There have only been two previous ‘halving’ events in Bitcoin’s history. The event is written into the code of the digital currency and happens roughly every four years.

The next one is expected to take place in May 2024.

As well as being traded, Bitcoins can be generated (known as ‘mining’) through using computational power to solve complex mathematical puzzles. When a halving occurs, it means the rewards for mining are split.

Whereas mining a ‘block’ of Bitcoin would previously earn you 12.5 coins, now you’ll only get 6.25.

The are only a finite number of Bitcoins available and the halving is set to continue until all 210,000 blocks of Bitcoin reach zero in two decade’s time.

The reason for the finite amount of Bitcoin (there will only ever be 21 million in existence) is because unlike regular currency there is no central bank or government that can regulate the amount.

Cryptocurrency advocates say this finite number is what gives Bitcoin its value.

The halving comes at a time when Bitcoin prices were climbing. The digital currency has gained more than 20% in value since the start of the year, however the halving event has caused that value to fall.

What is Bitcoin and how is it used?

Bitcoin was first released in 2009 and its value has fluctuated over the last ten years, reaching its peak in December 2017.

The cryptocurrency can be used to buy products and services, in in 2018 a company in Northern Ireland started to accept Bitcoin as a way of payment to buy a house.

People can track their ownership of Bitcoin by using a cryptocurrency wallet, which is a digital way to exchange payments.

It is easy to track Bitcoin as details are stored in a ledger called blockchain, which is publicly accessible and it includes all confirmed transactions.

The value of Bitcoin fluctuates all the time in a similar way to more conventional currencies.