Bitcoin undergoes halving for the third time. What does it mean?
Cryptocurrency Bitcoin saw its third having in 11 years since inception. Before knowing what it means one has to know what is Bitcoin and how it works. The Digital Currency Bitcoin was created in 2009 by an unknown individual or a group of individuals going by the name of Satoshi Nakamoto (1 satoshi is the smallest sub-unit of bitcoin). It was launched after the recession of 2008 as a digital transaction alternative. No central authority owns Bitcoin as all the transactions are recorded in a public distributed ledger.
Bitcoin Blockchain
The bitcoin blockchain is a public ledger that records bitcoin transactions.It is implemented as a chain of blocks, each block containing a hash of the previous block up to the genesis block[d] of the chain. A network of communicating nodes running bitcoin software maintains the blockchain. Transactions of the form payer X sends Y bitcoins to payee Z are broadcast to this network using readily available software applications.
Bitcoin Mining
Mining is a record-keeping service done through the use of computer processing power. Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodes. Each block contains a SHA-256 cryptographic hash of the previous block, thus linking it to the previous block and giving the blockchain its name. Once the Proof of Work is established the miners are given bitcoins as rewards for their computing power. In the early days of Bitcoin’s inception a low end PC was enough for Bitcoin mining but with time mining became lucrative and specialized rigs were developed for dedicated mining.
Bitcoin Halving
Nakamoto designed Bitocoin in such a way that the number of Bitcoins given out as rewards were halved every 210,000 blocks or roughly every four years. In 2009, 50 Bitcoins were given as reward for successful Bitcoin Mining, this was halved to 25 in 2012. In 2016, 12.5 Bitcoins were given to successful miners while in 2020 this has been halved to 6.25.
