What is Bitcoin halving?
Bitcoin halving is an event that is held every 3-4 years on the Bitcoin network. The number of new Bitcoins created and mined by miners with each new block of transactions is cut into half. When a change in the Bitcoin inflation occurs, it is called halving.
Why does halving occur?
Bitcoin halving is part of its predictable and transparent monetary policy, designed to have a built-in reward system. This system awards every miner who mines a block by solving a complicated mathematical problem. The reward began at 50 Bitcoins and continues to be halved until all 21 million Bitcoins are mined.
At the start of Bitcoin’s existence, if you mined 1 block you were awarded 50 Bitcoins. As time went on this was later halved to 25 Bitcoins, and currently stands at 12.5 Bitcoins.
As of 2018 nearly 80% of all Bitcoins have been mined. The next Bitcoin halving event is roughly expected to occur in 2020.
What happens when all 21 million Bitcoins are mined?
This will essentially affect all miners, because there will no longer be blocks to mine and therefore, no Bitcoins awarded to miners. Thus, miners will solely rely on transaction fees as monetary rewards. Unless, the Bitcoin protocol is changed to permit a larger supply of Bitcoins. Only time will tell!