- 1105 2020Bitcoin investors are bracing for a key technical event
Bitcoin faces a key technical event Monday known as the “halving.” Due to take place later in the day, industry insiders are debating what effect it might have on the cryptocurrency market. So what is the halving? You can think of it as an update to the underlying network that logs all bitcoin transactions. There are so-called “miners” on this network with specialized computing rigs competing to solve complex math problems to validate bitcoin transactions. Whoever wins that race gets rewarded in bitcoin. On Monday, the amount of bitcoins rewarded to those miners is set to get cut in half. This is something that takes place roughly every four years to keep a lid on inflation. The current reward stands at 12.5 bitcoins, or BTC, so that will now be reduced to 6.25 BTC. Unlike fiat currencies like the dollar, there is no central bank that manages the supply of bitcoin or its inflation rate. Instead, this is maintained thanks to a rule written into bitcoin’s code by pseudonymous inventor Satoshi Nakamoto. The total number of bitcoins that will ever be mined is capped at 21 million. Rewards to bitcoin miners keep halving until they reach zero. Bitcoin bulls say that this scarcity is part of what underpins the cryptocurrency’s value and make it a potential “hedge” against currencies that are vulnerable to devaluation in times of economic crisis.