Litecoin, a peer-to-peer currency and open-source global payment network, announced it will be halving on Tuesday, Aug. 25, marking what the Litecoin Association calls a milestone in the cryptocurrency’s 4-year history. The association has produced a video that describes the halving’s significance to Litecoin.
After the halving, Litecoin will reward miners 25 coins rather than 50 new coins per block for solving blocks, Litecoin explained in a video. “The halving process doesn’t just happen once,” the video explained. This process happens every four years for both Litecoin and Bitcoin, as stated in their respective codes.
As inflation slows, there are fewer coins for the market and everyone’s price rises, the video notes. Acknowledging there has been a price decline prior to the halving, the video notes the most likely reason is that people expect the price to rise. “We should also point out cryptocurrency has come a long way since 2012 when bitcoin underwent its first halving,” the video notes.
Another part of the equation is the miners, who invest in specialized equipment to mine the coins and must make a profit. Because their mining income will fall by 50 percent, they shut off a lot of their equipment unless the price rises to the point where it makes sense to continue.
Miners face two options. One is the price rises and miners continue to operate. If the price doesn’t rise, the miners will no longer be able to operate. If this occurs, the network hash rate will drop as mining declines, resulting in a less distributed network. If the network hash rate drops low enough, the mining difficulty will automatically adjust itself. Those miners who stopped mining could be able to resume. Read more