I have read a lot about the halving that is set to take place later this year, but my question is how is halving calculated? Will it also effect my bitcoin balance as a whole?
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3 Answers
The halving takes place approximately every 4 years. It is programmed in the software.
It will not affect your current bitcoins at all. It only affects the newly mined bitcoins which will be 12.5 after the halving (instead of 25).
The halving is expected to influence the price of bitcoin. With less supply the price will probably rise given that demand is the same... at least in the long run, since supply could also stay the same or even increase if people that were holding bitcoins start to sell.
A Bitcoin block reward is composed of two parts:
- the block subsidy, which are newly minted coins
- the transaction fees, which are paid by the transactions included in the block
The block subsidy halves every 210,000 blocks which take about four years. The subsidy started with 50 BTC, halved to 25 BTC in 2012, to 12.5 BTC in 2016, and will halve to 6.25 BTC in May 2020. Eventually, the halving will reduce the block subsidy to an amount below one satoshi and no new bitcoins will be created. The block reward will be only composed by transaction fees then.
Existing Bitcoin balances are not changed by the halving.
Halving reduces the block reward by 50%.
Current block reward is 12.5 Bitcoins. As a result, after halving the block reward of bitcoin will fall to 6.25 Bitcoins. After 4 years from now, block reward will be reduced again, and will fall to 3.125 BTC and so on.
According to this countdown of bitcoin, halving will happen in just 18 days https://bit4.sale/en/halving/btc/, so that is approximately on the 11th or 12th of May, depending on which time zone you're located in.
Your Bitcoin balance won't be affected in any way. Halving only reduces the reward that miners will get from each block.