Bitcoin is notoriously volatile, prone to sudden price surges and swift reversals that can wipe out millions of dollars of value in minutes. Those changes are often mysterious to market observers, because of the digital currency’s lack of ties to the real economy. Bitcoin has another quirk, one that was built into the code that gave it birth: Every so often, the formula that governs the rate at which new tokens are created changes. As another such event — called a halving — approaches, Bitcoin supporters and skeptics are debating what kind of impact it may have on the coin’s value. The coin hit records after each of the last three halvings and rose past its previous peak of $68,991.85 in March, making a comeback from a plunge in 2022.
One of the characteristics that gave rise to a fascination with Bitcoin is the way its pseudonymous creator, Satoshi Nakamoto, tied the creation of coins to the work needed to prevent counterfeiting. Bitcoin is generated by so-called miners whose computers perform complex calculations that validate the transactions on what’s known as the blockchain, a public digital ledger. The miners compete with each other to earn newly issued tokens, something known as a block reward.
