Bitcoin, the creation of Satoshi Nakamoto, has represented a true revolution, for all humanity, especially in terms of financial operations, although it has had and, continues to have many detractors, the truth is that it increases daily the number of shareholders who trust this cryptocurrency as a store of value, apparently at the end of it all is not the financial bubble that many had envisioned.
But it is that in addition to forever changing the financial context, the birth of Bitcoin opened many opportunities for developers and cryptographic technology enthusiasts, who based on the success of this project ventured to create many other projects, based on this new technology. , creating a second revolution, this time in the field of computer applications, with the birth of Decentralized Applications or DApps, which in turn caused the generation of an increasing number of new cryptocurrencies called “Altcoins”.
How do you create a cryptocurrency?
Although in this publication we will not delve too deeply into the different protocols that intervene for the creation of new cryptocurrencies, according to each blockchain, we will mention some of them in a very summarized way to be able to enter the central theme of this publication: The Halving.
For a new cryptocurrency to be generated, in very simple terms, a block must first be generated within a certain blockchain, depending on each block that is generated, a certain number of tokens is automatically assigned that will be distributed among all those who validated (approved) the creation of the said block, these are known as: as miners, witnesses, validators, etc. Depending on the consensus algorithm used for the approval of the blocks that are generated.
Among the most popular algorithms or consensus protocols that are used for the approval of blocks, we have the Proof of Work, typical of Bitcoin or Ethereum, the Proof of Staking (PoS), used by DogeCash, the Proof of Authority (PoA), the Delegated Proof of Stake (DPoS), used by Steemit and Hive or some others such as Leased Proof-of-Stake (LPoS) or Proof-of-Elapsed-Time (PoET).
Block production rewards
As mentioned above, each time a block is generated, a certain amount of cryptocurrencies are also produced, depending on the characteristics of each particular blockchain, in the same way, mining or production rewards are produced that will be different from a network with respect to the other and that will be distributed in the form of tokens to each of those who participated in the block creation process.
For example, in the case of bitcoin, when the production of the same began, the commission or reward for the creation of each block was 50 BTC per block, now the production rewards of BTC are 6.25 BTC per block. Why were the rewards reduced in this way? Thanks to a process called Halving
¿What is Halving?
The Halving consists of the 50% reduction of the rewards that miners obtain for the production of blocks of a certain blockchain, in the previous example, of the Bitcoin network. As for BTC, the first was held on November 28, 2012, at that time the mining rewards went from 50 Bitcoins (BTC) for each closed block to 25 BTC per block, that is, a reduction of 50%.
This reduction occurs as a consequence of the deflationary model designed by Nakamoto when creating bitcoin, according to this model, every 210,000 mined block must generate a halving process. If we consider that approximately every 10 minutes a block of bitcoin closes, we can infer that every four years a halving of this cryptocurrency will be generated, then we can see those that have been made and those that are estimated to be generated in the coming years:
| Event | Year | Date | Reward |
|---|---|---|---|
| BTC creation | 0 | January 3, 2009 | 50 BTC |
| Halving N ° 1 | 4 | November 28, 2012 | 25 BTC |
| Halving N ° 2 | 8 | July 9, 2016 | 12.5 BTC |
| Halving N ° 3 | 12 | 11 May 2020 | 6.25 BTC |
| Halving N ° 4 | 16 | 2024 | 3.125 BTC |
| Halving N ° 5 | 20 | 2028 | 1,563 BTC |
| Halving N ° 6 | 24 | 2032 | 0.781 BTC |
Curious Note: did you know that the page academy.bit2me.com keeps a countdown that informs us how much time is left for it to occur the next Bitcoin halving? |
|---|
Now I would like to know your opinion, did you know what halving was? Do you consider that this process could affect the value of a cryptocurrency? And if so, do you think its value would increase or decrease? I hope to read you in the comments.
We keep reading!
Posted Using LeoFinance Beta