What Is Bitcoin Halving? Definition, How It Works, Why It Matters

Basics of the Bitcoin Network

To understand a Bitcoin halving, you must first know how the Bitcoin network operates.
Bitcoin's underlying technology, blockchain, consists of a network of computers (called nodes) that run Bitcoin's software and contain a partial or complete history of transactions occurring on its network. Each full node—a node containing the entire history of transactions on Bitcoin—is responsible for approving or rejecting a transaction in Bitcoin's network. To do that, the node conducts a check to ensure the transaction is valid. These include ensuring that the transaction contains the correct validation parameters and does not exceed the required length.
Each transaction is approved individually. This is said to occur only after all the transactions contained in a block are approved. After approval, the transaction is appended to the existing blockchain and broadcast to other nodes.2

Adding more computers (or nodes) to the blockchain increases its stability and security. As of Nov. 1, 2023, there are 16,902 nodes estimated to be running Bitcoin's code.3
 Although anyone can participate in Bitcoin's network as a node as long as they have enough storage to download the entire blockchain and its history of transactions, not all of them are miners.

Basics of Bitcoin Mining

Bitcoin mining is the process by which people use computers or mining hardware to participate in Bitcoin's blockchain network as a transaction processor and validator. Bitcoin uses a system called proof-of-work (PoW) to validate transaction information. It's called proof-of-work because solving the encrypted hash takes time and energy, which acts as proof that work was done.
The term mining is not used literally but as a reference to how precious metals are harvested. When a block is filled with transactions, it is closed and sent to a mining queue. Once it is queued up for verification, Bitcoin miners compete to be the first to find a number with a value less than that of the hash. The hash is a hexadecimal number that contains all of the encrypted information of the previous blocks.
Mining confirms the legitimacy of the transactions in a block and opens a new one. Nodes then verify the transactions further in a series of confirmations. This process creates a chain of blocks containing information, forming the blockchain.