Litecoin has just reduced its block reward for miners by halving its price. In the process of halving, the mining reward for cryptocurrencies like Litecoin (LTC) gets reduced by nearly 50%. Different cryptocurrencies have different rewards attributed to them. Litecoin awards 25 coins for every block. But from now onwards, 12.5 Litecoins per block will be received as rewards by miners.
Litecoin, an early spin-off of bitcoin or altcoin was released in the year 2011 by Charlie Lee, an ex-employee of Google and Coindesk. Litecoin is an open-source cryptocurrency that is not being managed by any central authority. It is nearly identical to Bitcoin. The main underlying difference between them is that Litecoin processes blocks every 2.5 minutes as compared to the processing of blocks every 10 minutes by Bitcoin.
The Litecoin network has been designed in such a way that the rewards get halved for every 840,000 blocks and this process repeats itself every 4 years. Around 576 blocks are generated per day by Litecoin at a speed of approximately 2.5 minutes per block. This halving of Litecoin has resulted in a slight rise in its value to about $100.
Despite the buzz that has generated around this event, it needs to be noted that the price of Litecoin remains surprisingly lower compared to its value of June 2019. In January 2019, LTC price was around $30, but it increased to $140 in the month of June. This means that after the halving process, the price of Litecoin has come down by nearly 40% in comparison to the figures of June 2019.
Many people are still speculating whether the value of Litecoin would show any substantial growth in the future, after analyzing its dismal performance during the halving process. This halving of Litecoin will increase the relevance of transaction fees as an incentive that is being provided by the network. As the Litecoin network becomes mature by every passing day, scarcity of Litecoins increases due to the reduction in their supply.
Miners are the ones who face the consequences of LTC halving, particularly those who accumulate coins over a period of time rather than selling them off instantly as per the changing market rates. In spite of the increase in circulation as a result of halving, most investors won’t be instantly affected by the fall in block rewards.
The pre-event upward shooting of prices is a very common phenomenon that occurs during LTC halvings, which ultimately causes a subsequent drop in the prices. But these happenings are mainly dependent on the conditions prevailing in the crypto market.
On the basis of current projections, the next LTC halving is expected to happen sometime in August 2023. But for now, more importance is being put on ‘Bitcoin halving’ that is scheduled to take place on May 2020. This LTC halving gives investors an idea of what could be the consequence of 2020 Bitcoin halving.
Source: News BTC, Atomic Wallet, Crypto Briefing, Cointelegraph