What is a litecoin block halving?
Like many other cryptocurrencies, Litecoin rewards miners for verifying transactions and adding them to the blockchain. When a block is successfully mined, the miner is rewarded with a certain number of litecoins. When Litecoin was first launched, the block reward was 50 litecoins per block. However, the block reward is halved every 840,000 blocks, or roughly every four years. This process will continue until the block reward reaches zero, which is estimated to happen around the year 2142. Currently, the block reward is 12.5 litecoins per block, but after the next halving it will decrease to 6.25 litecoins per block.
Why was this done?
Litecoin was designed as a deflationary cryptocurrency, meaning that its supply will decrease over time. This is similar to how the supply of gold decreases over time as it is mined and extracted from the earth. As the supply of litecoins decreases and demand for them increases, the value of Litecoin may increase as well. This can be seen as a hedge against inflation, as the value of fiat currencies like the US dollar tends to decrease over time due to monetary debasement through inflation. For example, housing prices have generally increased over time due to inflation and the decreasing purchasing power of the dollar.
One of the benefits of Litecoin is that its issuance is predetermined and transparent. This allows users to understand the current and future inflation rate of Litecoin, as well as how many litecoins are in circulation and how many remain to be mined. Having this information readily available can help people make informed decisions about using Litecoin as a currency or investment.
The issuence of Litecoin
The issuance of litecoins is controlled by the Litecoin network, which is maintained by all participants in the network. Since its inception, Litecoin has operated under certain consensus rules, including a maximum supply of 84 million litecoins, a target block interval of 2.5 minutes, and a halving event every 840,000 blocks (approximately every 4 years). These rules also specify that the block reward starts at 50 litecoins per block and decreases by half every time the halving event occurs, until it reaches zero (estimated to happen around 2142). Any changes to these parameters must be agreed upon by consensus among all participants in the Litecoin network.
Halving event dates
The first halving event for Litecoin occurred on August 25, 2015, at block height 840,000. This was followed by the second halving event on August 5, 2019, at block height 1,680,000. These events marked significant milestones in the issuance of litecoins, as they resulted in a reduction of the block reward given to miners. The halving events will continue to occur periodically, approximately every four years, until the block reward reaches zero.