What is Bitcoin Halving? | All About Bitcoin Halving (2021)
It can be difficult to get started with cryptocurrency. For many beginners, it will be complicated to understand all the technical details behind the cryptocurrency.
Because blockchain is still a fairly new technology that has not yet been incorporated into many applications, there are many people who do not know exactly how it works. Each crypto currency works differently and therefore it is a lot of information to understand all at once.
How to Start Buying Bitcoin on Your Own - Step-by-Step
1 - Buy bitcoin with an online broker: There are many online brokers to choose from (we recommend eToro!)
2 - Open an account: Simply use the orange 'register' button on eToro's website
3 - Fund your account: You can securely transfer money to your account, you will need this to buy BTC.
4 - Buy the bitcoins: Find bitcoin on the trading platform and decide how much money you want to buy BTC for!
A top online broker for easy investing in bitcoin is eToro. Register directly with the button!
With Bitcoin, it is important to know that the currency can be mined. This means that miners, who approve and verify transactions, are compensated in the form of new Bitcoin for mining.
However, there is a maximum number of 21 million Bitcoin that will appear on the market. This means that at some point, no more Bitcoin can be issued - that is why Bitcoin halving was invented.
This article will tell you everything about what Bitcoin halving means, what effect it has on the Bitcoin exchange rate, and when Bitcoin halving is planned.
What is Bitcoin Halving?
Bitcoin is entirely based on Blockchain. You have probably heard of the term before and maybe you know exactly what it means.
Blockchain can be used for many different applications but in this article we will look at how Bitcoin uses the technology.
Simply put, with Blockchain you create a database of information that is decentralised. This means that the database is not controlled by one person or computer but is built by all the bits of information from all the users.
This means that no one has control over Bitcoin and no crazy things can happen inside the database. This makes it safe from outside attacks and makes it impossible for large parties to influence the Bitcoin price.
Bitcoin halving is all about blockchain. As mentioned before, miners receive a fee when they approve an entire block of Bitcoin transactions.
This fee consists of part new Bitcoin that the miner receives and part transaction fee. This way, it is still beneficial for miners to use a lot of computer power to keep Bitcoin technology alive.
Bitcoin halving halves the fee a miner receives in new Bitcoin. A Bitcoin halving happens every 210,000 blocks that are approved which is about once every four years.
The idea behind this halving is that, in the long run, the price of Bitcoin will continue to rise enough that the fee for miners will be enough to keep the computer power working. With a limited number of Bitcoins on the market, this theory seems to work for now.
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When is there a Bitcoin Halving?
Bitcoin has been around since 2009 and there have been three halves. In Bitcoin's early years, the fee per approved block was 50 new Bitcoin.
Bitcoin Halving 2020
The last Bitcoin halving was in 2020 when the fee per block was halved from 12.5 Bitcoin to 6.25 Bitcoin. Below is the list of all Bitcoin halvings to date with the fee in effect at that time.
3 January 2009
Bitcoin was launched in 2009 and with each block, miners were rewarded with 50 new Bitcoin. Between 2009 and 2012, the price went from €0.00001 to €20.
28 November 2012
First Bitcoin Halving
The end of 2012 marked the first Bitcoin halving date. The first 210,000 blocks were reached and the reward was halved from 50 new Bitcoin to 25 new Bitcoin. At the time, the reward was worth 25 * €20 = €500.
In the years after 2012, the price of Bitcoin skyrocketed and with it, the reward became more and more interesting.
9 July 2016
Second Bitcoin Halving
The second Bitcoin halving date was 9 July 2016. The date was still before Bitcoin really became known to the general public. In July 2016, the price of Bitcoin fluctuated between €500 and €600.
The reward per block was halved from 25 new Bitcoin to 12.5 new Bitcoin. The value of the reward increased due to the huge price rise the coin went through.
12 May 2020
Third Bitcoin halving
In the four years between 2016 and 2020, a lot happened to Bitcoin. The price rose from €500 to €16,500 during that period.
The third Bitcoin halving date came at a time when Bitcoin was a lot more well-known. The Bitcoin halving 2020 meant that the fee was halved from 12.5 new Bitcoin to 6.25 new Bitcoin per block in May 2020. The fee was worth about 6.25 * €9,000 = €56,250 in May 2020.
