Bitcoin Halving is an event that occurs approximately every 4 years. During this event the prize paid to miners for mining blocks on the blockchain is halved. This means the bitcoins miners get paid for mining a block are reduced to 50 % of what they were getting before the fourth year. This event occurs specifically as a way of reducing the number of new bitcoins entering into circulation and it is an inbuilt feature of the Bitcoin network that is on the bitcoin whitepaper made by Nakamoto. The Halving of Bitcoin takes place to ensure that the number of bitcoins in circulation will not surpass 21 million Bitcoins. Above all, halving serves to keep Bitcoin scarce thus maintaining its value.
In the history of bitcoin, there has been three halving events. The first halving occurred in November 2012, the miner's reward was reduced from 50 BTC per block to 25 BTC. The second halving took place in July 2012 and the miner's reward was reduced from 25 BTC per block to 12.5 BTC. The third halving event took place in May 2020 and the reward was reduced from 12.5 BTC to 6.5 BTC per block. The fourth halving event is expected to take place in 2024 which will see the block reward being reduced from 6.25 BTC per block to 3.25 BTC.
Halving bitcoin rewards every 4 years basically takes place so as to reduce the number of coins entering into circulation, promote scarcity and potentially drive up the price. From the observed history of bitcoin halving, there hasn't been a single directly linked effect. As such the effect of halving on bitcoin price remains rather under much debate and speculation. One popular opinion is the "halving pump". This theory states that the halving of bitcoin reduces the new rate supply relative demand therefore potentially increasing the price. However this is just one theory amongst many others. The real relationship between halving and bitcoin prices remains quite unestablished therefore it is wise to remain vigilant.
As always this doesn't constitute professional advice, be vigilant , do your research and happy earning !!
