A Bitcoin halving is a process that occurs every 210,000 blocks (approximately every four years) when the payment for mining a new block is halved. This event is known as halving because it halves the speed at which new bitcoins are released into circulation. The reward system will continue until around 2140, when the proposed limit of 21 million is reached. At that time, miners will be rewarded with fees, which will be paid by network users, for processing transactions.
This ensures that miners continue to have the incentive to mine and keep the network running. The Bitcoin protocol reduces the reward it gives to miners by 50% every 210,000 blocks, hence the name “halving”. It takes an average of four years to extract those blocks. Halving imposes synthetic price inflation on the cryptocurrency network and halves the rate at which new bitcoins launch into circulation.
Bitcoin investors or traders should keep in mind that a halving often leads to a considerable amount of instability and turmoil for cryptocurrencies. The last halving is predicted to occur in 2140, after which block rewards will not be in the form of bitcoins. Hasu said he “expects transaction fees to be enough to incentivize Bitcoin's security in the end, but believes it's worth anticipating the 'worst case'. The underlying technology of Bitcoin, blockchain, basically consists of a set of computers (or nodes) that run the Bitcoin software and contain a partial or complete history of the transactions that occur on its network. Bitcoin's next halving is very likely to occur in 2024 and could have a dramatic impact on the cryptocurrency's price.
On the other hand, miners may lose the incentive to create more Bitcoin if the price of the digital currency does not rise and block rewards are reduced.