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Glossary

Emission

November 21, 2023 - Around 3 mins mins to read

Emission, in the context of blockchain and cryptocurrencies, refers to the process of introducing new units of a particular cryptocurrency into circulation. It determines the rate at which new coins are created and added to the existing supply.

For instance, let’s take the example of Bitcoin, the first and most well-known cryptocurrency. Bitcoin operates on a decentralized network called the Bitcoin blockchain, where transactions are validated and recorded by a network of participants known as miners. Every 10 minutes, a new block is added to the Bitcoin blockchain, and miners are rewarded with a certain number of Bitcoins for their efforts in validating these blocks.

When Bitcoin was initially launched by its mysterious creator, Satoshi Nakamoto, in 2009, the reward for mining a block was set at 50 Bitcoins. This meant that the emission rate of Bitcoin was around 7,200 new Bitcoins per day. However, to control inflation and ensure scarcity, a mechanism known as “halving” was introduced into the Bitcoin protocol.

Halving is an event that occurs approximately every four years, reducing the block reward by half. This means that after the first halving event, the block reward dropped to 25 Bitcoins per block. The second halving event reduced the reward to 12.5 Bitcoins, and the most recent halving in May 2020 further decreased it to 6.25 Bitcoins per block.

This gradual reduction in the emission rate ensures that new Bitcoins are introduced into the ecosystem at a decreasing rate over time. The total supply of Bitcoin is capped at 21 million coins, and according to the predetermined schedule, the final Bitcoin will be mined in the year 2140.

It’s important to note that not all cryptocurrencies have a fixed emission rate like Bitcoin. Some cryptocurrencies, such as stablecoins, are designed to maintain a stable value relative to a specific asset or currency. One example is Tether (USDT), a popular stablecoin that is pegged to the value of the US dollar.

Tether is generated whenever someone deposits one US dollar as a reserve. This means that new units of Tether can be created as required, based on the demand for the stablecoin. It’s important to understand that while stablecoins like Tether are issued on the blockchain, their emission rates are controlled by the entities behind them and are not subject to the same decentralized emission mechanisms as Bitcoin.

In summary, emission in blockchain refers to the process of introducing new units of a cryptocurrency into circulation. While some cryptocurrencies like Bitcoin have a fixed emission rate that decreases over time, others like stablecoins can be created as needed based on demand. Understanding the emission dynamics of a cryptocurrency is essential for investors and enthusiasts to comprehend the supply dynamics and potential long-term value of the coin.

Author

Coincu

Glossary

Emission

Emission, in the context of blockchain and cryptocurrencies, refers to the process of introducing new units of a particular cryptocurrency into circulation. It determines the rate at which new coins are created and added to the existing supply.

For instance, let’s take the example of Bitcoin, the first and most well-known cryptocurrency. Bitcoin operates on a decentralized network called the Bitcoin blockchain, where transactions are validated and recorded by a network of participants known as miners. Every 10 minutes, a new block is added to the Bitcoin blockchain, and miners are rewarded with a certain number of Bitcoins for their efforts in validating these blocks.

When Bitcoin was initially launched by its mysterious creator, Satoshi Nakamoto, in 2009, the reward for mining a block was set at 50 Bitcoins. This meant that the emission rate of Bitcoin was around 7,200 new Bitcoins per day. However, to control inflation and ensure scarcity, a mechanism known as “halving” was introduced into the Bitcoin protocol.

Halving is an event that occurs approximately every four years, reducing the block reward by half. This means that after the first halving event, the block reward dropped to 25 Bitcoins per block. The second halving event reduced the reward to 12.5 Bitcoins, and the most recent halving in May 2020 further decreased it to 6.25 Bitcoins per block.

This gradual reduction in the emission rate ensures that new Bitcoins are introduced into the ecosystem at a decreasing rate over time. The total supply of Bitcoin is capped at 21 million coins, and according to the predetermined schedule, the final Bitcoin will be mined in the year 2140.

It’s important to note that not all cryptocurrencies have a fixed emission rate like Bitcoin. Some cryptocurrencies, such as stablecoins, are designed to maintain a stable value relative to a specific asset or currency. One example is Tether (USDT), a popular stablecoin that is pegged to the value of the US dollar.

Tether is generated whenever someone deposits one US dollar as a reserve. This means that new units of Tether can be created as required, based on the demand for the stablecoin. It’s important to understand that while stablecoins like Tether are issued on the blockchain, their emission rates are controlled by the entities behind them and are not subject to the same decentralized emission mechanisms as Bitcoin.

In summary, emission in blockchain refers to the process of introducing new units of a cryptocurrency into circulation. While some cryptocurrencies like Bitcoin have a fixed emission rate that decreases over time, others like stablecoins can be created as needed based on demand. Understanding the emission dynamics of a cryptocurrency is essential for investors and enthusiasts to comprehend the supply dynamics and potential long-term value of the coin.

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