After some blocks are mined, or almost every four years, the block reward given to Bitcoin miners for processing transactions is cut in half. It is called halving because it cuts in half the rate at which new bitcoins are released into circulation.
And this system would work until sometime in 2140 when it would be exchanged for various fees. It is envisaged that the fees will be charged from the time the 21 million mark is reached. In the beginning, the rewards were really high but now it’s averaging about 6.25BTC and that will also shrink over time.
It is said that almost every 4 years the rewards go down, but it mostly depends on how much is mined and when it reaches some limit the rewards start going down again.
So we reckon that around 2024 bitcoin should start halving again to some 3.25btc and then it will continue around 2028 to 1.625.
Cutting the block reward in half will effectively double the cost of miners, who are essentially bitcoin producers, so this should have a positive impact on the price as producers will have to adjust their selling price to their costs.
But if we look into the history of what happens after halving, the price definitely increases. In fact, the first halving the price went up very much from just 11 dollars. If we look at the second halving, it again moved the price of Bitcoin by several times what it was. And it was the same for the third halving. So it’s probably clear what to expect in 2 years.
Around 2140, the last of the 21 million bitcoins will be mined. At that point, the halving schedule will stop because no more new bitcoins can be found. However, miners will still want to continue to validate new transactions on the blockchain because the value of transaction fees paid to miners is expected to increase in the future.
And so it’s definitely a good idea to reconsider whether we want to get into the world of cryptocurrencies and bitcoin because you can still make a lot of money after halving and support the modern world of cryptocurrencies. But it is very risky and you need to find out a lot beforehand as halving is not everything that happens with Bitcoin.
Many people claim that in a few years there will be only cryptocurrencies and everything will be paid through the internet and blockchain as paper currency is slowly but surely losing its value.