What is Bitcoin Hawing and what does it mean? When does it happen? How does it affect the value of bitcoin? In this post with help an essay We answer these questions in simple language from the 99bitcoins website.
Summary of Bitcoin Bitcoin
On average, every four years (after 210,000 blocks in the Blockchainchain), the production of new bitcoins abruptly halves, or more precisely, the reward given to miners for adding a block to the Blockchain is reduced by 50% Finds. Howing was put into the network code by Satoshi Nakamoto, the anonymous creator of Bitcoin, with the aim of controlling bitcoin inflation.
Since the Hawing event actually halves the supply rate of new bitcoins, the experts believe that this event will have a significant impact on the price of bitcoins and can increase the value of bitcoins over time.
This is a summary of the Hawing event for those who do not have much time to study, but if you are looking for more detailed information, it is better to keep reading.
What does Bitcoin Hawing Mean?
To understand the concept of bitcoin howling, you must first become familiar with the basic concepts of bitcoin mining. In short, it can be said that volunteers under the name of miner or “miner” to confirm bitcoin transactions and maintain its security, give their hardware processing power to the network in a process called “extraction” that requires power consumption and solving equations Advanced math. The network generates some bitcoins as a reward and gives them to miners. Hawing halves the miners’ bonuses every four years.
When Satoshi Nakamoto was setting the rules for the Bitcoin Protocol, he focused on two rules:
- Bitcoin inventory is finite and limited to 21 million units.
- The number of bitcoins produced per block should be reduced by 50% after every 210,000 blocks.
Halling or Hawing?
the door Pronunciation of halvingThe letter “L” is not pronounced. Therefore, although the term Halloween is also used among Persian-speaking users, Hawing is more correct.
How many years does bitcoin hawking occur?
Considering that an average of 6 blocks are found per hour and the Hawing event occurs after every 210,000 blocks, it can be said that Hawing occurs approximately every 4 years.
At the beginning of bitcoin activity, 50 bitcoins were generated every ten minutes, or more precisely, the first miner to reach the answer to the block equation received 50 bitcoins. In 2012, after the first hawing, the extraction bonus reached 25 and in 2016, after the second hawing, the extraction bonus reached 12.5 units. Today, as we write this article, about 12.5 bitcoins are generated every ten minutes. This figure will be reduced to 6.25 bitcoins after the next hawing, which will take place in May 2020.
What is the philosophy of the Hawing event?
You may be wondering why it was necessary to design this change in the Miners’ Rewards and why the reward rates for the Miners should not be kept constant. Will this event not end to the detriment of the miners?
The answer to this question lies in the law of supply and demand.
If new bitcoins are produced quickly, or the number of bitcoins that can be produced is infinite, the high number of bitcoins in circulation will gradually devalue them.
In his personal note to the BitcoinMegzin website, Ethereum creator Vitalik Buterin explains the need to slow down the distribution of bitcoins through the Howing event:
“The main reason for doing this is to control inflation. One of the biggest mistakes of traditional Fiat currencies, which are controlled by central banks, is that they can print as much money as they want, and if they print too much, the value of the government currency will rapidly decline under the law of supply and demand.
Unlike conventional currencies, bitcoin is designed to act like a valuable commodity, like gold. The amount of gold in the world is limited, and with each gram extracted, it becomes more difficult to extract the remaining gold.
It is because of this limited supply that gold has been able to establish itself as a medium of exchange and value storage over the past 6,000 years. “We hope Bitcoin can do the same.”
On what date will the next Hawing take place?
According to the average time required to produce the block (10 minutes), the next hawing should take place in May or finally June 2020 (May to June 99).
To view the Bitcoin counter-counting counter, you can refer to the bitcoin price page of the digital exchange site.
The truth is that the time of bitcoin blocks is not exactly 10 minutes and on average it reaches ten minutes. Since the creation of Bitcoin, the average time required to create a block has been 9 minutes and 20 seconds, not 10 full minutes, which is about 7% faster than our estimated time.
What effect does Hawing have on the price of bitcoin?
The most important question people ask about Howing is whether it will affect the price of Bitcoin, and the answer is that no one knows. In fact, on paper and in theory, assuming demand is stable, if supply halves, the price should be twice as high to meet demand, but it cannot necessarily be said that demand remains stable and does not decline.
In 2016, a week after the Howing incident, there was not much change in the price of bitcoin. At that time, Bitcoin was priced at around $ 650, and a week later it reached $ 675, which was not a significant change. But more than a year later in 2017, the price of Bitcoin reached its highest point in history, $ 20,000.
The first bitcoin howling happened on November 28, 2012, after the extraction of the 210,000th block. Bitcoin was priced at $ 13.42 at the time, and Howing did not seem to have much of an impact on the price. It is true that the price of Bitcoin soon reached $ 230, but many attribute the increase to the financial crisis in Cyprus.
However, there are still arguments that either the price will increase or there will be no change.
Many also believe that the Hawing event is known only to members of the bitcoin community and therefore can not surprise anyone or cause a significant change in the price of bitcoin.
No one in the meantime believes that Hawing can reduce the price of bitcoin in any way.
Frequently Asked Questions about Bitcoin Hawking
According to estimates from the Howing event, the final number of bitcoins in 2140 will reach about 21 million (20,999,999,9769) units.
No, as long as bitcoin exists, its extraction will necessarily continue. When the block reward is reduced to such an extent that it does not cover the extraction costs, the miners’ reward will be covered by the transaction fee.
An average of 144 blocks are mined each day, which means that the average number of bitcoins mined before May 2020 (Hawing) is 1,800 per day (24 hours a day * 60 minutes per hour / 10 minutes per block).
Bitcoin was created with the goal of being able to stay valuable, and that’s why Hawing is built into it. There will be only a limited number of bitcoins (21 million), and with Hawing, inflation from bitcoin supply will be controlled by slowing down the distribution rate.