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Litecoin is one of the most successful altcoins. It is a fork of Bitcoin that works almost similar to the top digital currency. This is why it is known as “digital silver”. It is Bitcoin that functions like digital gold.
Both digital currencies have limited supply. Litecoin has a maximum supply limit of 84 million. This is the highest number of Litecoin that will ever be available on the market. Once this number is reached, no new Litecoin will ever be released.
Litecoin is decentralized such as to have no control authority. It means that no one will ever decide to change the numbers once completed. This is different from government-controlled fiat currency. The government can increase or decrease supply, depending on inflation.
At the time of writing, there are 66,003,758 coins in the supply. That means there are 17,996,242 Litecoins left for mining. While it’s a bit difficult to know when the last coin will come out, some data puts it at 2042. Thereafter, the system will rely on the available currencies for transactions and transaction verification.
Litecoin Mining
The process of creating new coins is called mining. The miners use special machines to create new coins. Previously, it was easy to mine Litecoin using common CPUs and GPUs. However, over time, the competition has become more robust, leading to the need for more processing power.
Extraction involves solving several algorithms. The right answer creates a file hash, which becomes a new addition in the blockchain. All miners in the system must verify a hash before it becomes part of the block.
Verification helps in blockchain security. It helps to avoid the possibility of double payments using the same details. As such, miners are not only crucial for the creation of Litecoin, but also for safety.
The need for more power led to the creation of special energy-intensive machines to operate. For this, special mining centers have arisen in recent years. Mining companies can afford the devices and pay for the power. The companies are also mainly found in countries with cheaper electricity like China.
Miners who successfully create blocks get rewards in the form of Litecoin. The premiums depend on the period as they are reduced by half after each halve.
Which brings us to the next concept on Litecoin halving;
Litecoin halved
Litecoin’s halving is where the rewards for success extraction is reduced by half. The halving occurs every 840,000 blocks. It happens every four years.
Litecoin has suffered two halvings from the start. The first was in 2015 when the coin rewards went from 50LTC to 25 LTC. Subsequently, the next halving was in 2019, when the rewards changed from 25LTC to the current 12.5 LTC.
Halved it is also essential for the system as it helps determine the offer. The falling rewards value means that most miners would lose interest. The reduction in supply with similar demand leads to an increase in prices. For this, most of the halving comes with an increase in value.
Halving has become one of the most critical events in the cryptocurrency world. The event creates a lot of buzz on the coin even before it happens. That is why, in most cases, the price of the currency would rise even before the event.
The other concern is what will happen when mining rewards hit zero. The prizes are likely to reach this number before the coins are all drawn. However, the miners are so crucial to the community for safety. The system must find a way to continue motivating the miners.
The best way to proceed would be to increase transaction costs. Litecoin is currently one of the most affordable virtual currencies use. It comes with reasonable pricing which makes it an option for most.
The need to motivate miners will lead to increased transaction costs. This shouldn’t be a problem. Most traders understand the need for security. For this, they will be willing to pay more for the operation of the miners. However, the costs will remain industry standard. Other coins, such as Bitcoin, also have the same phenomenon.
Litecoin worth
As a product, Litecoin depends on market forces to determine its value. It is only worth what the market believes it is. Products derive value from supply and demand. Any asset that is readily and cheaply available becomes less valuable.
So far, Litecoin has successfully held its value due to limited supply. Limited supply means there is no risk of oversupply in the market.
Litecoin also draws its value from use cases. The coin has become one of the most useful in the world of cryptocurrencies. It works perfectly as a transfer of value. It also comes with the ease of use that has seen most people prefer it over other coins.
Litecoin also has some impressive transaction speeds. It’s four times the speed of Bitcoin,
As with fiat currency, the most reliable store of value becomes the preferred currency. Currently, the US dollar has been the most reliable currency. The U.S. dollar acts as the world’s leading reserve currency. Losing currencies like Zimbabwean dollars see the country consider using the dollar.
The recent fiat currency the slowdown has seen cryptocurrency come into conflict as an ideal store of value. The Coronavirus pandemic has hit the traditional stock market so hard, with most currencies losing value. The same period saw cryptocurrencies Optimize.
Litecoin will continue to grow in importance as use cases increase.
Bottom line
Litecoin draws some from the limited supply. It has a maximum supply of 84 million. After that, no new money will ever be born. There are currently 17.996242 left for mining.
This follows that the coins already mined are 66003758. The last coin will be mined in 2042.
The limited supply of money is its main factor in extracting value. Limited supply means there is no risk of oversupply. For this, miners continue to play a role in the system.
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