In the cryptocurrencies world, there are many processes that existm but aren’t known by many. Some of them might be the solution to the problems of many cryptos, but because of lack of knowledge, aren’t discussed among their users. One of the less known processes among beginners is halving. In the following articles we’ll talk a bit about it, so those that aren’t familiar with it can understand its implication better.
In the cryptocurrency world, we understand halving as the reduction to half of the reward received by miners for their job, that’s completing a transactions’ block. This way, the mining difficulty’s rised and the inflation’s reduced by half instantly. The last halving made to Bitcoin, for example, reduced its inflation from 8% to 4%.
This reduction process is declared in the code of those cryptocurrencies who have it, which orders the reduction to half of said reward by the mining job after a certain amount of finished blocks, in the case of Bitcoin, 210.000 blocks. In the creation of Bitcoin in 2.009, the starting reward was of 50 BTC by completed block, and currently is 12.5BTC.
Even when all the experts know about halving, few of them know that the Bitcoin code in the beginning didn’t have that order. Thus, it was after Bitcoin was established, used and popularized that really added the halving as option. This way, after a discussion among its followers, the Bitcoin code added the halving as rule every 210.000 blocks. From this moment, the option of using this reduction process was made a possibility in the cryptoworld.
This way, November 28th 2.012, the first halving in the history of the cryptoworld occured. Thus, they went from 50 BTC by block as reward to 25 BTC by block as reward to miners of Bitcoin. Is from this moment that the world started seeing the halving in the cryptoworld as a way to erradicate the possible inflation that these may suffer.
A cryptocurrency’s offer is limited to a specific issue number, and in those that can be mined, miners are rewarded for their job, that’s verifying the Blockchains’ blocks. This reward if offered to miners when they manage to generate new blocks, and this has an estimated time, that according to calculations is about 10 minutes.
When a halving occurs, an order to reduce to half the reward that’s offered to miners by block every determined about of completed blocks is added to the source code of the crypto. When that number of blocks has been completed, the reward is reduced by half and the number of blocks it’s started to count from scratch. And every time that this number of blocks is reached, it’ll be reduced by half.