Block Reward Reduction

Definition ∞ Block Reward Reduction is a scheduled event within a cryptocurrency protocol that decreases the amount of new coins issued to miners for successfully validating a block of transactions. This mechanism, often called halving, controls the rate at which new units of a cryptocurrency are introduced into circulation. It is a key component of a deflationary monetary policy.
Context ∞ Block reward reductions are critical events in the lifecycle of many proof-of-work cryptocurrencies, most notably Bitcoin. These reductions directly impact miner incentives and the overall supply issuance rate, frequently leading to speculation about price movements due to altered supply dynamics. Market participants closely observe these events for their influence on asset scarcity and valuation.