As we enter the year 2024, the much-anticipated Bitcoin halving event is at the forefront of every cryptocurrency enthusiast's mind. In this article, we will explore the concept of Bitcoin halving, understand the reasons behind its design, and discuss what we can expect from this year's halving event.
What Is Bitcoin Halving?
The Bitcoin halving is a special event in the Bitcoin blockchain where the reward miners receive for verifying and adding new blocks of transactions to the blockchain is reduced by half. The halving happens approximately every 210,000 blocks, which takes around 4 years given Bitcoin's 10-minute block time.
The next Bitcoin halving is estimated to occur on April 17, 2024, and it’s important to explore the historical events of past Bitcoin halvings and the notable impacts these events had on Bitcoin’s value and the mining community. These topics will be discussed in the upcoming section.
Why Was It Designed?
Monetary inflation is one of the problems that Bitcoin was designed to address. It is perceived as a hedge against inflation due to the decreasing production of new Bitcoins entering circulation, known as Halving. Bitcoin halving was designed to mimic precious metals like gold's scarcity and deflationary characteristics. Bitcoin halving reduces the rate at which new bitcoins are created, thereby controlling inflation.
The halving was designed with the expectation that as adoption increases, so too would the network's value. It’s imperative to reduce the supply to sustain value for miners. As the block reward diminishes over time, transaction fees are expected to become a significant portion of the miners' rewards.
What to Expect in the 2024 Halving?
It's been a long bear market, and there is increasing anticipation among the cryptocurrency community that the upcoming Bitcoin halving may trigger a bull run, particularly in the altcoin market. Historically, some of the altcoins have often outperformed Bitcoin in the year following a halving event. This tendency is due to investors turning to altcoins for portfolio diversification and potential gains, especially when Bitcoin's price becomes prohibitively high. However, there are no guarantees and the markets may respond differently than previous halvings.