So it seems that a fee has become much more valuable and it might be easy to make money as a Bitcoin miner. However, over the years, it has become much more difficult to mine Bitocin.
There are more and more miners, and these miners have better equipment that makes it impossible to mine with your own computer. In addition, there are more and more companies that bundle a lot of computer power.
Mining a block on your own is therefore not possible. If you want to mine, you have to join a mining pool and share the revenue with all the miners in the pool.
The exact Bitcoin halving date is unpredictable but it will roughly follow the trend of once every four years. At the Bitcoin halving date of 2024, the fee will go from 6.25 new Bitcoin to 3.125 Bitcoin, here is a Bitcoin Halving Countdown. This countdown predicts the Bitcoin halving date.
Because there is a maximum amount of Bitcoin that will ever come to market, this fee will no longer apply at some point. However, due to the halving every 210,000 blocks, the maximum number of Bitcoin will not be reached until around the year 2140.
Because miners also receive transaction fees, the idea is that Bitcoin will continue to increase in value and the transaction fees will become a larger part of the miners' compensation. In fact, from the year 2140, mining may be profitable without receiving new Bitcoin.
What effect does a Bitcoin halving have?
For Bitcoin halving to work properly, it is important that the price of Bitcoin continues to rise. Once this does not happen, miners may not be interested enough to continue working on the network.
This is one of the reasons why many cryptocurrency investors are excited about Bitcoin halving. Here is the Bitcoin halving chart with its effect on the exchange rate.
A direct effect of Bitcoin halving is not necessarily seen in the Bitcoin halving chart. As you can see above in the Bitcoin halving chart, after the first two Bitcoin halving events there was no immediate reaction in the price.
In the longer term, the last two halvings do show a reaction although not necessarily directly related to the halving. At the end of 2017, there was a real crypto boom as Bitcoin suddenly attracted a lot of attention and the same seems to have repeated itself after the Bitcoin halving in 2020.
In the period that a halving is approaching, there is always extra news and extra tension surrounding Bitcoin. This can cause the price to fluctuate sharply as shown in the Bitcoin halving chart leading up to Bitcoin halving 2020.
In addition to Bitcoin halving, Bitcoin Cash halving is also taking place. Bitcoin Cash halving also occurs with every 210,000 blocks mined, and the same effect on the price can be expected with Bitcoin Cash halving.
Responding to the Bitcoin Halving
As an investor, you always try to keep an eye on the news surrounding your investment. Cryptocurrencies are no different, news about certain coins will always cause the market to react.
As you could see above, the effect of a Bitcoin halving varies but you can see that after the last two Bitcoin halvings, there was a huge increase in the price of Bitcoin. It is advisable to keep a close eye on when there is a Bitcoin halving and monitor the price before then.
The last Bitcoin halving saw the price plummet just before the halving, while it was quite stable in the following days. When the next Bitcoin event occurs, it is important to take this information into account in order to anticipate the fluctuation of the Bitcoin exchange rate.
Buy BitcoinWant to start buying Bitcoin right away? Here are the best places to start your first Bitcoin purchase.
Step 1: Choose an online broker
Step 3: Verify and fund your account
Step 2: Open an account
Step 4: Buy your first Bitcoin
Step 1: Choose your broker
You need a good broker to buy Bitcoin. A broker is the intermediary between the market and the consumer.
Below are some brokers and their main features. Choose the broker that suits you best and start earning Bitcoin right away.
Buy bitcoin at eToro
eToro is a very suitable broker for novice investors who do not yet know exactly where to start. The user-friendly interface and the focus on social trading makes it an ideal broker to start investing in various trading products.
Not only crypto currencies are available at eToro. Also stocks, ETFs, commodities are examples of the extensive range of trading products at this broker.
It is possible that at the beginning you do not know perfectly what you want to invest in. For this, eToro has devised the copy trading platform.
This feature allows you to view the investments of others and even copy them to your own investments.
Also you get at eToro a free demo account. With the demo account, you can invest on the platform without it costing you real money. This allows you to first discover the various trading products before you deposit money into your account.
Depositing money is easy, and eToro has only a low minimum deposit amount of $50 (€42). So getting in is easy. Try it now!
