The originator of Bitcoin programmed the block reward to be cut in half at regular intervals. The reward for mining a block is reduced by half for every , blocks added. It currently takes some four years to add that many blocks, so Bitcoin halving has been occurring at approximately four-year intervals. The latest and third halving took place in May The next is expected in Although who actually created Bitcoin remains a mystery, it is believed that the platform was put together in a way that would make it a deflationary currency — with purchasing power that increases over time.
With the halvings resulting in decreased mining rewards, creating new bitcoins becomes an increasingly expensive proposition. As time goes on, each coin becomes more and more valuable. This contrasts with currencies like the US dollar, which invariably lose their purchasing power over time. Historical data shows a correlation between Bitcoin halving and increases in the price of Bitcoin.
Of course, price is affected not just by halvings, but by a whole host of factors. The last halving is predicted to occur in , after which block rewards will not be in the form of bitcoins. Instead, miners will be rewarded with fees from network users, the people who buy and sell bitcoins, so that they are incentivized to continue processing transactions on the blockchain.
Bitcoin halving is a much-hyped event that has been happening at approximately four-year intervals, with the first one occurring in The next halving is expected in Times Internet Limited. All rights reserved. For reprint rights. Times Syndication Service. Bitcoin mining has revolutionized the way we interact with our energy resources and the electrical grid.
For the first time in history, we have a way to monetize energy that is not location dependent. Wasted and stranded energy resources are now made productive. Producers become more profitable and can invest in long-term projects that bring about reliable, safe and abundant energy resources, like nuclear reactors. Energy prices fall every year across the world as energy producers harness energy from cheap resources that were previously unfeasible.
The electrical grid is stabilized with bitcoin miners that can respond to variable load demand with the flip of a switch. Gone are rolling blackouts and grid failures. More humans are able to interact with energy than ever before, lifting nearly all humans out of poverty in the process. Global gross domestic product GDP growth has exploded to levels not seen since the s, and that is reflected in growing purchasing power for the middle class, which itself is growing rapidly as billions around the world join its ranks.
No longer is success determined by how close to the money printer an individual is, but rather by how much real value they create in the world. Money appreciates in value over time so that individuals can plan their future knowing their wealth will be protected. This boom in entrepreneurship is what ultimately drives humanity forward. As more and more people continue to transact in bitcoin, it becomes more liquid, and its price signal allows market participants to coordinate with one another in the production of goods and services.
That results in further division of labor, increases specialization and gives rise to highly efficient economic systems. The ability to reliably save means people no longer need to speculate to beat inflation because inflation is gone. There is no need to stare at charts or listen to financial advice on how to speculate on risk assets just to keep up.
Individuals can save their money and their time to pursue their interests and passions instead. The arts and sciences flourish and a new renaissance begins. Individuals spend their free time thinking about how to solve big problems to provide lasting benefit for the world. Long-term projects are funded as people invest in the future they know is achievable.
Freed from the rat race of consumption culture, a new generation of creators spend years developing their craft and produce works that last through the ages. This change in mindset leads to feats of invention and creativity unfathomable to people from the pre-Bitcoin era. That is the most likely future I see for us.
Another, more ominous future is still very much a possibility. A future dominated by surveillance states, central bank digital currencies, social credit scores, authoritarianism, conflict and chaos. But we have Bitcoin, and thus we have both hope and a plan.
No one is going to make our Bright Orange Future for us. We need to do it ourselves. The stakes are high, but where there is hope, there is a way. The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies.
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