Bitcoin halvings, where the rate of new BTC issuance is reduced by half, is written into the Bitcoin protocol and occurs every four years, with the next halving taking place this month.
It is both a digital currency and a network – the Bitcoin network comprising tens of thousands of computers or ‘nodes’, and bitcoin, or BTC, the cryptocurrency. Newly mined bitcoins are given to miners as a reward for their ‘labour’ or computer processing power. However, the number of bitcoins miners receive for each block varies. Every 210 000 blocks, or roughly every four years, miners’ rewards are cut in half. This phenomenon is referred to as ‘BTC halving’ or ‘halving’.
The more ‘miners’ there are, the more secure the network. The Bitcoin network has never been successfully hacked.This will be the fourth halving of the leading cryptocurrency in history. The previous three occurred in 2012, 2016 and 2020.The opportunity to profit is the assumption that was built into the Bitcoin protocol. As things become scarcer, their value should rise.
However, as factors such as significant hacks or bankruptcies of crypto companies, stock market conditions, whale manipulation, or regulatory changes reduce the coin issuance, future halving events may be less potent.What’s different this time is that several exchange-traded funds have been launched since the start of the year, and they allow institutions to invest into BTC.