What is bitcoin halving and why you need to understand it?

After every 210,000 blocks mined, or roughly every four years, the block reward given to Bitcoin miners for processing transactions is cut in half. This cuts in half the rate at which new Bitcoin is released into circulation. This is Bitcoin's way of using a synthetic form of inflation that halves every four years until all Bitcoin is released and is in circulation.

This system will continue until around the year 2140. At that point, miners will be rewarded with fees for processing transactions that network users will pay. These fees ensure that miners still have the incentive to mine and keep the network going. The idea is that competition for these fees will cause them to remain low after halvings are finished.

The halving is significant because it marks another drop in Bitcoin's dwindling finite supply. The total maximum supply of Bitcoin is 21 million. At the time of writing, there are 18,361,438 Bitcoins already in circulation, leaving just 2,638,562 left to be released via mining rewards.

In 2009, the reward for each block in the chain mined was 50 Bitcoins. After the first halving it was 25, then 12.5, and it became 6.25 Bitcoins per block as of May 11th, 2020.

To put this in another context, imagine if the amount of gold mined out of the earth was cut In half every four years. If gold's value is based on its scarcity, then a "halving" of gold output every four years would theoretically drive its price higher.same goes here..

I hope you understood…