“Hah! Obviously, this means cutting the bitcoin in half, I saw the cover image.”
Not entirely wrong, but definitely not done the way as in the cover image. This is sort of unfortunate for the miners.
Let me explain.
There is a limited number of bitcoins ever going to be present in the system. 21 million to be precise. The limitation is because of the design and protocol. Accept it.
The proof of work system isn’t as simple as I’ve explained above (and for that matter, nothing here can be detailed in 5 minutes read), meaning wise it’s no [ if 2+2=4 then reward bitcoins ] protocol. It’s somewhat more complex. But for the sake of simplicity of this newsletter and your time, let’s just accept that the mining process involves a lot of heavy computation power and a lot of brute force (try and error). The mining process takes time and gets more and more difficult as new bitcoins are extracted over time.
To add to the calculation difficulty, the reward given to Bitcoin miners for processing transactions is cut in half after ever 210,000 blocks mined (around every 4 years). This is what they call the bitcoin halving event. The most recent halving event occurred no more than 2 weeks ago, on May 11, 2020 around 4 PM EST.
This halving event cuts in half the bitcoin’s inflation rate (the rate at which new Bitcoins enter circulation). At the time of writing, there are 18,394,475 already in the circulation, leaving just 2,605,525 left to be mined. With increasing computation difficulties and all halving events, this approximately expects all of the 21 million bitcoins to be mined by 2140.
There is more to the halving process but I’ve already overloaded your head for today. So, I must defer that to the next newsletter issue. You need some time to digest all this, right? Just come back this Thursday for some interesting statistics coverage. Yeah, it’s statistics, but still fun 😉.