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Bitcoin Halving Explained: The Past, The Present & The Future

When Satoshi Nakamoto developed Bitcoin, he/she/they thought of an innovative mechanism that would make the digital currency truly unique & fundamentally different to what has been used till then as a means of exchange & store of value.

This mechanism would be triggered every approximately four years and would make the first-ever cryptocurrency scarcer as time goes by & more valuable, as a consequence.

We now call this mechanism Bitcoin halving, an event that today draws a lot of attention not just from the crypto community, but also from mainstream media outlets.

This hasn’t been the case though, in the early years, when Bitcoin halving was only noticed by a handful of cypherpunks…

The Past: The First Two Bitcoin Halving Events

The first-ever halving day was November 28, 2012, when the first major milestone was reached: block number 210,000 was added into the blockchain signaling a new era of scarcer bitcoins.

Since that point, miners were rewarded 50 BTC from solving the Proof-of-Work problem. That’s how Satoshi Nakamoto built his/her/their fortune, in the first place: according to some sources, Satoshi earned 1 million BTC or more via mining. After block 210,000 though, the 50 BTC block reward was history & miners would now earn ‘only’ 25 BTC.

In the small crypto community back then, there were parties & all crypto enthusiasts celebrated this event. For most of us, however, this was basically a non-event.

Bitcoin Mining

Price-wise, after the first ‘bubble’ in 2011, Bitcoin reached a local low of $2 with around one year before the first halving. By December 2012, the price bounced back to around $13 per bitcoin, after Wordpress – the famous blog software – announced the integration of the cryptocurrency in its payment methods list. Soon afterward, the second ‘bubble’ was starting to develop...

Some four years & exactly 210,000 blocks mined later, another Bitcoin halving occurred. Compared to 2012, many more knew about the cryptocurrency, its ups & downs, its implications & its promises. Bitcoin wasn’t a no-show anymore. The price hit the $1,000 before and hopes that it could go back there were high. Still, to start 2016, BTC was valued at around $300 to $400.

On July 9, 2016, the block reward was cut in half, once more, from 25 BTC to 12.5 BTC. With two months before the event, the price started moving upwards towards a local high of close to $800 before crashing down to under $600 in late June.

At the time of the halving, the price stabilized at around $600 to $700 without any major moves till the end of that year when the signs for yet another ‘bubble’ emerged.

The Present: The Third Bitcoin Halving

The third Bitcoin halving occurred days ago, on May 11, 2020, at around 7:23 PM UTC. After that point, miners started collecting ‘just’ 6.25 BTC after they had solved the Proof-of-Work problem and added new blocks into the blockchain.

Obviously, this event was by far the most covered of all three by the media – crypto & mainstream – by people from all around via all online communication channels. In other words, it’s a good time to be alive.

Bitcoin Adoption Worldwide

Now, Bitcoin is scarcer than ever; already, over 18.37 million BTC have been mined leaving aside only 2.63 million BTC up for grabs till around the year 2140 when supposedly the last bitcoin will be mined.

In terms of price, the number one cryptocurrency has been fairly stable in 2020, starting the year on a high note at around $8,000 to $9,000 but dropping sharply with the worldwide spread of the infamous coronavirus that blocked the entire world altogether.

As the halving approached, Bitcoin started moving up again reconquering the $8,000 and then the $9,000 milestones.

The short post-halving brought much of the same as we take a look into the future.

The Future: From Bitcoin Mining Rewards To Transaction Fees

Indeed, the first two halving events tell us an interesting history of so-called bubbles, therefore we could assume what comes next will be yet another sharp rise in value.

The price already attempts to retake the five-digit mark, but we still must be cautious in the short run. The volatility may run rampant both ways, yet, long-term, the price could indeed go up as miners try to conduct business at a profitable level.

What’s even more important than price is that there will be many more bitcoin halvings in the future, up to around 2140. The block rewards will continue to be cut in half every approximately four years to 3.125 BTC in 2024, 1.5625 BTC in 2028, and so on until the block reward will be calculated in satoshis.

After the last halving, 120 years from now, solving the Proof-of-Work problem & adding a new block into the blockchain will give the miner nothing but the transaction fees.

Bitcoin halving on 11 May 2020

What will the future look like, at that point? What will Bitcoin’s price be? Will it have a price, in the first place?

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