“To understand halving, it is important to remember the role of miners, who are basically responsible for the bitcoin network security.”
Bitcoin miners, whose computer processors enable the running of the world’s most popular virtual currency, will soon face an event that takes place every four years and alters the profitability of the hi-tech industry.
The virtual unit was once the preserve of internet geeks and hobbyists but it has since exploded in popularity, with mining performed by huge banks of computers.Bitcoins are traded via a decentralised registry system known as a blockchain.That power is provided by miners, who do so in the hope they will receive new bitcoins for validating transaction data.
“Each time a block of bitcoin transaction takes place, they need to be verified by miners. The miner that verifies each block gets a reward for its work with more, newly created, bitcoins.”This occurs every four years and basically involves the halving of the reward from bitcoin mining. “However, if the value of bitcoin appreciates significantly then this will offset some of the costs.”
“With the supply of bitcoins mandated to eventually reach the limit of 21 million, the creator of the digital currency had decided that these rewards must decay exponentially, otherwise supply will not be controlled,” added Razaqzada.
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