Litecoin (LTC), one of the oldest and most popular cryptocurrencies on the market, will see its second halving on August 5th. Lots of analysts and reports talk about it, but what does halving mean? How can this affect the Litecoin price? How often do halving events take place? These and other questions are answered in this article.
Litecoin halving explained
There are different virtual currencies on the market that work with different consensus algorithms. One of them is known as Proof-of-Work (PoW), which is also popularized by Bitcoin (BTC). In PoW networks like BTC and LTC, miners have to process the network’s transactions by providing mining services.
This is achieved with hardware devices that use a lot of power and keep the network secure. By confirming that the transactions are real and have not been modified, miners receive rewards for their energy consumption and the time it took to mine those digital assets.
In this case, Litecoin miners receive 25 LTC coins per block compared to BTC miners who receive 12.5 BTC per block. Every 840,000 blocks on the Litecoin network and 210,000 on the Bitcoin blockchain, the rewards for miners will be cut in half. That means miners will be rewarded with 12.5 LTC every 2.5 minutes for the next half that Litecoin will experience. Bitcoin miners are rewarded 6.25 BTC every 10 minutes, considering that Litecoin block times are four times faster than Bitcoin’s.
Will Litecoin Price Be Affected?
Bitcoin and Litecoin are currencies with an inflation scheme that is reduced every four years. Litecoin inflation will be reduced from 8.72% a year to 4.26% a year, closer to what central banks around the world typically set as the “healthy rate of inflation” for their economies.
Cryptocurrencies are different. There is a clearly limited supply that cannot be changed, which creates certainty about what will happen and how inflation rates will go. With less LTC spending per month, it will be much easier for the market to absorb the new LTC printed. That could have a very positive effect on the price.
As virtual currencies expand, the demand for them increases. In recent years there has been a growing demand from larger investors and institutions compared to previous years when digital currencies were mainly traded by retail investors. Interest in Litecoin is also expected to increase, but a lower LTC issuance could ultimately impact the price of the fourth largest cryptocurrency.
Bitcoin has already seen several halves in 2012 and 2016. The next halving is expected to take place in May next year. Before and after these two halves, the price of the popular digital asset followed a positive trend.
There is a difference to Litecoin. The digital currency wasn’t launched until 2011, which means that the cryptocurrency will see its second halving event and not the third. Assessing the impact on the asset therefore turns out to be more difficult than Bitcoin. Even so, Litecoin is expected to behave similarly to Bitcoin, even if LTC didn’t perform well after first halving in 2015.
On August 25, 2015, Litecoin saw its first halving event, where miners received 25 LTC instead of 50 LTC since 2011. The graphs show that the digital asset had a price of 306% a month before halving, certainly driven by the fact that the market was excited about the event.
Nevertheless, the euphoria ended in just a few weeks and the price of Litecoin remained unchanged for over 1 year. It traded around $ 2.73 and $ 4.7, with the LTC rising above that level in a short space of time to hit $ 5.7.
This year we can see that Litecoin started a bull run in December 2018 after a year long bear market. Litecoin has already grown 550% since bottoming out, suggesting the halving has already been locked. The price movement we’ve seen over these six months is similar to what price tracked in 2015, when it rose 600% from $ 1.18 to $ 8.79.
Source: https://www.tradingview.com/Source: https://www.tradingview.com/
Although PoW currencies tend to have a lower correlation to other digital assets when halved, Litecoin is expected to behave in some ways in line with the overall crypto market. This means that to a lesser extent, any upward or downward movement in space will affect the digital currency before and after the halving event on August 5th.
At UseTheBitcoin, we wrote an article about the Litecoin price prediction that was created with various events in mind, including the upcoming halving.
At the time of writing, we are 11 days away from halving. According to data from CoinMarketCap, Litecoin has a price of $ 95.55 and a market capitalization of over $ 6 billion.
Litecoin offer and hash rate
Litecoin has a maximum supply of 84,000,000 LTC, of which over 62,840,000 LTC have already been mined. This equates to 75% of the total Litecoin that is expected to be mined in history. There are still 21,160,000 LTC to be dismantled.
14,400 LTC are currently being generated per day and the number of new LTC will be reduced to 7,200 with approximately 576 blocks being generated daily.
The Litecoin hash rate also reached new highs a few days ago at around 300 GH / s. For this reason, the difficulties in mining Litecoin have also increased significantly and set new records. Although the miners seem optimistic about the future of the network, it is clear that they will be less profitable after the halving.
During an interview with Mickey on July 10th, Charlie Lee, the founder of Litecoin, mentioned that there will be some impact on Litecoin’s mining ecosystem.
On this subject he commented:
“If the mining premiums are cut in half, some miners will be unprofitable and will shut down their machinery. When a large percentage does this, the blocks will slow down for some time. For Litecoin there are three and a half days until the next change [in difficulty]So maybe like seven days of slower blocks, and after that the difficulty will come back and everything will be fine. “
It is possible to start mining Litecoin by purchasing the necessary equipment and connecting to a mining pool that is serving well in the miner’s jurisdiction. Another way to access Litecoin is by purchasing it. At UseTheBitcoin, we wrote about the top five ways to buy Litecoin this year.
Litecoin halves the result
Litecoin will halve on August 5th. This is one of the most important events a PoW network experiences. According to our analysis, the market already seems to have priced in the halving, which coincided with the recovery of the cryptocurrency space.
Miners don’t seem to worry about the rewards reduction, which is kind of bullish considering they expect the price to go up. If this does not happen, there will be a short period of time when miners will be excluded from the network. Once the difficulty level has adjusted, things should return to normal.
In the long term, halving is always positive for the price of the virtual currency. With lower LTC issuance but higher demand for cryptocurrency, a bull market is expected to increase the price of the digital asset.