On Saturday, July 9, around 1:30pm EST, the bitcoin halving will occur.What the heck is the bitcoin halving?In simplest terms, for only the second time in the digital currency’s history, the reward that bitcoin miners receive will be cut in half.To get more in depth: All bitcoin transactions are recorded on the bitcoin blockchain, a public, decentralized, permissionless ledger.The transactions are recorded in bundles, called “blocks,” by “miners” who receive a small reward in bitcoin for mining.This process creates new bitcoins.Miners currently earn 25 bitcoins per block—at the current bitcoin price, that’s $16,175.But beginning with the mining of the 420,000th block, which is set to happen on Saturday, the reward will go down to 12.5 bitcoins rewarded per block mined.This will reduce the creation of new bitcoins from 9% down to about 4% per year.It’s an event that people in the bitcoin world have been anticipating for months with great excitement—but also uncertainty.So, what does this mean for you, Yahoo Finance reader, and for the bitcoin market?If you don’t own any bitcoin, perhaps nothing at all.

But there are signs that the halving could have a major impact on the price.And if it brings the price on another big ride, this could be the right time to get in.irish bitcoin exchangeConsequently, some experts predict the opposite: that the halving will be an exit event when many speculators get out.The last time the mining reward was halved, after 210,000 blocks, was on November 28, 2012.ethereum explorerThe price did nothing significant that day, then saw a slow increase in the weeks that followed, part of a run to the highest price bitcoin has ever seen, above $1,200 one year later.bitcoin blockchain splitBut the post-halving bump was likely due to many different factors, as is typically the case with every bitcoin price hike.Take the last few months as an example.bitcoin calculator java

Just after the Brexit vote, bitcoin saw a clear bump—but the price had already been on a big ride for months before the EU referendum, and many believe it was because of the approaching halving.bitcoin fork valueBitcoin is up 49% over the last 3 months, and 115% in the past year.litecoin merchant services(Then again, based on data from Coinbase, Brits bought a lot of bitcoin just before the Brexit happened.)Every time bitcoin spikes, people like to point to China, the de facto global capital of bitcoin and where the majority of miners are based.But bitcoin is an asset untied to any single country’s economy or currency (much like gold), which means the factors that raise or drop its price are varied and difficult to pinpoint.In a casual Twitter poll on what the price will do in the wake of the halving, nearly 300 respondents were basically split on whether it will go up, down, or do nothing.

The #bitcoin halving will have what effect on price?$btc — Daniel Roberts (@readDanwrite) July 8, 2016 One group that could be seriously hurt by the halving is miners using older mining machines, whose margins are smaller.(Most miners nowadays are big operations with expensive machines, mostly in China.)If the price drops precipitously, these small-margin miners could be cut out, because mining might become unprofitable for them.If that happens, bitcoin’s hashrate—the speed at which the blockchain is operating—would drop.And that would be bad for the entire bitcoin network.The only thing you can bank on from bitcoin in the next few weeks after the halving: volatility.But that doesn’t necessarily mean the everyday investor should stay away.Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.Follow him on Twitter at @readDanwrite.British bitcoin market sent extraordinary signals before BrexitThe latest Bitcoin price hike is not all about BrexitIt doesn’t really matter to bitcoin who created bitcoin

Update 3:56am UTC, 8th June: Attribution & link added for Chandler Guo 'Blockchain will shut down' quote source.At the heart of Bitcoin is a process known as mining, adding transaction records to Bitcoin's public ledger.The ledger is made up of blocks of transactions linked in a chain, forming the widely touted technological breakthrough, the Blockchain.Individual blocks must contain a proof of work to be considered valid, Bitcoin uses the hashcash proof-of-work function.This process is intentionally designed to be resource-intensive and difficult, and the protocol provides a block reward to incentivize miners.The reward is also a way to initially distribute coins into circulation, since there is no central authority to issue them.The block reward currently supplements transaction fees, paid at the user's discretion.As more users send bitcoin transactions, and blocks become full, those transactions with the highest fees will be included first.This guarantees a swift transaction for users willing to pay more, and is designed to eventually fund the entire process of mining.

However, transaction fees are currently average less than half a bitcoin per block.While the reward currently supplements the fees, the amount of bitcoins rewarded is designed to reduce over time, halving every 210,000 blocks.With fewer than 5000 blocks remaining till the next halving event, predicted to occur on July 10th this year, the reward is poised to decrease from 25 bitcoins per block, to 12.5.While the event, and the mechanics that drive it, are well documented and understood, the potential ramifications are hotly debated.What the greater bitcoin mining community will do in response is currently impossible to know.Simple arithmetic would seem to indicate that miners with less-efficient mining equipment may be inclined to shut down their operations.Large mining operations often have several locations, with hundreds or thousands of mining 'rigs' at each.Aside from the initial setup costs, the main ongoing expense is electricity.Chandler Guo, founder of Chinese multi-service bitcoin banking platform Bitbank fears that the reduced reward may lead to fewer miners.

“When halving comes the cost of the electricity is the same, so it must shut down,” Guo explained.“If mining equipment can only mine the electricity payment, they don’t need to work.” The problem that Guo points out is Bitcoin's difficulty rate.To compensate for increasing hardware speed and varying interest in running mining operations, the proof-of-work difficulty number is determined by a moving average, targeting an average of six blocks per hour.If blocks are generated too fast, the difficulty increases, and vice versa.This re-balancing occurs every 2016 blocks, roughly every two weeks, and has the effect of ensuring that miners produce the right number of blocks.According to Guo, it might also have more scary effects under a halving condition.During an interview with CoinDesk, Guo made the bold claim that the blockchain could shut down; - Chandler Guo, Bitbank Founder, speaking to coindesk.While Guo highlights a worst case scenario for the fledgling alternative financial system, he also highlights the systems saving grace; the value of bitcoins on the open market.

Miners pay their bills in fiat currency.Immediately after the 2012 halving, there was a month or so of downward price movement, and then 2013 then became one of the most bullish and exciting years in Bitcoin's history.So the question becomes whether or not the 2012 block reward halving was one of the causes of that bullishness.Many feel that it was not; the market price reflects the event well in advance.The price of bitcoin rose gradually over the six-month period leading up to the 2012 halving, more than doubling in price between June and November 2012 This effect could easily be explained by traders preemptively pricing in increased scarcity.Bitcoin developer David Perry pondered this issue in his last-minute blog post preceding the 2012 event.A poll of the community showed that far more people believed the value of bitcoin would rise more after the halving, but they didn't seem to consider it priced-in before the event.The debate and theoretical discussion continue to this day.

Other than the previous bitcoin reward reduction, the closest thing we have to another halving happened on the Litecoin blockchain, last August. website states that, “a wild speculative rally took the price from 2$ to more than 8$, before crashing back to 3$,” two months prior to the event.It is now starting to look like Bitcoin's price may be headed in the right direction to match the doubling in time as well.The price of Bitcoin has nearly doubled over the last six months While commentators can only speculate what the price will be on block 420,000, the trend is certainly headed higher, with Bitcoin approaching $600.If the price at halving is $600, miners will effectively be earning the same reward as they did with bitcoin at $300 - a price point that the cryptocurrency was below for much of 2015.The hashrate increased 78% in 2015.If the price were to go above $700 before the halving, an amount that is double where we were six months previously, then miners would be compensated at roughly the same rate after the halving event as they were in February.