Draper Associates founding partner Tim Draper was an early investor in Bitcoin, and he believes millennials should jump in, too.
If distinguishing between cryptocurrency and blockchain weren’t enough to confuse the uninitiated, there’s also the process of halving.
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At least when it comes to bitcoin, the digital tender synonymous with cryptocurrency.
And halving is nothing at all like ripping a $20 bill in two. Bitcoin is generated by using algorithms to verify transactions in a shared digital ledger, a process known as mining. Halving is an event that occurs roughly every four years, or after 210,000 transactions, that reduces the amount of bitcoin mined in each verification by 50 percent.
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“The way bitcoin verifies transactions is in blocks,” Mati Greenspan, founder of Quantum Economics, a Tel Aviv-based project for helping people understand financial markets, told FOX Business.
“Miners fill a block and then lock it up,” he added. “For locking in a block, the miner gets a reward in the form of freshly minted bitcoin.”
Fifty bitcoin were mined in each transaction when the cryptocurrency launched in 2009. After the third halving, on May 12, 2020, 6.25 tokens will be mined per transaction.
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The 21 millionth and final bitcoin is expected to be mined on May 7, 2040.
