Earlier today (2020-05-11), the amount of new BitCoins awarded to each minor that hits the jackpot of finding the right hash to validate the latest block of transactions now gets rewarded HALF the amount of BitCoin that they would have been awarded for each block mined for the last 4 years. For the last 4 years, up until earlier today, every block that was mined, 12.5 BitCoins were awarded to the miner that mined it. Now, and for the next 4 years, any minor that mines a block will be awarded only 6.25 BitCoins.
Why did that happen?
Creating new BitCoins is like printing money. It shouldn’t be done unless it has to because doing so floods the market with new coins and reduces the value of every coin already in existence. This is called “inflation”. But, the miners have to be incentivised to run their expensive hardware and burn through their expensive electricity, therefore, they are rewarded with a small amount of new coins. But, also built into the algorithm is a maximum limit of 21 million total BitCoins. There aren’t that many BitCoins yet, and this halvening algorithm is part of the reason why. By cutting in half, the reward, every 4 years (more specifically, every 210,000 blocks mined), it will take 144 or so years before the last BitCoin is mined.
What does this mean?
For miners, it means their income is cut in half… but only in the short term. BitCoin is deflationary by design, so the value of BitCoin has been and it is expected to continue to go up over time.
For consumers, it doesn’t mean much, at least not in the immediate future. The price of BitCoin has not been immediately effected by prior halvening events. For the most part, it should be business as usual.
For HODL’rs (people that Hold On for Dear Life… saving for the long term), it should reinforce the future value of their BitCoin.
For day traders, given prior halvenings that turned out to be non eventful, they probably won’t experience much of a difference either.
For the most part, there’s more hype than action… every halvening, but the algorithm for the halvening is critically important for the long term viability of BitCoin.