Bitcoin, one of the most popular cryptocurrencies in the world, has recently halved the reward that bitcoin miners receive for their part in the network. Only July 9th of 2016, the 25 bitcoin reward that miners once received for helping verify the blockchain was reduced to 12.5 bitcoins.

Bitcoin miners did have some warning that this reduction was going to take place. In fact, they have known about it since the system went live. The decision to reduce the verification reward was made to prevent inflation within the system. Since there are a finite number of bitcoins, the only way to go about combating inflation was to reduce the rate at which new bitcoins enter the market. This halving event isn’t the first of its kind, nor will it be the last. The first halving event took place in 2012, and they are scheduled to happen every four years until the currency is completely mined around the year 2140, assuming the system stays the same through all that time.

Bitcoins are a unique currency that operate far differently from any other institutional currency. The main reason behind this is that there are no overarching regulatory agencies that oversee the network. It is entirely peer-to-peer, and its open-source nature means that the system requires a technological means of confirming transactions. This happens in the blockchain, which is a record of every bitcoin transaction ever made.

Miners are rewarded for their part in helping verify and confirm bitcoin transactions. They do so by offering a portion of their computer system’s processing power to the task. Many miners have grown past the point where they use their personal systems since it requires so much time and energy to maintain. Instead, dedicated hardware modules have been designed to perform the work at a much more efficient cost. There are even mining collectives that work together in an effort to increase their chances of receiving the reward, which is then split amongst the members of the collective.

It may not sound like an exceptionally secure system, but bitcoin has created a fairly stable currency platform. There are protocols engineered into the system that prevent fraudulent transactions, and the reward system guarantees a steady influx of new bitcoins. Since bitcoin miners are essential to the integrity of the blockchain, they are rewarded as a way of keeping their interest on the task. Miners jumped on board when the reward was 50 bitcoins at the start of the platform, and when the first halving event occurred there was a slight mining crash as those who could no longer afford the cost for such a relatively small reward decided to give up on the process.

There is a growing fear that the average bitcoin miner won’t be able to survive the most recent halving event. There are some bitcoin mining companies that have already declared bankruptcy, simply because they know they won’t be able to afford to continue to operate under the smaller reward due to lower profit margins. The Chinese have also entered the bitcoin mining market, and they are exceptionally good at it. The miner’s reward reduction may cause another mining crash that results in China taking a larger portion of the total processing power on the bitcoin network. They already control an estimated two thirds of the entire network.

Even though it is necessary to reduce the bitcoin reward for miners, that doesn’t mean the system will respond favorably to it. All currencies represent volatile markets, and bitcoin is no different.