The halving is one of the most important mechanisms that governs the systems behind major cryptocurrencies functioning as digital money. It is a scheduled, programmed event that occurs approximately every four years for Bitcoin, Bitcoin Cash, Litecoin and other cryptocurrencies. Today the automated halving took place on the Litecoin network, reducing block rewards by half — hence the term “halving.” The process executed automatically and was implemented on the network without issues. Below we summarize how the Litecoin price reacted to the halving and explain how this scheduled mechanism works.
Litecoin halving: what is its purpose?
To understand halving, it is essential to grasp how mining works — specifically mining based on the original digital currency, Bitcoin. Mining Bitcoin is a core part of the network’s operation and its model of decentralization. Miner nodes perform the fundamental tasks that keep the system running. All miners run the network’s core code, participating in synchronization, transaction confirmation, and adding validated transaction data into blocks that are permanently stored on the blockchain.
Miners earn small transaction fees for confirming operations. But the mechanism by which new coins are issued on the network—the equivalent of printing money—comes from the block reward. This “prize” goes to the first miner or mining pool that solves the cryptographic puzzle for the current candidate block. The winner appends a new block to the chain and receives newly minted coins that enter the circulating supply. This model applies to BTC, Litecoin, and many other cryptocurrencies.
Reward reduction every four years
These cryptocurrencies are designed to be deflationary with a capped supply. For Litecoin, there will never be more than 84 million LTC in circulation. That cap is enforced by cutting block rewards approximately every four years until the total supply reaches the maximum.
When the Litecoin network began, the block reward was 50 LTC. In 2015 it dropped to 25 LTC. As of today, the reward is 12.5 LTC. In theory, reducing new supply through halving supports price appreciation if demand holds steady or increases. Assuming mining power remains constant, the final Litecoin is expected to be mined around the year 2142.
The process completed smoothly and block times were better than expected
The Litecoin halving was implemented automatically without issues, according to the Litecoin Foundation’s counter. Project founder Charlie Lee confirmed that the halving occurred at block number 1,680,000 on Monday morning. Because blockchains are public ledgers, anyone can verify this information using any Litecoin block explorer. Lee also noted that miners have continued operating after the halving, maintaining a hash rate that performed better than anticipated. Estimates predicted an average of 2.5 minutes per block; the network recorded an average of about 1.4 minutes per block.
Since the halving, 12 blocks have been found in 17 minutes.
Seems like miners have not shut off their hashrate at all. Instead, we are mining at a rate of a block every 1.4 minutes on average, which is much faster than the expected 2.5 minutes.
Litecoin network is healthy! pic.twitter.com/xvgefqIPtP
— Charlie Lee Ⓜ️🕸️ (@SatoshiLite) August 5, 2019
Litecoin follows Bitcoin in a new price surge
As noted in our recent analysis of Bitcoin’s price, the leading cryptocurrency was positioned for another significant move after testing a nearby support level. BTC briefly retraced to about $10,300 before launching a strong rally that pushed it above $11,800, where it is now consolidating to seek further upside.
Meanwhile, Litecoin has been trying to convincingly break the $100 barrier. At the time of writing, LTC is hovering around that level, trading between $99 and $100. Today Litecoin reached highs of $107.04 on Coinbase, according to data reported by TradingView.