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What is bitcoin halving day?

What is bitcoin halving day?

Just what is halving day? How often does it come about, and why does it matter? Does it affect the price of BTC, and why does it exist at all? In this video, shot in ...

Transcription

What's up party people! Chris DeRose here, community director of the Counterparty Foundation, and today's question is "What is halving day?" So a couple of people asked this and halving day is something that has only happened a couple of times before. It is a day on which the reward for mining a block halves. So there's a lot of articles, and you should look through these, on how the money supply in bitcoin works, but one of the ways that bitcoin works is in a logarithmic award of money to the miners. The miners typically receive bitcoin every 10 minutes. They receive an amount of bitcoin that is their reward. Now, in the early days of bitcoin that reward was 50 bitcoins per block.

Then around, I think, November 2013 that reward went down to 25 bitcoins per block, and then I'm not sure where the next one is, it's roughly every four years, so I think mid 2016 that will go down to 12.5 bitcoins per block. And that will keep on going, it will halve, and it will halve, and it will halve, all the way up to the year I think 2100 or something like that. And the halving interval is every 2010 blocks roughly, which is the four years, and this is one of the ways that the bitcoin money supply has been really interesting to people over the years. It's very different from most currencies. It is a deflationary monetary supply, which is a little different than deflationary but it is unique.

It matches what we have in gold, loosely, and I'm not an expert in gold, but as I understand it at least, gold was something that initially was everywhere, and as we started to take it, it got harder and harder to get, until in recent years, you had to put a lot of money in to get just a little bit of gold. And that trend will continue with gold, and it will continue with bitcoin. When you look at a lot of people in bitcoin, they are making these fantastic sums of money in the early years, part of the reason why was because so many bitcoin were awarded every 10 minutes in that block interval. When that halving number dropped, or halving day came, the amount dropped, a lot of people started producing less money, and this is really important for a lot of reasons. When you look at the bitcoin economy, various ways to value how bitcoin will be priced and such, includes the supply that is entering the economy every day, so when halving day comes that supply halves, and the price may or may not reflect that at some degree. As the time goes on we shall see.

Some of us expect that it will over time, but it's important to understand that bitcoin itself is something that was designed to provide a limited supply over time. That's one of the features. It's a pretty exciting part about bitcoin. It's even one of the more interesting and controversial parts about it. We can speculate as to all the reasons why Satoshi did this. Certainly I'm really not the person to say, but who knows? Maybe we'll get more answers from him one day, if he ever chooses to reappear.

I think it's a smart system, and it's a lot of fun. So, yeah! What other questions do you have? Did we answer all your questions on halving day? Do you want some more questions answered? You can look at the other questions I've answered this far. You can subscribe at the channel if you like to, and you can ask me more on Twitter, my handle is @derosetech and by email, my address is chris@chrisderose.com. Thank you party people!