Bitcoin (BTC) halving activity, which will take place for the third time, causes heated discussions about whether it will have a major impact on the price of BTC in the future.
Bitcoin (BTC) Halving Limits BTC Supply
However, the rules that guide the creation of the new BTC added to the software by Satoshi Nakamoto, the secret founder of Bitcoin, are very clear.
Unlike traditional currencies controlled by governments and printed on demand, Satoshi has set a solid supply limit of 21 million tokens. In addition, about four years, the BTC awards given to the miners were halved and a limited limit to limited supply was introduced. The current upcoming halfway will reduce the 12.5 BTC reward per block to 6.25 BTC.
The reward system is combined with the difficulty adjustment of Bitcoin, which automatically analyzes network activity and adjusts the amount of computing power required to process transactions to ensure that miners can continue making profits.
The gradually decreasing Bitcoin mining rewards are a central part of the Satoshi method, which allows the supply of new BTCs and ensures that supply does not exceed demand while carefully monitoring and mitigating the effects of inflation.
Bitcoin (BTC) Ensures Halving BTCs Distribute Fairly
Hal Finney, who made the first BTC send via e-mail in 2008, explained the Bitcoin halving issue as follows:
The production of new cryptocurrencies means that the money supply will increase by a planned amount, but this does not necessarily lead to inflation. If the money supply increases as the number of people using it increases, the prices remain constant.
If demand does not increase as fast as supply, there will be deflation and early currency owners will see an increase in value. Coins need to be distributed fairly initially, and a flat rate looks like the best formula.
Bitcoin’s procurement program will slow down in the coming years and an increasing number of BTC will enter the market. This new Bitcoin creation rate will slow down so much that it will take more than 100 years for the last Bitcoin to be removed. And probably the last Bitcoin will be released in 2140.