Charlie Lee, the creator of Litecoin (LTC), drew inspiration from Bitcoin (BTC) and integrated the fundamental features of Blockchain, including the process of halving the block reward, into his own cryptocurrency project. The block reward halving represents a programmed 50% decrease in the issuance rate of a cryptocurrency, designed to occur every four years. Litecoin’s Blockchain is currently preparing for its third block reward halving, which is expected to take place today.
Hours Away from Litecoin’s Major Block Reward Halving
According to data provided by Litecoinblockhalf.com, the third block reward halving of Litecoin, which has been in circulation since 2011, will occur around 18:52 today. Block reward halvings in the Litecoin Blockchain take place every 840,000th transaction block, and the average time to create a block is 2.5 minutes. With the third block reward halving, the block reward in the Litecoin Blockchain, currently at 12.5 LTC, will decrease to 6.25 LTC, aligning it with the block reward in the Bitcoin Blockchain.
Speaking in a recent Twitter Spaces, Lee stated that block reward halvings aim to encourage the mass adoption of a cryptocurrency without compromising network security. Like Bitcoin, Litecoin also utilizes a Proof of Work (PoW) consensus mechanism, relying on “miners” who use computational resources to process transactions and secure the network. This means that these miners are rewarded with LTC, which is subject to variable transaction fees and undergoes a 50% reduction approximately every four years.
The long-term plan for Litecoin involves gradually shifting the block reward payments to miners primarily through transaction fees. Lee stated, “The idea is that enough usage on the chain will create enough transaction fees, which will be sufficient to continue to pay miners to secure the network.”
However, the main challenge lies in motivating miners while gradually reducing payments. According to Lee, one potential outcome is that as fewer new cryptocurrencies are produced and the growth rate in supply slows down, the price will increase. Lee said, “Price is determined by supply and demand. If the supply side decreases by half and the demand remains the same, then the price should increase.”
Impact of Block Reward Halving on LTC Price
Addressing the impact of block reward halving on LTC price, Lee emphasized the significance of market reaction, stating, “Sometimes it doesn’t have much impact. Everything depends on how the market will react to the block reward halving.”
Since the beginning of the block reward halving year, the price of Litecoin has increased by 33%, and market analysts do not expect significant upward movements in the short to medium term following today’s block reward halving.
