Halving 101: What Exactly Is Halving in Blockchain? (Part 1)

Introduction: Halving, Explained

At an approximate frequency of each leap year, you may hear the term 'halving' thrown around in the Web3 and cryptocurrencies sphere.

'Halving' is a unique mechanism used to manage cryptos' supply and long-term value. This pre-programmed event, embedded in a cryptocurrency's code, periodically reduces the rate at which new crypto coins are created. Understanding halving is key to navigating the complexities of the crypto market and its potential impact on investors and the blockchain ecosystem.

But what exactly is halving, and why should you care?

What Is Halving?

Imagine a money tree that sprouts a certain number of coins every year. Every few years, the number of coins this tree produces is cut in half.

In the actual halving process, the supply of crypto coins is reduced because of an adjustment in the mining process, in which coin miners' rewards get cut in half.

This Web3 mechanism runs contrast to how central banks or monetary authorities operate in traditional financial systems. They can print money and inject it into the economy to stimulate growth or combat crises. However, once this new money is in circulation, it generally stays there. Central banks have limited options to 'take back' or reduce the money supply, potentially leading to inflation if not managed carefully.

Why Does Halving Happen?

Most cryptocurrencies have a limited supply of coins. Bitcoin, for example, has a maximum supply of 21 million coins. Halving ensures that these crypto coins aren't all mined too quickly, helping to maintain their value over the long term.

How Does Halving Work?

Halving typically occurs at regular intervals. For example, Bitcoin's halving happens approximately every four years.

Let's say a blockchain network rewards miners with 10 coins for every block they add to the blockchain. After the halving event, that reward is reduced to 5 coins per block for the same amount of work.

What Are the Benefits of Halving?

Halving has several key benefits:

Controls inflation: By reducing the rate of new coin creation, halving helps to keep inflation in check
Increases scarcity: As fewer coins are created, the existing coins become more scarce, potentially increasing their value
Promotes sustainability: Halving encourages long-term sustainability by ensuring that the cryptocurrency's supply is managed responsibly

Halving in the Real World: Bitcoin Halving

The most well-known example of halving is Bitcoin's halving. Since its creation, Bitcoin has undergone three halvings, each of which has significantly impacted its price and the overall crypto market and Web3 space.

Stay Tuned for More Halving Guide

In the next instalment of our 'Blockchain 101: What Is Halving' series, we'll dive deeper into the effects of halving on blockchain networks. Stay tuned!

aelf's layer 1 AI blockchain is equipped with artificial intelligence functionalities that provide real-time support to Web3 users and developers, making the technology more accessible and user-friendly.

With its customisable architecture featuring a MainChain and dAppchain, aelf boasts scalability and interoperability, making it conducive for supporting a variety of dApps across DeFi, gaming, and SocialFi.

aelf is preparing for its first halving event—set to take place on 12 December 2024—a key milestone that will see a greater expanse of growth and evolution for the AI blockchain.

*Disclaimer: The information provided on this blog does not constitute investment advice, financial advice, trading advice, or any other form of professional advice. aelf makes no guarantees or warranties about the accuracy, completeness, or timeliness of the information on this blog. You should not make any investment decisions based solely on the information provided on this blog. You should always consult with a qualified financial or legal advisor before making any investment decisions.

About aelf

aelf, an AI-enhanced Layer 1 blockchain network, leverages the robust C# programming language for efficiency and scalability across its sophisticated multi-layered architecture. Founded in 2017 with its global hub in Singapore, aelf is a pioneer in the industry, leading Asia in evolving blockchain with state-of-the-art AI integration to ensure an efficient, low-cost, and highly secure platform that is both developer and end-user friendly. Aligned with its progressive vision, aelf is committed to fostering innovation within its ecosystem and advancing Web3 and AI technology adoption.

For more information about aelf, please refer to our Whitepaper V2.0.

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Tool/Platform	What's it about
ChainGPT	An AI-powered assistant for the blockchain and crypto industry, specializing in content creation, language translation, smart contract coding, and more.
aelf	A high-performance, customisable multi-chain blockchain framework with AI-powered smart contracts and a developer-friendly environment.
Quick Intel	An AI-powered crypto security platform that helps investors avoid scams, rug pulls, and honeypots by analysing smart contracts, social sentiment, and on-chain data.
Cogwise AI News Aggregator	An AI-powered news aggregator that analyses real-time news and global trends to predict market movements in the crypto market.
OpenAI Codex	An AI system that transforms natural language into code, automating code creation for smart contracts, blockchain applications, and other development tasks.
QnA3	An AI-powered Web3 knowledge hub that provides real-time information and insights on cryptocurrencies, blockchain projects, and the broader Web3 ecosystem, with unique Solana Actions integrations.
Fetch.ai	A platform that combines AI and blockchain to create autonomous economic agents (AEAs) for various applications, including supply chain optimisation and smart city management.
Octavia	A decentralised digital identity (DID) platform for creating and managing self-sovereign digital identities, empowering users to control their data and online presence.
TensorFlow	A versatile open-source machine learning framework used for building AI models that can analyse blockchain data, enhance security, and predict market trends.
Alethea	A platform that creates 'Intelligent NFTs' (iNFTs) with unique personalities and the ability to engage in conversations, powered by AI and blockchain technology.

Chain	URL	Explorer
AELF	https://aelf-test-node.aelf.io/	https://explorer-test.aelf.io/
tDVW	https://tdvw-test-node.aelf.io/	https://explorer-test-side02.aelf.io/

Feature	Description
Inheritance	ERC-404 inherits from the interfaces IERC-404, IERC721 Receiver, and IERC165, implementing functions specified in these interfaces, behaving as both ERC20 and ERC721.
Data Structures	Mappings track balances, allowances, approvals, and ownership of tokens. Double-ended queue stores ERC721 token IDs. Data for managing ownership and indices of ERC721 tokens.
Constructor	Initialises token name, symbol, decimals, and other necessary variables for ERC20 and ERC721 tokens.
Token Minting and Burning	_mintERC20 function for minting ERC20 tokens. _retrieveOrMintERC721 function for minting ERC721 tokens and retrieving from a bank. _withdrawAndStoreERC721 function for depositing ERC721 tokens into the bank.
Transfers	Functions for transferring ERC20 and ERC271 tokens between addresses. Distinguishes between token types based on ID. _transferERC20WithERC721 function handles transfers involving both types.
ERC20 and ERC721 Interactions	Approve function handles approvals for both token types. Functions like transferFrom, safeTransferFrom, and permit handle transfers and approvals.
EIP-2612 Support	Supports EIP-2612 permit functionality for ERC20 tokens.
Interface Compatibility	Implements necessary functions for ERC-404 and ERC165 interfaces, indicating compatibility with ERC20 and ERC721 standards.

Role	Max Number
BP	2N+1, N starts from 8 in 2022
Candidate node	5*(2N+1)
Voter	No limit

Benefits	Description
Makes smart contracts 'smarter'	AI-driven smart contracts can autonomously modify terms based on predefined conditions and real-time data input, ensuring that the contracts are not just automated but also intelligent and self-improving over time.
Levelled up data analysis	Data is the new oil, and AI is the machinery that refines it. It is possible for AI to reduce large-volume blockchain data analysis time by up to 90%.
Boosts security	Through machine learning models, AI can prevent frauds and detect security threats in real time. It can identify potential breaches, predict future threats, and adapt to evolving security measures.
Lowers carbon footprint	AI algorithms help optimise energy consumption in blockchain operations, given the flak drawn by activities like Bitcoin mining.