- Bitcoin, the largest cryptocurrency by market value, experienced its first-ever halving process 11 years ago today.
- On November 28, 2012, or three years and ten months after the mining of Bitcoin’s first block, the first halving event took place.
- The Bitcoin halving mechanism was programmed into the BTC mining algorithm to combat inflation by preserving scarcity.
Today marks the 11th anniversary of the first Bitcoin halving event: What is the significance of the halving event for Bitcoin? Let’s take a look at the history of halving and Bitcoin!
11th Anniversary of the Bitcoin Halving Event
Bitcoin, the largest cryptocurrency by market value, experienced its first-ever halving process 11 years ago today. As the community celebrates the anniversary of the first Bitcoin halving, it’s time to revisit some historical milestones of Bitcoin ahead of the next expected halving in April 2024.
The first Bitcoin transaction took place approximately 15 years ago on January 3, 2009, shortly after the mysterious creator of Bitcoin, Satoshi Nakamoto, published the Bitcoin whitepaper in October 2008.
On November 28, 2012, or three years and ten months after the mining of Bitcoin’s first block, the first halving event took place. At that time, BTC was trading at only around $12, or according to StatMuse data, more than 308,200% below the current price of Bitcoin.
Although the Bitcoin halving – like the digital currency’s 21 million supply limit – is not directly explained in Nakamoto’s white paper, the document does point to specific mechanisms to control the creation of new BTC. The white paper says:
“To compensate for the increase in hardware speed and variability of interest in running nodes over time, proof-of-work difficulty is determined by a moving average targeting the average number of blocks per hour. “If it is produced too quickly, the difficulty increases.”
While the basic information in the BTC whitepaper did not directly explain the halving direction, the direction of the halving is specified in the Bitcoin source code. The halving, particularly the reduction of the miner’s block incentive “halved every 210,000 blocks, which occurs approximately every four years,” is indicated in the validation.cpp file in the Bitcoin Core GitHub repository.
The Bitcoin halving mechanism was programmed into the BTC mining algorithm to combat inflation by preserving scarcity. Before the first halving, miners were rewarded with 50 BTC for each block. After the first halving event, the reward was reduced to 25 BTC, and then the second halving event in 2016 further reduced the reward to 12.5 BTC. The most recent Bitcoin halving occurred in 2020, reducing the block reward from 12.5 BTC to 6.25 BTC.
Price is influenced by the halving cycle
Bitcoin halvings have historically influenced the price cycle of the cryptocurrency as they significantly increase its scarcity. Just one year after the first halving, Bitcoin almost reached $1,000. The second halving event led to a 350% increase in the following year, and BTC then reached nearly $20,000 in December 2017.
Following the third Bitcoin halving, BTC reached $69,000 in November 2021. The anniversary of the first Bitcoin halving comes as the crypto community anticipates the fourth Bitcoin halving. The expected date for this event is April 17, 2024. Many Bitcoin advocates are particularly optimistic about the Bitcoin price in 2024, especially as expectations grow for the United States securities regulators to finally approve a spot Bitcoin exchange-traded fund (ETF).
However, the 2024 halving won’t be the last. It is expected that the Bitcoin miner reward will halve 34 times until 21 million Bitcoins are exhausted. According to the current schedule, the maximum supply of 21 million Bitcoins will be reached around 2140.
