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Bitcoin Halving 2024

The next Bitcoin halving is expected to take place in April 2024, specifically, when the blockheight reaches 840,000. The halving mechanism is fundamental to Bitcoin’s monetary policy, ensuring its scarcity by limiting the supply. Here we’ll take a look at what this means both technically and for the funds you hold.

What is a "halving"?

Halving refers to when the block reward earned by miners is cut in half. This happens every 210,000 blocks, which equates to roughly once every 4 years. The April 2024 halving will reduce the block reward from 6.25 to 3.125 BTC per block.

The halving mechanism is embedded in Bitcoin's design to ensure that its total supply will never exceed 21 million coins. This deflationary mechanism increases the scarcity of bitcoin over time, making it more valuable as a finite resource.

From a technical standpoint, the halving ensures that the rate at which new bitcoins are created is reduced over time, which slows down the issuance of new coins. This is a key aspect of Bitcoin's value proposition as a store of value and a hedge against fiat currency inflation.

Halvings & how Bitcoin works

The Bitcoin network is peer-to-peer, with transactions made directly between users. These transactions are verified through Bitcoin’s proof-of-work consensus mechanism by a network of nodes (miners) and included in a public ledger (blockchain) through a process called mining.

Mining ensures that the public Bitcoin blockchain is a complete and indelible record of every bitcoin transaction. Moreover, it ensures that you cannot spend bitcoin that you don’t own, or that you’ve already spent.

New bitcoins are created during the mining process and are used as a reward for the miners. This acts as an incentive for miners to independently validate transactions and maintain the integrity of the blockchain.

Halving is the scheduled reduction of this block reward (also known as block subsidy) by half. This reduction in the rate of creation of new bitcoin ensures scarcity of the asset, and limits the total supply, which is capped at 21 million.

Miners also earn rewards in the form of transaction fees. This additional income stream varies depending on network usage, and is poised to become increasingly significant as the block reward diminishes over time.

Bitcoin halving dates & history

Historically, Bitcoin halvings have been landmark events that are closely watched by the community. There have been three previous halvings before the 2024 event:

  1. November 2012: The reward dropped from 50 to 25 BTC.
  2. July 2016: The reward decreased from 25 to 12.5 BTC.
  3. May 2020: The reward was halved from 12.5 to 6.25 BTC.

The 2024 halving will see the block reward drop from 6.25 to 3.125 BTC. This system will continue until all BTC is mined, with the final halving expected to occur in the year 2140.

What happens to Bitcoin after the halving and what should I do?

Previous halvings have typically been accompanied by a price appreciation, caused by the reduction in the rate of supply of new bitcoin alongside a general increased demand for the asset. That said, it is important to note that halvings alone do not dictate the value of BTC, as many other market factors also influence its price.

For the network, the decline in block rewards likely leads to an industry leaning more heavily on transaction fees, thus raising challenges in profitability and security for miners.

What can be guaranteed is a significant amount of media coverage and chatter surrounding the event. This in turn attracts more and more newcomers to the asset, which unfortunately means scammers will be waiting to exploit such an opportunity. As Trezor was originally designed to be the safest and most convenient way to protect your bitcoin, the best course of action any newcomer can take is to secure their bitcoin using a Trezor hardware wallet, and follow the usual best security practices:

  • Purchase your Trezor directly from us, or an authorized re-seller
  • Never share your recovery seed or make a digitial copy
  • Use a strong PIN to protect your device from unwarranted physical access
  • Keep Trezor Suite and your device up to date
  • Learn how to use the Passphrase feature to enable hidden wallets
  • Stay vigilant: report phishing attempts from suspicious email addresses, and never click on links or download attachments from unknown senders

Bitcoin halving 2024: FAQs

Should I buy BTC before the halving?

It’s always a good time to buy bitcoin! If you’re particularly interested in investing in bitcoin as part of a broader portfolio, the anticipation of the halving ordinarily drives the price of bitcoin up, but it can of course also increase market volatility.

Will BTC go up after halving?

Historically, the price of bitcoin has followed a four-year cycle believed to be associated with each halving event. Each halving has led to a substantial rally leading up to the event, followed by a brief correction and period of consolidation before the major bull run.

Is Bitcoin halving good?

Halvings are significant events in Bitcoin blockchain, and they are core to the monetary policy of the asset. The 2024 halving is a continuation of Bitcoin's deflationary monetary policy, designed to increase scarcity and potentially drive up value over time. The halving event also has implications for miners, as it can result in consolidation within the mining sector, with smaller miners potentially struggling to remain profitable and larger players dominating the industry. The shift towards relying solely on transaction fees once all 21 million Bitcoins are mined will also require miners to adapt.

How much will bitcoin be worth after the 2024 halving?

We cannot say exactly how and when the price of bitcoin will change, but historically halvings have been associated with a general appreciation in value. This will happen if the supply reduction leads to positive price action, which has been observed historically. The 2024 halving is also accompanied by other developments such as the launch of Bitcoin spot ETFs, decreasing confidence in devalued fiat currencies, and a broader positive opinion of Bitcoin—all of which can have a positive effect on its value. However, the market is unpredictable, and other factors will also influence the future price of bitcoin.

What will the halving do to the price of bitcoin?

We cannot predict the future, but we can look back and see the effect(s) of previous halvings. Each halving has historically led to significant price volatility that has been followed by a bull run in the months or years following the event.

If you’re interested in adding bitcoin to your investment portfolio, a good place to start is Dollar Cost Averaging (DCA) in Trezor Suite to remove exposure to price volatility.
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