoin mining reward hanging over the present, the debate over how and when this big event will affect the future price of the largest cryptocurrency is raging across all media communities in the crypto sector.
Clear and unchangeable rules for managing the Bitcoin offer over time
The rules that guide the extraction of the new BTC, implemented in the software by its anonymous creator, Satoshi Nakamoto, are crystal clear and leave no room for misunderstanding.
In stark contrast to traditional currencies controlled by governments and printed at will by central banks. So Satoshi has set a maximum limit of 21 million coins produced over the years according to a predefined and unmodifiable algorithm.
Every four years or so, BTC prizes given to miners for their mining activity are halved. This year the reward will go from 12,5 BTC per block to 6,25 BTC per block.
The rewards system combines with Bitcoin's fix fix, which automatically analyzes network activity and optimizes the amount of computing power needed to process transactions, to ensure that miners can continue to earn profits as the supply of new BTCs becomes increasingly scarce.
A program to avoid currency inflation
The reduction of the rewards of Bitcoin mining over time is a central element of the method invented by Satoshi in 2008. This plan was studied by its creator to allow new fresh BTCs to come into circulation and ensure that the offer does not exceed demand, carefully monitoring and mitigating the effects of inflation.
Bitcoin pioneer Hal Finney had told the media in an e-mail exchange in 2008: “The fact that new coins are produced means that the money supply increases by a planned amount, without necessarily leading to inflation.
If the money supply increases at the same rate as the number of people using it increases, prices remain stable. If it does not increase rapidly as demand, there will be deflation and the first to have accumulated Bitcoin will see the value [of their own portfolio] increase.
The coins must initially be distributed in some way and a constant rate seems to be the best formula. " The Bitcoin mining program will slowly slow down in the years and decades to come, ensuring that an increasingly limited number of BTCs enter the market.
In 2009, the system started spinning by extracting 50 coins every 10 minutes. Two halves later, 12,5 BTC extracted every 10 minutes. The fourth halving of Bitcoin history is expected on May 11, which will bring the mining reward to 6,25 BTC drawn every 10 minutes.
The rate of creation of new Bitcoins will slow down so much that it will take more than 100 years to mine the latest Bitcoin. This will probably happen around the year 2140. If you want to know more about the quotation Bitcoin and beyond, you can find more information on our page in real time!