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The Bitcoin Halving Explained

Unlike fiat currencies, which can be printed by central banks at will, the supply of bitcoin is limited algorithmically. There will only ever be 21 million bitcoins in existence. This, by definition, makes it a deflationary asset, as opposed to an inflationary one.

Every 10 minutes, a “block” of bitcoin transactions is solved by miners and added to the bitcoin blockchain. This is complicated and expensive work, demanding a lot of electricity and specialized hardware. So why would anyone do it in the first place?

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Because of the algorithm rewards miners with new bitcoins, which are generated and added to the circulating supply every 10 minutes. This distribution of new BTC is known as the “block reward.” When bitcoin first appeared, the block reward was 50 BTC. This means that every 10 minutes, somebody, somewhere, was getting 50 bitcoins delivered to their wallet. This was back in the days when BTC was worth pennies and you could mine it using only a laptop.

 

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