Litecoin Halving Event

Owned by Egya (Unlicensed)
Last updated: Jul 27, 2023
3 min read

The Litecoin Halving Event is a pre-programmed event that takes place approximately every four years on the Litecoin blockchain or every 840,000 blocks. This process is anticipated to continue until there are no LTC coins to be mined, which is estimated to be in the year 2142. The halving mechanism is inherent and feature-specific to the Proof-of-Work (PoW) consensus algorithm and does not apply to other types of Distributed Ledger Technology (DLT), such as Proof-of-Stake (PoS).

During the Litecoin Halving event, block rewards earned by miners for validating transaction blocks are reduced by 50%. The current block reward earned by miners is 12.5 LTC for validating/adding new blocks to the blockchain. New blocks are estimated to be added to the blockchain approximately every 2.5minutes by miners which culminates in a total issuance of about 7,200 new LTC daily.  As a result of the halving event miners are expected to receive 6.25 LTC as rewards for transaction validation thereby decreasing the rate at which new Litecoin is issued to 3,600 LTC per day.

This process is integral to Litecoin's monetary policy, designed to control its inflation rate similar to Bitcoin and to mimic the scarcity properties of precious metals like gold. The halving event aims to create a deflationary environment, making Litecoin more valuable over time as its supply becomes more limited. The most recent halving event took place on August 5, 2019.

 The upcoming Litecoin halving is estimated to occur on 2nd August 2023, 15:46UTC / 19:46 GST once the blocks reach Block Height of 2,520,000. The actual date and time may change as there is dependency  on the Block Height and occurrences of unpredictable hash rate fluctuations on the network.

 

 Historical Halving Events

LTC Halving

Block Height

Block Reward

Date

Genesis

0 (Genesis Block)

50 LTC

October 7, 2011

1st Halving

840,000

25 LTC

August 25, 2015

2nd Halving

1,680,000

12.5 LTC

August 5, 2019

3rd Halving

2,520,000

6.25 LTC

August 2, 2023 (tentative)

 

Litecoin Halving Event | Announcement and Countdown

Litecoin Halving Event Countdown

 

Evaluation Process  

MidChains has:  

  • Evaluated what is changing? 

  • Analysed the impact of the changes. 

 

What is Changing?

 

  • Block Rewards: The halving event reduces the block rewards received by miners for validating transactions and adding blocks to the blockchain. This decreases the rate at which new Litecoins are created, leading to a limited supply.

  • Mining Incentives: With reduced block rewards, miners may experience a short-term reduction in their income. This could lead to some miners leaving the network or switching to mine other virtual assets, affecting Litecoin's overall network security.

  • Scarcity and Inflation Control: The halving event implements scarcity feature into Litecoin's issuance, making it a deflationary asset. This controlled supply is expected to have a positive impact on Litecoin's value over time, as demand potentially outpaces supply.

 

Impact Analysis

Impact on Client Funds: No Impact to client funds. However, the halving event could potentially lead to price volatility and could impact the value of LTC holdings. This in no way reduces clients' original balances/amounts held in custody with MidChains. All transactions are expected to be processed without any issue.

Regulatory Implications: No Impact

Maturity / Market Capitalization: Re-affirmation of LTC’s established monetary policy that could positively contribute to LTC’s Market Capitalization with dependency on demand.

Security and Operations: Possible decline in hashing power as the number of miners or mining participation could reduce as a result of the slash in mining rewards and incentives that could adversely affect the security of the Litecoin blockchain network in the short term (e.g. of security threats include 51% attacks). However, Litecoin's network has proven resilient in previous Halving events, and it is expected to remain secure in the long run.

Traceability / Monitoring: No Impact as the blockchain's transparency and immutability remains unaffected.

Exchange Connectivity and Demand: Potential increase in market participants due to anticipated market volatility.  

Type of Distributed Ledger Technology (DLT): No Impact

Innovation and Efficiency: The halving event is an innovative way to manage Litecoin's issuance and create a deflationary asset. It seeks to promote the efficient use of resources and aligns with the broader narrative of digital scarcity.

 

All potential material, operational, and market risks associated with the Litecoin Halving event have been duly assessed. The Litecoin development team has given top priority to network security, ensuring robust measures are in place to safeguard against any malicious actions. Additionally, MidChains remains committed to maintaining transaction traceability and monitoring of transactions initiated on the blockchain.

 

Upgrade Preparation  

MidChains’ custody infrastructure will ensure a smooth handling of the Litecoin Halving event. No action is required by clients who hold LTC, node operators, users or validators. However, node operators and validators are advised to monitor closely and take necessary precautions in implementing upgrades if not previously done. There is no expected downtime during the Halving period. Hence, deposit, withdrawal, and trading will remain uninterrupted for LTC and LTCUSD.