The word half may often be perceived as something incomplete. In the world of cryptocurrencies though, ‘halvings’ have little to do with incompletion. They are updates put in place to ensure cryptocurrencies like Litecoin become more complete.
What is the Litecoin Halving About?
Litecoin (LTC) halving is a pre-programmed event where the block reward gets reduced in half – similar to Bitcoin’s halving. By doing so, miners receive less LTC for their mining activities and this will supposedly have a deflationary impact on the value of LTC tokens.
On the Litecoin chain, halving cycles occur after every 840,000 blocks have been mined – which is roughly every 4 years.
The upcoming Litecoin Halving is the token’s third halving event and will reduce block rewards from 12.5 LTC per block to 6.25 LTC per block. The previous Litecoin Halvings occurred in 2015 and 2019 - halving rewards from 50 LTC to 25 LTC in 2015 and 25 LTC to 12.5 LTC in 2019.
Why Are Halvings Significant?
Imagine if governments were to print fiat money at an unregulated rate - this would result in an accelerated increase in the supply of the currency, ultimately leading to inflation.
Because halvings affect the rate at which new Litecoins are created, they help control the inflation rate of Litecoin and create scarcity in the token supply. Due to the limited token supply, the value of LTC tokens will supposedly become more valuable over time, thereby creating a deflationary currency.
What is Litecoin?
Litecoin (LTC), a cryptocurrency designed to provide fast, secure, and low-cost payments, was launched in 2011 by Charlie Lee, a former Google employee.
Litecoin is essentially Bitcoin’s (BTC) younger and more efficient cousin - it was created based on the Bitcoin (BTC) protocol, uses a different hashing algorithm, has a block time of just 2.5 minutes, and has much lower transaction fees.
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Will the Litecoin Halving Affect Prices?
When a halving occurs, it results in a fifty percent reduction of the block reward for miners. As a result, the rate at which new Litecoins are generated decreases. This reduction in the coin's newly created supply can potentially exert upward pressure on its price, given that demand remains steady or experiences an increase.
Nonetheless, it is crucial to understand that the price dynamics of cryptocurrencies are influenced by various factors and can be subject to fluctuations. While the halving event may contribute to price appreciation, it is not an assured outcome, as other market forces also play a significant role in determining the cryptocurrency's value.
Here’s a quick outlook on the prices of LTC from the last 2 halvings
Litecoin First Halving August 25, 2015
Litecoin Second Halving August 5, 2019
How will the Halving Affect Me As a Coinhako User?
The halving will not affect your experience as a Coinhako user, but we do invite you to stay tuned to price movements by logging into the mobile app daily. This is also a great way to accumulate points which you can use to redeem trading fee discounts on Coinhako!
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Disclaimer: All writers’ opinions are their own and do not constitute financial advice. As a company, we do our best to provide information that is accurate and valuable. The contents of this blog post are intended for educational purposes only. Individuals are advised to perform due diligence before purchasing any cryptocurrencies as these assets are subject to high volatility, and understand the risks associated with trading cryptocurrencies.
