In the Bitcoin world, as many as 300,000 purchases and sales occur every day, verifying each of these transactions means a lot of work for miners. In return for undertaking this workload of bitcoin miners; Bitcoins are issued whenever they add a new transaction block to the blockchain.
The new amount of bitcoin that is created in each mine block is called the "block reward". The block reward is halved every 210,000 blocks (or roughly every 4 years). In 2009, the award was 50. By halving every four years; It went down to 25 in 2013, 12.5 in 2018 and halved to 6.25 in May 2020.
This system will continue until approximately 2140. After this date; miners will be rewarded with fees for processing transactions paid by network users. These fees will ensure that miners still have the incentive to mine and continue the network. The idea here is; because of the competitive environment, these fees will remain low after the halving is over.
This halving situation reduces the creation of new digital money. Thus, the available supply drops. Falling supply is effective for investors because other assets (such as gold) with low supply can get high demand and raise prices. At this halving rate, the total number of bitcoins in circulation will reach the limit of 21 million, making the currency completely limited. This limit is predicted to make bitcoin more valuable over time.
- CandleFocus Editor
Rewarding Bitcoin Miners