Currently, over half of the countries worldwide are experiencing an inflation rate exceeding 8.7%. Lebanon (190%) and Argentina (102.5%) have even witnessed this indicator soar past the 100% mark, making everyone suffer from the severest global inflation in decades. An increasing number of individuals are becoming aware of the declining purchasing power of their government-backed paper currency. One of the main causes behind this depreciation is the oversupply of money issued by governments.
This is an inevitable issue for traditional fiat currencies as they are controlled by central banks. To address this tricky problem, cryptos like Bitcoin and Litecoin have innovatively introduced a halving/supply reduction mechanism, which aims to control the supply cap and issuance rate through underlying code. This mechanism makes cryptos such as Bitcoin and Litecoin as scarce as gold and thus stabilizes their value.
The next halving of Litecoin, one of the oldest cryptos, is expected to happen in 2023. Since its launch in November 2011, Litecoin has been on the market for 12 years. The current market cap of Litecoin has gone beyond $5.87 billion, ranking 11th on the crypto market cap list. As the halving event approaches (expected around August 3), both miners and traders are showing growing interest in Litecoin. To introduce more crypto enthusiasts to Litecoin, ViaBTC held an online seminar on June 16, 2023, via their official Twitter account. The seminar brought together many insiders, including Keith Yong from the Litecoin Foundation, Dmitry Gomon and Arthur from Hiveon, Shan Belew from Litecoin OG, and Paphy Cai from ViaBTC. The discussion revolved around the theme of “Litecoin Halving: History, Trends, Challenges and Opportunities”.
During the seminar, the history of Litecoin halving was reviewed in the context of the current market trends. The speakers exchanged ideas on how to respond to the halving event and embrace the opportunities for Litecoin’s future development from the perspectives of miners, traders, and holders, aiming to address their biggest concerns nowadays.
1. Today, many major mining pools use merged mining, where they mine LTC and receive DOGE as a reward. Will the halving of LTC lead to a decrease in the DOGE reward earned by miners?
According to Paphy Cai from ViaBTC, the largest LTC mining pool globally, the additional DOGE reward through LTC mining has become the primary source of income for Litecoin miners. Currently, most mining pools employ a settlement model called PPLNS. In a PPLNS model, profits will be allocated based on the shares of hashrates miners contribute. Therefore, the halving of Litecoin will not affect the output of DOGE.
Paphy Cai added that the actual DOGE reward earned by miners would be affected by the daily mining difficulty of the network and the crypto price. Therefore, it is difficult to determine whether the mining rewards will decrease. However, if the halving event has a positive effect, miners can expect more substantial earnings.
2. What will happen when all Litecoins are mined? Will Litecoin go to zero? What are the possibilities for the future development of Litecoin?
According to Keith Yong from the Litecoin Foundation, even when all Litecoins have been mined, people will still be able to use this crypto. Although miners will no longer receive block rewards, there will still be an incentive mechanism in place. In other words, miners can still get rewards by packaging transactions, and thus stay passionate. The precondition is that the consensus for Litecoin is still at work.
People’s consensus on Litecoin is what gives it value. In essence, it is similar to gold, which holds value because it has gained consensus from people. Keith Yong believed that its value would remain with the consensus for Litecoin, no matter it is fully circulated or at any other stage.
When it comes to the future development of Litecoin, Keith Yong mentioned that various interesting experiments had been conducted on the Litecoin network, such as the Lightning Network and the Ordinals protocol. In nature, Litecoin can be used as a kind of commodity money. Perhaps in the future, more banks will hold 2% of their reserves in cryptos. Overall, people need to be optimistic about the future of Litecoin because it is worthy of expectations.
3. Will the Litecoin halving event affect LTC mining and adoption rates? Will it promote Litecoin mining or make more miners turn to other cryptos?
Dmitry Gomon from Hiveon, a leading global one-stop ecosystem for crypto mining, stressed that the halving event would directly affect LTC in various aspects. As the market enthusiasm soars, the participation of more miners will push up mining difficulty. In other words, early comers will have to devote more resources and efforts to maintain a stable mining output. However, if market prices do not match mining output, some miners may leave the market, potentially affecting the price of the crypto. Judging from the performance observed after the previous two halving events, the market would remain robust during the first half of the halving event.
According to Dmitry Gomon, Litecoin has established a strong consensus after more than a decade of development. Price fluctuations, both upward and downward, are considered normal. For miners, reducing electricity costs and employing the most efficient mining machines often prove to be profitable.
In addition, Shan Belew and Arthur shared their views on whether the Litecoin halving would impact the market price of other cryptos. If you’re interested, you can access the discussion in the Twitter Space via the link below.
Play recording: https://twitter.com/ViaBTC/status/1669658810863190016
As shown by the data from ViaWallet Explorer, there are less than 50 days remaining until the next Litecoin halving event, which takes place every four years. With the hashrate stabilizing at over 700 TH/s, miners are optimistic about Litecoin’s long-term potential as staunch promoters of the Litecoin network and key players in its ecosystem. Despite the volatility and uncertainty in the crypto market, especially during the halving event, this seems to have not dampened investors’ enthusiasm for Litecoin. What will happen to the crypto market in August? Let’s wait and see.
*The above content does not constitute investment advice. Before entering the market, investors should consider their investment goals and risk tolerance, and make rational investment decisions.