Ha(l)ve it: The Most Important LTC Gaining Ground
Social media platforms are buzzing these days with opportunities in the virtual digital assets (VDA) sector. Among several digital currencies, Litecoin or LTC is trending the most as the asset approaches the halving event.
LTC price rallied nearly 30% since last Thursday as the countdown to halving begins. It is intriguing to know behind Litecoin halving and its influence on the blockchain as whole.
What is a Litecoin block halving event?
In blockchain terminology, halvings are events that halve the rewards for block miners. Each one is programmed to happen after a certain amount of blocks have been mined.
Similar to its elderly sibling Bitcoin, Litecoin is programmed to undergo a block halving after every 840,000 blocks. This block halving event takes place every 4 years. Litecoin’s initial block reward was 50 LTC, which as we know was split after 4 years.
What the halving process does is, it lowers the rate at which Litecoins are generated. The primary objective of this mechanism is to ensure that Litecoin would remain deflationary. Similar protocols have been incorporated into other blockchains as well.
The halving is periodical and is programmed into Litecoin’s code. Current Litecoin block reward is 12.5 LTC, after the halving, the block reward will be 6.25 LTC. Essentially, after every halving the miners reward is halved or reduced by 50%. In case of LTC, the halving will end approximately by the year 2142.
Why was this done?
As it is known, in the case of conventional FIAT currencies, governments or banks allow printing money. This cause inflation. In Litecoin’s case, the total supply will be maxed out at 84,000,000 LTC. Printing extra money causes inflation, if there is no extra money printed, the value of the Litecoin should increase as the demand will rise (people using Litecoin grows) and supply will lower or stay flat (no more Litecoins are “printed” or “minted”). This makes Litecoin similar to gold, which has limited supply and cannot be “printed” or artificially created.
What is the significance of Litecoin halving?
The Litecoin halving event gains significance since it has a major effect on the price and thus the market capitalization of Litecoin. As we are aware that the halving event leads to control of the inflation rate of Litecoin and try to create an artificial scarcity of the token supply, making it more valuable over time. The reduced rewards for mining incentivize miners to continue contributing to the network while limiting the number of new Litecoins introduced into circulation.
Is there any difference between Bitcoin and Litecoin halving?
There is no difference between Bitcoin and Litecoin halving, except for a few that relate to the nature of blockchain. These differences are: market impact, which differs given the adoption size of both the tokens, and the level of security.
Conclusion:
Crypto traders/investors carefully watch the halving event, since it can have a huge impact on the asset’s price and market cap over time.
As far as predicting the impact of Litecoin halving, it would amount to speculation. But, it will definitely add volatility to the price.
The conditions leading up to the upcoming Litecoin halving closely resemble that of observed during the previous halving event.
Back then, the price of LTC had also been finding resistance at $100. On the day of the halving, LTC peaked at over $105. After several days of volatility, within a week, the price had fallen below $90.
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