Currency traders are seemingly obsessed with trying to predict the Federal Reserve’s next move, meticulously analyzing every word of every official communique for clues about the future path of monetary policy.
There’s nothing like that in the world of bitcoin. Instead, the rate at which the bitcoin supply increases is preordained by a few lines of code.
And on Saturday, that rate will fall dramatically after a quadrennial event called “the halving.” Some say the event, which will cut the rate at which new bitcoins are created in half, could cause the price to jump.
Here’s what you need to know:
What is the halving?
Satoshi Nakamoto, the pseudonym used by the mysterious creator, or creators, of bitcoin, intended for the supply of bitcoin to be inherently deflationary, contrasting sharply with the policies of central banks, which can, in theory, print a limitless supply of new currency.
So he created a mechanism for gradually reducing the supply of new coins created, and wrote it into the underlying bitcoin software.
This is how bitcoins are created: Miners process transactions on the network by using powerful computers to solve complex cryptographic puzzles that bundle transactions into blocks, which are then stored on the blockchain — the supposedly