How does the block reward impact the overall supply of Bitcoin?

1 answers

• Nov 27, 2021 · 3 years ago
  The block reward is an essential part of Bitcoin's economic model. It serves as an incentive for miners to dedicate computational power to secure the network and validate transactions. When a miner successfully mines a new block, they are rewarded with a certain amount of Bitcoin. This reward contributes to the overall supply of Bitcoin. However, the block reward is not fixed. It is designed to decrease over time. The reduction in the block reward occurs through a process called the halving, which takes place approximately every four years. The halving cuts the block reward in half, effectively reducing the rate at which new Bitcoin is created. This mechanism ensures that the total supply of Bitcoin grows at a decreasing rate, eventually reaching its maximum limit of 21 million coins. The block reward mechanism is a crucial factor in maintaining the scarcity and value of Bitcoin as a digital currency.
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