Litecoin halving: A complete guide to how it's mined & what to expect tomorrow

On 3 August 2023, Litecoin (LTC) is set to undergo a significant event known as halving, making it an important date for cryptocurrency enthusiasts. As one of the most popular cryptocurrencies and considered the second-oldest after Bitcoin (BTC), Litecoin was created by Charlie Lee, a former Google engineer, with the aim of improving upon Bitcoin's perceived limitations.

One of Litecoin's main objectives is to offer faster transaction processing speeds and address concerns related to mining centralisation. Unlike Bitcoin, which has evolved into a "store of value," Litecoin's focus remains on becoming a practical and efficient digital currency for everyday transactions.

Let's explore the unique features of Litecoin and understand how it operates in the world of cryptocurrencies.

What Is Litecoin & how does it work?

Litecoin, introduced in 2011, is one of the first altcoin - cryptocurrencies other than Bitcoin and sometimes Ethereum. It was created to provide fast, secure, and low-cost payments. The main goal of Litecoin was to improve upon Bitcoin's technology and offer merchants an alternative with quicker settlement times and better transaction speeds.

Litecoin shares many similarities with Bitcoin. Both cryptocurrencies utilise proof of work to verify transactions and operate on open-source principles. However, Litecoin uses a different hashing algorithm called Scrypt, which enables faster transaction speeds.

While Bitcoin can process about five transactions per second with block generation taking approximately 10 minutes, Litecoin can handle 54 transactions per second, with new blocks created every 2.5 minutes.

How Litecoin is mined?

Litecoin mining is a complex and energy-intensive process, similar to Bitcoin mining. Miners compete to solve complex mathematical puzzles, known as hashes, in order to validate and record new transactions on the Litecoin blockchain. The first miner to solve the hash for a particular block is rewarded with newly created Litecoin as an incentive for their efforts.

The current block reward is set at 12.5 LTC, but this reward is subject to halving events that occur approximately every 840,000 transactions, reducing the reward by half. To solve these hashes efficiently, miners use specialised hardware, such as application-specific integrated circuits (ASICs) and graphics processing units (GPUs), to perform the complex calculations required.

The energy-intensive nature of Litecoin mining has led to the establishment of large-scale mining farms and pools, where multiple miners combine their computational power to increase their chances of successfully mining new blocks. Litecoin's mining process ensures the security and immutability of its blockchain while steadily releasing new coins into circulation, maintaining the integrity of the network.

How is Litecoin halved?

Litecoin undergoes a fascinating process known as halving, which plays a crucial role in controlling its supply and inflation. Just like Bitcoin, Litecoin's total supply is capped, but instead of 21 million coins like Bitcoin, Litecoin has a maximum supply of 84 million coins.

The halving process occurs at regular intervals, specifically after every 840,000 transactions. When miners successfully add a new block to the Litecoin blockchain, they are rewarded with a specific number of newly-generated LTC. However, during a halving event, this reward is reduced by half.

For instance, when Litecoin first launched, miners received 50 LTC for each block added. Over time, this reward has halved several times, with the current reward standing at 12.5 LTC per block. By decreasing the block reward periodically, Litecoin ensures a gradual and controlled release of new coins into the market, making it a more deflationary asset in the long run.

The next Litecoin halving is set to happen 3 August 2023, further cementing its reputation as a well-structured and robust cryptocurrency.

Litecoin advantages & disadvantages

At the time of writing, Litecoin's transaction fees were significantly lower, making it an attractive option for merchants and users alike. Litecoin has faced some challenges, including its creator's divestment of most of his holdings in 2017, which caused some loss of confidence in the cryptocurrency.

Additionally, newer cryptocurrencies with even faster transaction speeds, such as EOS, XRP, and Cardano, have emerged, potentially reducing the demand for Litecoin's faster payment network.

In short, Litecoin remains a relevant and widely traded cryptocurrency, offering practicality for both seasoned investors and newcomers. While it might face competition from newer alternatives, Litecoin's advantages and staying value still make it a viable choice for those seeking efficient and convenient digital transactions.

As with any investment, it's crucial to conduct thorough research and consider your financial goals before buying Litecoin or any other cryptocurrency.