Halving is a procedure in the crypto world that slows the rate at which new coins are issued. More exactly, halving refers to the reduction in the block subsidy offered to miners on a regular basis. The halving ensures that a crypto asset’s issuance rate remains constant until its maximum supply is achieved.
In the case of Bitcoin, new coins are constantly being created as part of the block reward (which is made up of the block subsidy plus transaction fees). As a result, every time a miner successfully “discovers” and validates a new block, they are rewarded with newly minted coins. So for Bitcoin if blocks are mined every 10 minutes on average, and the block subsidy decays at a predetermined rate. As a result, the halving ensures that every 210,000 blocks which is roughly every 4 years, the reward rate will reduce by 50%.
By lowering the quantity of bitcoins in circulation and increasing demand for Bitcoin, it causes price inflation in the crypto. The halving of Bitcoin has ramifications for all stakeholders in the Bitcoin ecosystem.
