What does the fourth Bitcoin Halving signify?

According to CoinGecko, the fourth Bitcoin halving took place on Friday, impacting the price of Bitcoin. The halving process occurs approximately every four years and is a significant event in the cryptocurrency world. The amount of Bitcoins in circulation has been halved, leading to increased demand in the market.

Bitcoins are mined through a process called mining, where miners use special computers to solve mathematical problems. The reward for miners is halved every 210,000 new blocks, which regulates the total amount of Bitcoins that can be created. This halving process is hardwired into the cryptocurrency’s code to limit the number of coins to almost 21 million.

In the past, Bitcoin has seen significant price hikes following halving events. For example, after the first halving in November 2012, the price rose from $12.35 to over $1000. The most recent halving in May 2020 saw a rapid increase in the Bitcoin price to over $60,000. The halving affects miners, who may become less profitable and could lead to increased centralization in the market.

As the mining rewards decrease with each halving, the last Bitcoin is expected to be mined in 2140. Miners would then rely on transaction fees to secure the system, which becomes more crucial with each halving event. Transaction fees need to be high enough to incentivize miners to process transactions and ensure the security of the Bitcoin network. The importance of transaction fees increases with every halving event, posing challenges for the future of Bitcoin mining.