Incoming: Litecoin Block Reward Halving #3
Last September we witnessed Ethrereum’s Shappela upgrade, and prior to that, it was Bitcoin’s third halving event. This time around, the cryptocurrency landscape offers another major milestone on the horizon – the third block reward halving of Litecoin. Let's dive into the upcoming update.
Halving events are a major trigger for network activity as both new and existing participants look to either acquire or trade the network's underlying asset.
Litecoin, one of the oldest and most popular cryptocurrencies, has such an event scheduled on Wednesday, August 2, after which miners will be receiving 6.25 LTC for each mined block instead of 12.5 LTC. This is the third block reward halving event in Litecoin’s history preceded by:
- Block Rewards Halving #1
Date: 25 August 2015
Reward Halved from 50 LTC to 25 LTC - Block Rewards Halving #2
Date: 5 August 2019
Rewards Halved from 25 LTC to 12.5 LTC
Litecoin: Over 10 Years in Circulation
Since its launch in October 2011, LTC has rarely vacated its spot in the top 10 biggest cryptos – so strong has been its appeal as a cheaper, faster Bitcoin spin-off. Which (without undermining Charlie Lee’s founding team’s work) is what Litecoin effectively is – it was created based on Bitcoin’s protocol with distinct hashing algorithm, hard coin cap and block transaction times – a “Lite version of Bitcoin”, Lee said himself. Its mission has been to provide an alternative to BTC in micropayments, where the pioneering crypto lags in terms of transaction fees and processing speed. To that end, it’s been fittingly dubbed “the silver to Bitcoin’s gold”.
Key Metrics:
- Total LTC supply: 84,000,000
- Mining algorithm: Scrypt
- LTC generated per day: 7,200
- Litecoin current inflation rate: 3.65%
- LTC generated per day after the halving: 3,600
- Litecoin inflation rate after the halving: 1.825%
Litecoin Rewards Halving #3: Why? How?
Block reward halvings are among the most significant events for any cryptocurrency after it enters circulation. These planned network updates effectively slash in half the rewards that the network distributes to miners for their work i.e. the computing power they provide to process and validate transactions. The reason behind is to secure that the newly-issued currency supply is controlled and the scarcity of the asset, a founding cryptocurrency trait, is guaranteed. By ensuring a gradual and predictable amount of coins is released in circulation, inflationary pressures on the cryptocurrency are countered. It’s important to note that block reward halvings occur only on networks utilizing the Proof-of-Work concept: Bitcoin, Bitcoin SV, Bitcoin Cash and Litecoin.
- The LTC Block Reward Halving event plays a crucial role in controlling the issuance of new Litecoins, leading to a decrease in Litecoin's inflation rate over time and creating deflationary pressure on its fixed supply, similar to Bitcoin.
As for mining LTC, Litecoin's design encourages miners by rewarding them with coins for validating new blocks approximately every 2.5 minutes. The Litecoin halving occurs every four years or after 840,000 blocks, reducing mining rewards by 50%. This process will continue until around the year 2142 when no more LTC coins can be mined.
Currently, about 7,200 new LTC coins are created daily, which will decrease to 3,600 per day after the halving event. Litecoin’s halving is built into its protocol and is crucial for controlling the issuance of new coins, which manages the coin supply and can influence its long-term value.
Price and Network Activity Analysis
Block reward halving events spark interest in the asset from market participants – here’s how this one has impacted Litecoin’s network so far.
