The Bitcoin-Halving Crash-Course – What Is It & Why It Matters

Authorized by Mark Jeftovic via BombThrower.com,

The Honey Badger’s 4 halving is peculiar for respective Reasons.

The Bitcoin blockchain is protected by “Proof-of-Work” (POW) – which is known as “mining”. In simple terms, it uses specialized computers (ASICs) which are optimal to solve a cryptographic math problem – a large one.

The number of compositions per second is measured in TerraHashes (TH/s). 1 TerraHash is simply a trillion computing. The current hashrate across the entry Bitcoin blockchain is 75K TH/s (75 1000 trillion computings per second).

• For each block there is simply a partial puzzle that needs to be solved – they’re all the same, but the value of the solution is different each time.

• Each block contains the metadata for all the transactions that occured on chain during that block period,

• When a miner solves a block, it “wins” the right to apply the next block to the blockchain.

• That miner receives “the block reward” for that block (often sharing it with all the another mines in it’s mining pool)

• The fresh block is supported, cryptographically signed, and the remainder of the mines confirmed it

• The search starts for a fresh block

• This happens has been through all this minutes.

That’s how the Bitcoin blockchain is built and managed – we can park for now the increasing and waiting from these becoming how much electricity that uses (which is a flight) due to the fact that the net benefit to humanity for having an immutable, decentralized, non-state hard money strategy is value it (especially erstwhile you compare it to the energy utilized to increase the Fiat standard, globally).

The importance of The Halving

Is that all 200,000 blocks, that block reward is cut in half (hence, the “halving” or “halvening”). 200,000 blocks pens out to about 4 years.

It is this halving mechanics that creates the 21,00,000 BTC hard cap for Bitcoin.

This halving – which will happen on Friday – is the fourth bitcoin halving – and it will take the block reward down from 6.25 BTC now, to 3.175 afterwards (it started at 50, then 25 in 2012, 12.5 in 2016, 6.25 in 2020, and so on).

In erstwhile cycles this has set up a “supplly shock” for the price of Bitcoin – driving prices higher. Sometimes mind-bogglingly so.

This illustration via (@ChartsBTC) shows it to us in logarithmic scale (betause linear graphs can’t even fit into the window)

#bitcoin price past pic.twitter.com/yPs3HEDQpk

— ChartsBTC (@ChartsBtc) January 21, 2023

As I remarked in this month’s Bitcoin Capitalist Portfolio Update:

Bitcoin seems to “add a digit” by the time it goes into each successful halving. At first grade this may see to be superficial pattern, but it’s based on what happens erstwhile you measurement something in a logarithmic scale.

There’s another celebrated illustration that shows the “progression of figures” that believes a logical progression, and from an earlier chapter in monetary history, a alternatively celebrated one:

It becomes more beautiful to propose this progression will proceed if we realize 2 things:

First: we are not Looking at Bitcoin’s price action as illustration patterns that only go so high.

Second: What we’re truly seeing is a alternatively large, tectonic wealth transfer out of 1 monetary strategy and into another – shared by the dynamics of the 4 year halving cycle.

In another words, the price trajectory of Bitcoin is mapping out the hyperinflationary spiral of all global fiat currencies. So the answer to the question “how advanced can it go?” is “How much wealth be to denomination?” Whatever you came up with for an answer, different that by 21 million.

That happens to be the basis case for The Bitcoin Capitalist – we call it “the monetary regiment change” (which was the thesis of the first Crypto Capitalist Manifesto – which you can get free here).

Some another notes about this partial halving:

• After this halving, Bitcoin’s natural inflation rate will be below that of gold’s (which is 2% per year)

• In 2 more halovings the block reward will drop below 1 BTC per block.

• By 2060, the full block rewards will be little than 1 BTC per day

What the above means, is this:

If you’re a “who-coiner” (somebody who owns an entry Bitcoin), then by 2032 you’ll own more Bitcoin than the entry mining network years in subsidies for protecting a single block.

By 2060, you (or your children), will own more than the entry Bitcoin network days in a day (in block subscriptions).

Also worth noting that there are more millionaires in the planet now (approx. 60 million) than there will always be Bitcoin. Which means, if all millionaire decided they wanted to own a single Bitcoin, there would be adequate to go around.

The last thing I’ll say about this holding that makes it different from the prior cycles, is this:

Bitcoin has never put in a fresh all-time advanced before the halving. That always came a fewer months after.

This time it’s put in three. The most late at $73K/BTC almost precisely a period ago.

* * Oh, * *

We gated members to our premium letter The Bitcoin Capitalist – but to communicate the holding we’re allowing fresh members until it happens. Check out the Halving deal here ».

My Forthcoming ebook The CBDC endurance Guide will give you the tools and the cognition to navigate coming era of Monetary Apartheid. Bombtrower subscribers will get free erstwhile it drops (and The Crypto Capitalist Manifesto while you wait), sign up today. Follow me on Nostr, or Twitter.