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Amiti Uttarwar (Bitcoin Core Contributor)
[00:00:00]Amiti Uttarwar: Hey everyone, my name is Amiti, I am a Bitcoin core contributor. And today I want to talk to you about what is the halving, so let's get into it.
What is the Bitcoin halving? In order to understand that first, we need to understand the idea of block subsidy. There's only one way that new Bitcoin can come into existence and that is via the subsidy.
This is a reward for miners to incentivize them to mine blocks with transactions in them. The number of new Bitcoins per block was written into the code since the very first release of Bitcoin. It started at a reward of 50 Bitcoin per block, but every 210,000 blocks, the subsidy is reduced by half. The halving is the blocks where that happens.
So, when does this happen? Since it's scheduled by block height, not by calendar date, we can have a rough idea of what the calendar [00:01:00] date will be like and a precise idea of when the halving will happen according to block time, we can translate that into calendar date because blocks are mined approximately every 10 minutes.
So for the upcoming halving, we know that at block 630,000, the subsidy will change that from 12.5 Bitcoin per block to 6.25 Bitcoin per block. And we can estimate that this is roughly on May 11th. So all of the halvings have been determined from the first release of Bitcoin. The Genesis block had 50 Bitcoin.
And then at block 210,000, we saw that it changed to 25 Bitcoin and all the way through, into the future where we can identify the exact block from which no new Bitcoin will ever be created.
And as I was saying, this was part of the very first release of Bitcoin. [00:02:00] When Satoshi released Bitcoin, he did so by emailing the cryptography mailing list. This is a direct excerpt from that email,
and almost a third of it is talking about what the total circulation will be and how the halving, and how it cuts in half, every year is part of that emission cycle and how that leads to the max supply cap. You've probably heard this 21 million Bitcoin, will be the max that can ever be in existence.
And the having is what enables that to happen.
Having a finite supply of a digital monetary system is an incredible idea and totally revolutionary. Unfortunately, the first implementation had a bug in it. This was the code. And for those who are intimately familiar with C++, they were able to figure out that, that there was a bug that actually meant over [00:03:00] time.
The subsidy would wrap back around and start at 50 again and cause an infinite supply. Luckily, we have some really smart people working on Bitcoin and in 2014 with BIP42, the bug was fixed.
So what enforces this limit? Well, you do, especially if you run a full node. A coin base transaction is special because these are the ones where that subsidy can be introduced.
They're the only ones that are allowed to create new Bitcoin. So every user on the network that is running a full node is able to validate them for themselves. And if you bootstrap and you decide to download the Bitcoin blockchain, what the software will do is every time it gets a block, starting at the Genesis block all the way until where the blocks currently are, it will validate that there's only one Coinbase transaction and [00:04:00] the amount is going to be less than or equal to the max subsidy, that it is creating.
And so here's a little depiction of whenever a miner tells, the network that there is a new block. Every single node is going to verify this independently.
And we saw this in action. Last July, there was a block that tried to create more Bitcoin than what the subsidy would allow, and it was rejected from the network.
That's a little overview of what the halving is. If you're interested in more of these comics, please sign up at my: tinyletter.com/amiti.
And what's really incredible though, is that you can dig in and verify this for yourself. If you have a node running, or if you're willing to interact with a block Explorer, then you can use some of these really simple RPC commands in order to see what was the subsidy at each one of these blocks and check [00:05:00] it out for yourself.
So here's a little snippet of part two that. If you're interested in, you can go to either the github page with Bitcoin bytes or look at the tinyletter.com/amiti. And it'll walk you through how you can interact with your node or use that information to interact with the block explorer to verify for yourself that this is actually how the emission model has been working in Bitcoin.
Thanks for listening.