Bitcoin Halving: What does reward halving mean?

Bitcoin Halving: What does reward halving mean?

The digital currency Bitcoin has seen a notable rise in recent weeks, resulting in a relaxed mood among holders. Since the beginning of the year, Bitcoin has gained around 50 percent and has largely ignored the decline after November 2021. Nevertheless, geopolitical events such as Iran's attack on Israel and profit-taking have pushed the Bitcoin price from over $71,000 to under $62,000. The current rate is approximately $66,000.

The main reason for Bitcoin's recent boom is the high demand for several exchange-traded funds (ETFs) in the US, which allow investors to invest in the cryptocurrency without purchasing it directly. The rally is also being driven by Bitcoin's upcoming fourth halving, in which the reward for verifying transactions will be halved.

The halving protocol, established by Satoshi Nakamoto, the pseudonymous founder of Bitcoin, stipulates that the reward for miners is halved every 210,000 blocks. This results in a limit on the amount of newly introduced tokens. The upcoming halving to 3,125 Bitcoin could lead to a price increase if demand exceeds limited supply, according to experts.

Despite the record prices, many traditional investors are skeptical about Bitcoin, with no expectation that the price will rise to $100,000 or higher. A survey by Deutsche Bank shows that a third of US consumers expect Bitcoin to fall below $20,000 by the end of the year. In this uncertain situation, German consumer advice centers do not recommend investing in Bitcoins due to the high risks.

The upcoming halving could also impact the miners who keep the Bitcoin network running. Less efficient or costly miners may struggle if the reward is halved. Nevertheless, professional miners have prepared for the halving and should be able to continue to work profitably. While the mining landscape is expected to change, it is unlikely to have a significant impact on the entire network.