Bitcoin is not only a digital currency. It is a superpower in the struggle against a financial system that only serves itself.

Bitcoin halvings are important not only because of their role in maintaining the Bitcoin network but also because they are a symbol of cryptocurrency’s immunity to both money printing and the mismanagement of the mainstream financial elite.

What does printing money have to do with anything?

Back in the early 90s, a group of computer scientists created a mailing list to talk about philosophy, mathematics, cryptography and politics. The cypherpunks looked at the recent trail of economic crises and decided neither governments nor banks could be trusted to manage money. The internet age would need its own, independent currency.

Most countries in the world use fiat currencies. The value of a fiat currency is guaranteed only by the ongoing existence of the government that issues it. Governments are free to print as much of their own currency as they want. In times of crisis, like the ongoing pandemic, trillions of dollars are printed at a time. While this has its uses, every new note printed decreases the value of those that already exist.

Central banks often run for the money printer as soon as things get tough. For perspective, the U.S. Federal Reserve printed over $9 trillion of new dollars in 2020 alone. That’s nearly a fifth of all dollars just created at the push of a button.

The cypherpunks thought this kind of economic management was irresponsible and an insult to people who dreamed of a financial system that could truly serve the public. And they were right. Bitcoin was developed to counter decades of financial mismanagement, corruption and government interference.

Bitcoin was launched in 2009, at the height of the financial crisis that began in 2008. Written into the very code of Bitcoin was a reference to the then-UK chancellor’s decision to bail out banks that had once again failed millions of people around the globe. The very same people that would have to foot the bill.

But when the pseudonymous Satoshi Nakamoto created Bitcoin, he included in the code a fatal blow to the money printing of the mainstream financial system: Only 21 million Bitcoin can ever exist.

After the final Bitcoin is generated in around 2140, no others will ever be created. Nakamoto’s decision to create a hard cap for the total number of Bitcoin insures against the inflation created by money printing. As the supply decreases over time, demand for Bitcoin will increase and push up the price. Savings held in fiat currencies like dollars and euros will depreciate every time money is printed. All it takes to wipe out the fiat savings of an entire generation is a few bad months and a handful of incompetent politicians. But the same can’t be done with Bitcoin.

Bitcoin is free from government control. No one group or individual can ever control or own it. No banks are needed to verify transactions. It is a financial system managed by code and the community that uses it.

What is a Bitcoin Halving?

Bitcoin halvings are crucial to Nakamoto’s vision of a decentralized, international digital currency. To understand halvings, we need to understand how Bitcoin is made. Bitcoin is created as a reward for something called mining. Mining is a process in which powerful computers crack complex mathematical problems to create “blocks” of verified transactions. These are then added to the blockchain. A blockchain is like a digital ledger that tracks and stores information about Bitcoin transactions.

Halvings are programmed events where the rate at which Bitcoins are created for each new block of verified transactions is halved. A halving takes place every 210,000 blocks, roughly every four years.

The last halving event took place on May 11 2020. As a result, the Bitcoin reward for each new block dropped from 12.5 BTC to 6.25 BTC.

Why do we need halvings?

Bitcoin halvings are essential to the network because they follow Nakamoto’s code-based decree that the supply of Bitcoin would decrease over time and then stop once the final Bitcoin is mined.

This periodic shrinkage of the supply also helps bolster Bitcoin’s value. As the amount entering the system decreases with each halving, the demand will either stay the same or increase. Following the basic rules of supply and demands, this drives up the price.

Consequently, Bitcoin halvings have been hotly anticipated by miners, traders and analysts alike looking to capitalize on any increase in profits. But this may soon change. Many people now understand Nakamoto’s pre-programmed supply schedule and the associated price increase is now considered by some to be gradually ‘priced in’ over time.

Nakamoto’s few early emails and the infamous bank bailout commentary embedded within the code hint at a political motive behind creating Bitcoin. But Nakamoto disappeared into the ether around a year after creating the software. What he left behind has blossomed into a remarkable financial movement that is going on to shape the world in its own right.

While all other currencies around the world can be created without limit, Bitcoin’s limited supply is a powerful remedy to the toxic culture of money printing. Bitcoin halvings are a periodic reminder that money can be smarter, more valuable and democratic. The true value of fiat currency is in freefall. But as more people realise the true power of cryptocurrency, Bitcoin is stronger than ever before.