OK Blockchain 60 Lectures | Episode 31: What is the halving of digital currency?

特邀专栏作者

2020-05-11 08:56

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&nbsp; &nbsp; &nbsp; &nbsp;Hello everyone, I am Mr. K. Today we are going to talk about: "What is the halving of digital currency".

To put it simply, halving is actually a special mechanism in digital currency. We all know that the birth node of Bitcoin was the financial crisis in 2008, and the source of the financial crisis was the world-class inflation caused by the additional issuance of US dollars. Under such a background, when Satoshi Nakamoto chose the economic model, he would naturally not consider the monetary model of the fiat currency world, such as the U.S. dollar and Japanese yen, which can be issued infinitely, so Bitcoin chose a deflationary economy with a constant total amount at the beginning Model.

However, a new question arises, that is, in what way should Bitcoin be circulated to the market? In order to solve this problem, Satoshi Nakamoto stipulated in the underlying consensus mechanism of Bitcoin that all Bitcoins can only be obtained through mining at first, and miners will be rewarded with certain Bitcoins every time a block is generated. In addition, in order to prevent the miners from mining too fast and causing Bitcoin to be mined in a short period of time, Satoshi Nakamoto added a new mechanism, and this mechanism is the halving of Bitcoin.

The specific content of Bitcoin halving is as follows:

In the Bitcoin blockchain network, starting from the first genesis block, a new block will be generated every 10 minutes on average, and each block will bring 50 bitcoins into the market.

However, in order to ensure that all bitcoins will not be circulated on the market in a short period of time, Satoshi Nakamoto stipulates that every 210,000 blocks are generated, roughly calculated, that is, every 4 years, the bitcoins brought by the newly generated blocks Rewards will be cut in half.

That is to say, starting from the 210,001st block, every time a new block is generated, only 25 bitcoins can be circulated on the market, and when the 420,001st block is reached, it will become 12.5 bitcoins, and so on. Until the 33rd halving, the reward of each block will infinitely approach 0 from 0.0021 bitcoins.

According to the data range supported by the computer language, the overall limit value is 20999999.9769 BTC, which is approximately equal to 21 million, so the total limit of Bitcoin is only 21 million.

The Bitcoin halving mechanism plays a vital role in the success of Bitcoin. The reason is that it allowed Bitcoin to control the balance between deflation and inflation well in the early days. We all know that if an item is completely deflated, its liquidity will eventually become worse and worse. Conversely, if inflation continues, the value of the item will eventually become lower and lower.

The halving will help Bitcoin control the speed at which it circulates into the market in the early days. It will not be too inflated, causing the value of Bitcoin to fall, and it will not be too deflationary to cause the liquidity of Bitcoin to decline. Therefore, Bitcoin The value of "payment" can be fully displayed in the early stage.

In addition, this mechanism has helped Bitcoin's blockchain network to develop and grow better. In the early stage, due to the low price of Bitcoin, the number of rewards will be more, encouraging more people to understand and participate in this project; later, as the price of Bitcoin rises, mining rewards will be less, but the handling fee will gradually increase. Growth, maintaining the size and stability of computing power in the network.

So later, as this mechanism of Bitcoin was verified by the market, everyone borrowed this mechanism one after another, so most of the digital currencies currently on the market have said that they will be halved.

In general, at present, when most people talk about halving, they don’t just refer to the halving mechanism, but more refer to the market fluctuations caused by the halving. Although speculation is a human nature, Mr. K still hopes that everyone will keep their feet on the ground and never forget their original aspirations.