How Does the ‘Halving’ Event in PoW Networks Affect the Security Budget?
Halving is the periodic reduction of the block reward for miners. Since the block reward is a major component of the network's security budget (the incentive to mine), a halving event reduces this budget.
This could theoretically lower the hash rate if transaction fees don't rise to compensate, potentially making the network slightly less secure or more susceptible to a 51% attack if the price doesn't increase.
Glossar
Halving Event
Epoch ⎊ The halving event, intrinsic to Bitcoin's design and periodically occurring approximately every four years, represents a programmed reduction of the block reward given to miners for validating transactions.
PoW Networks
Network ⎊ Proof-of-Work (PoW) networks are decentralized systems where participants compete to solve complex computational problems to validate transactions and add new blocks to the blockchain.
Transaction Fees
Cost ⎊ Transaction fees represent a quantifiable expense incurred for processing and validating transactions across diverse financial systems, functioning as a critical component of network participation and security.
Security Budget
Budget ⎊ This is the total economic value, derived from block rewards and fees, dedicated by the protocol to incentivize honest behavior and secure the network against adversarial takeover.