Being a part of the Crypto sector, you must have heard about the term “halving,” also Bitcoin halving and Ethereum halving. Similarly, another altcoin called “Litecoin,” also known as the “lite version of Bitcoin,” will witness a highly-anticipated halving event in the next 30 days. This event will happen on August 2, 2023.

When the reward for mining Litecoin transactions is cut in half, it’s known as the “Litecoin halving,” which is a significant event. The once-every-four-years occurrence slows the production of new coins, thus, reducing the quantity of fresh supply that is accessible even while demand increases. The halving is done to maintain the crypto asset’s purchasing value.

In this article, let’s see what Litecoin is halving and how it is different from Bitcoin halving.

About Litecoin

Litecoin is a decentralized, open-source, P2P, and fully global payment network where transactions are conducted in Litecoins or LTC units. Launched in 2011, two years after the launch of the first Crypto (Bitcoin), Litecoin is an altcoin that was created using the same basic structure as Bitcoin. The brain behind the creation of Litecoin was Charlie Lee, an MIT graduate and an ex-Google engineer.

Charlie’s initial goal behind the launch of Litecoin was to offer an improvement where Bitcoin fell short and make it up to be ‘the silver to Bitcoin’s gold.’ Based on market capitalization, Litecoin has been among the top-performing Cryptos since its inception.

What is Litecoin halving?

Litecoin has several similarities to that of Bitcoin, as it is its forked version. Some of them include the Proof-of-Work (PoW) consensus mechanism and the halving cycle. Thus, as happens with Bitcoin, Litecoin’s mining rewards are also halved every four years.

When the Litecoin network first went live in 2011, miners were paid 50 LTC for each block they mined. The block reward was slashed in half to 25 LTC four years later, in 2015. Similar to how it was further decreased to 12.5 LTC in 2019, the award will now be cut to just 6.25 LTC this year as a result of the upcoming halving event.

Importance of Litecoin halving

The significance of the Litecoin price halving is related to the fact that it significantly affects the price and, as a result, the market capitalization of Litecoin. In these kinds of blockchain networks, the goal of the halving event is to control the rate of Litecoin inflation and attempt to reduce the token supply’s availability, increasing its value over time. The decreased mining rewards encourage miners to keep supporting the network while restricting the amount of fresh Litecoins released into circulation.

Therefore, when halving takes place, Litecoin miners will no longer receive 12.5 LTC for the same amount of labor but just 6.25 LTC. Even while all other factors remain the same, the system becomes more scarce as a result of the decrease in supply, which raises investor demand and, consequently, the price of the crypto asset.

After understanding Litecoin halving and its importance, let’s see the difference between Bitcoin and Litecoin halving.

Difference between Bitcoin and Litecoin halving

Although the basic idea and concept of halving in Bitcoin and Litecoin are similar, there are a few minute differences because of the nature of blockchains.

#1 The market impact of Litecoin’s halving is not the same as Bitcoin’s.

It’s not too difficult to comprehend this. The market capitalization of Litecoin is $6.6 billion, while that of the king coin, Bitcoin, is approximately $560 billion, or roughly 85 times more. Due to its massive dominance over the total market capitalization of all Cryptos, the market impact of Bitcoin’s halving would therefore be significantly greater.

#2 Bitcoin and Litecoin both employ varying degrees of scarcity.

The total number of Litecoin coins that will ever be in circulation is 84,000,000, whereas the total number of Bitcoin coins is only 21,000,000. As a result, there is an incrementally larger scarcity of Bitcoins compared to Litecoins. Currently, approx 11.5 million LTCs are present to be mined, which is almost six times greater than BTC’s remaining supply. Another crucial fact to consider is that Litecoin has been trailing Bitcoin for about three years and thus is lagging in that aspect, as well.

Bottomline thoughts

In conclusion, Litecoin’s 3rd halving event is crucial for investors. However, if you look at the past halving events, they were not as impactful on the overall Crypto sector as Bitcoin’s halving would be. But considering the volatility of the Crypto prices, as an investor and a trader, you should always be prepared and stay alarmed. Litecoin halving is also important for traders and investors holding large amounts of LTC; for them, Litecoin halving is a very important event on which they should have a keen eye!