2024 Bitcoin Halving & Evaluation of Bitcoin Network Progress Before the Halving

We are now оne week away from the fourth consecutive Bitcoin halving event - a highly anticipated milestone for investors, developers, crypto holders, and the entire crypto community.

In this article, our focus will be on the improvements that were introduced to the Bitcoin network prior to the 2024 halving event. What significance do these improvements hold for the future of Bitcoin? What exactly is Bitcoin halving, and how halving is expected to affect the community? Furthermore, why does halving occur once every four years and how do we know when exactly halving events will take place? 

These questions, as well as others related to the Bitcoin network upgrades and improvements over the years, as well as other concerns with the BTC halving will be explored and answered in the paragraphs below.

What exactly is Bitcoin halving and what factors determine its occurence?

Bitcoin halving is a regular event taking place once over each approximately four-year long cycle. The idea behind halving is, as its name suggests, to reduce by half the Bitcoin mining rewards that crypto miners receive. The slashed Bitcoin mining rewards are limiting the number of new coins entering the Bitcoin supply. 

Bitcoin, as well as some other blockchain protocols are based on the Proof-of-Work (PoW) consensys, which allows cryptocurrency miners to actively participate in the network and get rewarded for their efforts. In essence, crypto miners are individuals equipped with special computers that have the ability to solve difficult mathematical equations. Once these equations are solved, new blocks are created on the network, new coins are released into circulation, and miners receive their reward for processing Bitcoin transactions and adding them into newly created blocks. 

Another significant rationale behind Bitcoin halving, as previously mentioned, is to control the influx of coins onto the Bitcoin blockchain by fostering a sense of scarcity. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, outlined in the Bitcoin whitepaper that the total supply of Bitcoin is fixed at precisely 21 million. Once this limit is reached, it will represent the maximum cap, and miners will no longer be able to generate new coins that can be entered into circulation.

What will be the consequences of 2024 Bitcoin Halving?

We can categorize the outcomes of the upcoming halving into two groups, and both are related to numbers. The first category is concerned with the amount of reward that miners will receive per mined block. The second one is Bitcoin price expectations.

To better illustrate what we are anticipating to happen after the halving, we need to take a look at the previous three Bitcoin halving events. The first halving took place in late 2012 when the block reward was slashed from 50 to 25 BTC. In 2016, the second halving reduced the block reward to 12.5 BTC. The third halving slashed it to 6.25 BTC per block. What we know will happen for sure is a reduction of the block reward to 3.125 BTC.

What we don`t know, however, is how the 2024 Bitcoin Halving is going to resonate on the BTC price. There is a common belief that Bitcoin price increases after halvings, which is based on the economic principle for supply and demand - the limited supply of Bitcoins will provide more value to the Bitcoin itself. There are various socio-economic, technological and political factors that can influence the price of the asset, which must be taken into consideration. 

The key driver for the community to expect spikes in Bitcoin value can also be tracked in the past. In 2012, after the first halving, the Bitcoin price went up by over 8%, which was followed by nearly 290% increase a year after the second halving. We can only speculate on the price, but what will actually happen is soon to be seen. 

How do we know when Bitcoin halving will happen?

We mentioned that each halving cycle repeats approximately every 4 years, but time is not the best metric for determining the exact day and time of a halving event. Instead of having guaranteed fixtures on the calendar, halvings are set to happen once every 210,000 blocks are mined. Knowing that the necessary time to mine a new block is approximately 10 minutes on the Bitcoin network, this gives us a rough idea that the period between one halving event and the next halving event is (give or take several days/weeks) four years. 

Аccording to the Bitcoin whitepaper, the total number of halving events that are pre-programmed to occur through the years is 32, with the last event set for 2140. As for Bitcoin Halving 2024 event, it is anticipated to happen either on 19 or 20 April, depending on the time zone in which you are in.  

Bitcoin protocol improvements prior the 2024 halving

The years between the last halving and this year's April halving have been very dynamic for the future of Bitcoin. Numerous improvements have been introduced to the blockchain as a result of the market dynamics. Here are some of the most notable improvements in Bitcoin:

Bitcoin ordinals: They are NFTs created with the Bitcoin smallest units - satoshis. These satoshis are given a unique serial number, which are known as Bitcoin ordinals. Ordinals serve as a medium for tracking, identifying and assigning ownership. Through another process called Bitcoin inscription additional content is written to ordinals. This content is stored directly onto the Bitcoin network, which eliminates the need for Layer 2 solutions. 

BRC20 Token Standard: In its early stages, the BRC20 token standard is an experimental project mirroring Ethereum's ERC20, but is tailored specifically for the Bitcoin blockchain. Enabled by the Bitcoin Taproot upgrade, BRC20 operates directly on the Bitcoin network via JSON ordinal inscriptions. Its goal is to broaden Bitcoin's applications beyond peer-to-peer transactions by assigning unique serial numbers to individual satoshis, ensuring ownership and preventing duplication.

Bitcoin Runes protocol: Runes protocol launch will coincide with 2024 Bitcoin halving and will aim to provide an efficient method for creating fungible tokens and an alternative to the BRC-20 token standard. This means that users will be able to create serial numbers tied to satoshis and after that - translate that data onto the blockchain. Runes will be based on the UTXO model and only time will show how Bitcoin Runes protocol will perform against BRC20. 

For further details on recent Bitcoin network improvements you can refer to our dedicated article. If you need insights into how Bitcoin halving and network improvements might impact your daily operations, feel free to reach out to our team. Rest assured, we continually upgrade our services to ensure seamless integration with all Bitcoin blockchain protocol updates as well as all other blockchain networks that we support.