Bitcoin halving is an event that promotes scarcity in Bitcoin and reduces inflation, aligning with traits that make Bitcoin similar to gold. The next halving event is scheduled for March 2024, and many are eager to see the outcome.

To understand Bitcoin halving, one needs to have a proper understanding of Bitcoin mining.

What is bitcoin halving

A halving event is a pre-programmed event whereby the reward for Bitcoin mining is cut in half. This is done to control inflation and increase scarcity.

In addition to our transaction fees, miners get a certain amount of new bitcoin as a reward for adding a block to the blockchain. After 210,000 blocks are formed, which takes four years, the reward is slashed down by half.

As of 2009, when Bitcoin was created, the reward for miners was 50 new BTC. In four years, according to Forbes, 10,500,000 were in circulation out of the 21 million BTC that was created, and the order continues as shown below until 2023.

Halving date	Reward

3 January 2009	50
28 November 2012	25
9 July 2016	12.5
11 May 2020	6.25
Expected April 2024	3. 125

Forbes

How does bitcoin halving work ?

Satoshi Nakamoto, the unknown person or group behind Bitcoin's creation, programmed the system so that no one is in control of Bitcoin or its circulation. After every 210,000 blocks are formed, the reward that a miner gets for adding a block to the blockchain is automatically halved. This innovation aims to promote scarcity and reduce the inflation of Bitcoin.

The reward will continue to divide every four years until 2140, according to an expert when the 21 million bitcoins will all be in circulation. There will no longer be a reward for the miners, and this may result in a loss as miners will rely only on transaction fees for sustainability. This could also lead to a drop in price while demand remains the same, making Bitcoin different from all other coins.

Potential Risks to Consider

1. Supply and Demand:

The halving of Bitcoin automatically affects the supply, causing an upward pressure on the price.

2. Assets Planning:

Investors normally accumulate their Bitcoin until after the halving when they expect a price upsurge to sell and make a profit. However, it is important to understand the market before and after the halving event before trading, given Bitcoin's volatility.

3. Market Liquidity:

Bitcoin halving could lead to a decrease in market liquidity, making it more difficult for people to buy and sell Bitcoin.

How African Investors Can Prepare

To avoid being at loss in the trading market, it is important for Africans to understand and follow certain principles in preparation for the halving event.

1. Dollars-Cost Average:

This is the practice of funding a fixed dollar cost regularly, regardless of the share price. Investors need to develop disciplined investing habits, be more efficient in how they invest, and potentially lower their stress levels, especially during the halving event.

2. Stop Loss and Take Profit:

A take-profit order signifies the exact price rate you want your trade to follow. Traders use stop-loss orders to limit loss or lock in remaining profits on an existing position.

3. Stay Informed :

Information is power, so try as much as possible to stay informed about the market conditions and when to buy and sell. Join blockchain communities and connect with crypto enthusiasts. Investors and traders need to understand the potential impact of the halving on BTC prices and make investment decisions aligned with their strategies.

Finally, do not be carried away by the predictions from different sources, the halving could induce a bullish or bearish market, so focus on studying the market and let your instincts guide you.