Would you like to start investing in cryptocurrencies such as bitcoin immediately? Then create an account on eToro now and start investing today!
Buy Bitcoin at Plus500
Plus500 is another great broker to choose from. The difference is that Plus500 only offers CFDs.
So, you cannot buy real bitcoin from Plus500, but you can trade it and anticipate the price changes. In addition, there are other crypto currencies offered in this way by Plus500.
Plus500 provides a platform with many analysis tools to help you understand the price of different cryptocurrencies. These analysis tools should make it easier for you to make a good choice when buying or selling Bitcoin.
Also at Plus500, you can first use a demo account. This way you can use virtual money to see if you like the platform and if investing is right for you.
Buy Bitcoin with Libertex
For the novice trader, Libertex is the best broker. With Libertex comes a user-friendly platform that is used by millions of other traders.
Libertex is one of the brokers with the lowest costs for trading crypto currencies. For example, at Libertex you pay very low transaction costs and you get good spreads.
Would you like to learn all about the possibilities of Libertex without immediately risking losing money on it? Then you can make use of the demo function of Libertex.
With this demo function you get virtual money with which you can start investing. This way, you can learn how the platform works and get used to investing in cryptocurrency.
In addition to crypto currencies, Libertex is also the place to go if you want to trade in stocks. In addition, Libertex offers extensive analysis tools.
With these analysis tools, you can gather more information about the trading product you wish to trade. This helps you to be well prepared when you enter the market.
In addition to Bitcoin, Libertex also offers other crypto currencies. They offer more than 30 crypto currencies! Try trading in other successful coins, such as Ethereum, or smaller altcoins, such as Polkadot.
All in all, we recommend Libertex for the novice investor who wants to start investing in Bitcoin.
Step 2: Open an account
For the novice investor, eToro is the most suitable broker and for the example in the next steps we will therefore look at this broker.
Opening an account at eToro is easy. Click on the big orange "Sign up" button on eToro's homepage.
To create an account, you initially only need an email address and password. You get an email to verify your account, once you have done this you can immediately get started with a demo account.
The verification in your email is not yet enough to really get started with the platform. Read below the steps you need to take before you can buy your first bitcoin.
Step 3: Verify and fund your account
To fully verify your account, you need to send a copy of your ID to eToro and fill out a questionnaire. At every secure regulated broker, it is mandatory to fill in this information.
Without this information, you will not be admitted to eToro's real platform. Once the verification is completed and approved, you can deposit money into your account for the first time.
At eToro, the minimum deposit amount is only € 42.
Step 4: Buy your first bitcoin
Using the search bar at the top of the eToro interface, you can search for stocks, cryptocurrencies, indices and more. If you search for Bitcoin, you will get several options such as Bitcoin Cash or the markets where Bitcoin can be exchanged for Ethereum or other cryptocurrencies.
To just buy Bitcoin, choose the top option to go directly to the Bitcoin market. Once there, you can use the blue 'Trade' button to buy your first bitcoin.
Through eToro you can easily and quickly get your first bitcoin. Start today with your registration to dive into the crypto market as soon as possible!
Frequently Asked Questions
Bitcoin halving cuts in half the rewards for miners who use their computer power to maintain the Bitcoin network. In addition to this reward, miners also receive a portion of the transaction fee.
Bitcoin halving is a major event on the Bitcoin network every four years. Investors look forward to these halves to see how the market reacts to them.
Since the value of Bitcoin exploded to around €15,000 in late 2017, there has been one Bitcoin halving. Before this halving, there was a sharp drop and rise.
What this makes clear is that the price fluctuates a lot around a Bitcoin halving. So, buying new bitcoins around a bitcoin halving is taking a risk.
To buy Bitcoin, you need to open an account with a broker. For the novice investor, eToro is the best place to start.
Bitcoin halving only affects the rewards for miners. If you do not do this and just own Bitcoin, nothing will change for you.
Bitcoin Cash (BCH) also halves its rewards once every 210,000 blocks. Bitcoin Cash was launched as an improved version of Bitcoin.
It is based on the same principles including halving the reward for miners but the value of the currency is very different compared to Bitcoin. Bitcoin halving and Bitcoin Cash halving are not simultaneous, there can even be a long time between a Bitcoin halving and a Bitcoin Cash halving.