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In the previous article, we introduced Litecoin (LTC) right from development history to work mechanism for how transactions are recorded in the block to mining pool distribution and much more. In this article, we will take a deep dive into Litecoin's block value halving, and the impact on its ecosystem.
I. Block Reward Halving Event Definition
When Satoshi Nakamoto developed the Bitcoin mechanism, he authorized that Bitcoin production per block would be halved after every 21[ads1]0,000 blocks were recovered. Fifty Bitcoins were initially produced per block, and then gradually halved after the production of each 210,000 blocks until all the blocks have been recovered. Simply put, each block could produce 50 Bitcoins first, and this figure will be halved every four years until 210,000 blocks are reached. Also, the difficulty of the calculation is often adjusted to make it take about 10 minutes on average to process a single block.
Historical Bitcoin Halving Performance% (Cumulative LN) 7
According to the above calculation, all 21 million Bitcoins will be recovered by 2040. Bitcoin increased exponentially after each reward half-event, and then gradually returned to its reasonable price range after the lubricant was cooled. In November 2012, after Bitcoin reward rewards, Bitcoin saw a price rise of over 80%. Similarly, Bitcoin's price increased from $ 651 to $ 2,518 after the second rewards halve in July 2016. The two block halving events were both followed by bull market cycles, as people generally had positive attitudes to their future market directions.
1. Litecoin (LTC) Block Reward Halving
Similar to Bitcoin, Litecoin undergoes a rewards that are halved approximately every four years, with the latest event on August 26, 2015, when the Litecoin reward was reduced from 50 LTC to 25 LTC. Theoretically, the halving of the block generation will lead to a decline in supply and trigger the prize for rally.
In reality, however, it may prove different, as many other factors and variables enter the game.
According to the historical data shown above, Litecoin went through a consolidation phase for about three months before the halves occurred August 26, when Litecoin (LTC) climbed from $ 1.3 to $ 8.96, an increase of 689.23%. However, it went back afterwards, landing at $ 2.95 on the day of the halving event. Also, Litecoin failed to stick to the bull trend and resigned soon after the halving event.
After a horizontal data analysis of Litecoin block reward half-event and a vertical data analysis of Bitcoin's two halving events, we make the following conclusions:
- Both Bitcoin and Litecoin went through a consolidation phase for several months leading up to their block reward halving event.
- The market reaction to Litecoin's block reward halving reflected shortly after the incident and the effect gradually faded, which is not the same case with Bitcoin, as it saw a rise in prices even after the event.
- Some investors speculated on Litecoin's blockage halving event and made quick money, but pulled their hands off after the event was finished.
Litecoin is scheduled to review the second block reward incentive event in August 2019.
What impact will this have on the Litecoin ecosystem this time around?
II. How on Net and Demand W ill A ffect litecoin cleanse D evelopment
Relationship between supply and demand is the key to underlying laws in the market economy. Akin for any commodity leads a decline in supply along with no change in demand generally at higher prices. Therefore, many investors will appreciate in the Litecoin block rewards halving event on the forecast that the supply of Litecoin will decrease in the future with the rising demand in tandem.
The Litecoin halving event triggers a short "sell news" response from the market in the weeks leading up to the event, but the price may withdraw when demand has adapted to its affordable range.
1. S upply and Demand I s a K ey F actor