Simply put, halving is a special mechanism used in cryptocurrencies. As we all know, Bitcoin was born out of the 2008 financial crisis, which was caused by massive issuance of the US dollar and resulting global inflation. Against this backdrop, Satoshi Nakamoto naturally did not choose a monetary model like fiat currencies (USD, JPY) that can be issued endlessly. Instead, Bitcoin adopted a deflationary economic model with a fixed total supply from the beginning.

But this raised a new question: how should Bitcoin be distributed into the market? To solve this, Satoshi Nakamoto defined in Bitcoin’s consensus mechanism that all bitcoins must initially be obtained through mining. For each newly generated block, miners receive a certain number of bitcoins as a reward. Furthermore, to prevent miners from mining too fast and exhausting the supply prematurely, Satoshi added another mechanism — the Bitcoin halving.

Here’s how Bitcoin halving works:

In the Bitcoin blockchain network, starting from the genesis block, a new block is generated approximately every 10 minutes, and each block initially brought 50 bitcoins into circulation.

To ensure that all bitcoins would not be released into circulation too quickly, Satoshi set a rule that after every 210,000 blocks (roughly every 4 years), the mining reward would be cut in half.

That means from block 210,001 onward, each new block only brings 25 bitcoins into circulation. By block 420,001, it becomes 12.5 bitcoins, and so on. After 33 halvings, the reward per block will asymptotically approach 0, starting from 0.0021 BTC.

According to the limits of computer data types, the maximum number of bitcoins that can exist is approximately 20,999,999.9769 BTC — about 21 million. Thus, Bitcoin’s total supply is capped at 21 million coins.

This halving mechanism played a crucial role in Bitcoin’s success. It helped maintain a balance between inflation and deflation in Bitcoin’s early stages. If an asset is too deflationary, its liquidity suffers. Conversely, if it inflates endlessly, its value diminishes.

Halving helped control the speed at which bitcoins entered the market — not too fast to cause inflation, and not too slow to hinder liquidity. As a result, Bitcoin’s “payment” value was able to shine during its early years.

In addition, this mechanism helped the Bitcoin network grow stronger. In the early days, Bitcoin’s low price and high mining rewards attracted more participants. Later, as the price rose, mining rewards decreased but transaction fees grew, helping maintain the network’s computing power and stability.

Eventually, as Bitcoin’s halving mechanism proved successful in the market, many other cryptocurrencies adopted a similar approach.

Nowadays, when people talk about “halving,” they are often referring not just to the mechanism itself, but to the market volatility that follows. Although speculation is human nature, we still hope people remain grounded and never forget their original intentions.