Today the 420,000th block of bitcoin’s blockchain was mined, bringing about the first reduction in the mining reward since 2012. Computer processing power around the world combines to secure bitcoin’s network and verify transactions; the reward they get for mining a single block is now 12.5 bitcoin, falling from 25.0. It will fall again to 6.25 sometime in 2020. Crypto-enthusiasts around the world are celebrating bitcoin’s maturity with halving parties. Instead of around 3,600 newly minted bitcoin becoming available on a day-to day basis, this number is cut in half to 1,800. A lot of the recent appreciation in bitcoin against fiat currencies has been attributed to the halving event, as it is essentially a reduction in the supply of the crypto-currency. We will now look at what bitcoin’s block reward halving really means.
This event has only ever occurred once before when, on November 28, 2012, the miners’ reward dropped from 50 to 25 bitcoin per block. bitcoin is decentralized meaning that no central authority controls its supply. The inventor (or inventors) designed the process of ‘mining’ bitcoin to be similar to the extraction of gold; a decreasing rate of supply and