What is the deal with Litecoin ‘halving’?

autorstwa Trading 101     sie 09, 2019

Litecoin officially ‘halved’ a couple of days ago – last August 5th to be exact. Cryptocurrency traders, investors, and enthusiasts have been speculating about what would happen to Litecoin post-halving. Is the price going to plummet? Are the miners leaving? Will it result in a drop in the hashrate?

Charlie Lee, founder of Litecoin, took to Twitter to update everyone on the status of Litecoin post-halving:

While it seems like Litecoin is good for now, what exactly happened?

Halving

Halving is something that happens to a cryptocurrency when it reaches a certain amount of blocks. While it originally affected only miners, ever since the cryptocurrency space boomed, it started affecting the cryptocurrency’s price, and in effect the whole cryptocurrency market as well. In Litecoin’s case, rewards for miners are halved every 840,000 blocks – which is estimated to happen every four years. Pre-halving this year, miners were rewarded 25 Litecoins per block. Post-halving last August 5th, it was reduced to half – equivalent to 12.5 Litecoins. In addition to reducing rewards for miners, fewer Litecoins will be in circulation.

The ‘Halvening’

Charlie Lee was interviewed by Crypto Love last month and he said that the halving, which he refers to as ‘the halvening’ may cause major problems for miners as “the halvening is always kind of a shock to the system so when the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine; so if a big percentage of the network does that, then blocks will slow down for some time” He continues that this should not be cause for panic as “for Litecoin, it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine”. As for Litecoin’s price post-halving, Lee explains “people kind of expect the price to go up, so a lot of people are buying in because they expect the price to go up, and that’s kind of a self-fulfilling prophecy”.

History Repeats Itself?

Litecoin’s price at the beginning of the year was $30 and soared to its all-time high this year at $145 back in June. At present, Litecoin’s price has dropped to $85; which is still good considering it is almost triple of its price when the year started. This is somewhat similar to what happened in Litecoin’s previous halving in 2015. In January 2015, Litecoin’s price was at $1 and soared to its all-time high at almost $9 in July. After halving in August 2015, it maintained its price between $2-5 before its rally in 2017. If this is an indication of Litecoin’s price post-halving, then there should be no significant drop observed in the following weeks and months.

Conclusion

The aftermath of halving is ultimately dictated by miners and the cryptocurrency community. Miners may find mining Litecoin no longer profitable and may choose to shut off their machine, causing blocks to slow down. The cryptocurrency community may expect an increase in Litecoin’s value after halving, causing a rally in price. As of present, there is no indication of significant changes in Litecoin’s hashrate and price.





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