With the upcoming Litecoin Halving, Will Litecoin Maintain Its Status?

According to the latest data released by CMC, the net inflow of cryptocurrency market has reached nearly 20 billion US dollars since February this year. The rebound of the market has made the cryptocurrency circle very busy after half a year of quietness.

It’s generally believed that this wave of market was the direct result of the Litecoin halving. Some people even believe it’s completely possible for the LTC to replace the BCH as the supplementary currency for BTC in the future.

The LTC with a market value of only 1.6 billion(USD) is often regarded as the “spicy strip” in the market “without any technology background” except for the title of “Silver Litecoin”, can it have such a big energy? Does it result from the pursuit of capital or the power of consensus, or the technological advancement?

“Unusual Move” Before Reward Halving

According to the LTC presetting, when the block height reaches 244220, the mining reward will be halved from the current 25 LTC to 12.5 LTC, and the annual inflation rate will also change from the current 9.01% to 4.26%.

According to the latest data issued by Litecoinblockhalf, the expected LTC reward halving will occur on August 5, 2019.

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The biggest impact of LTC halving will drive the entire cryptocurrency market to warm up.

After the Chinese Spring Festival in 2019, the LTC price rose from around $30 to $40 within one day, and the price kept rising to around $60. It also drove the cryptocurrency market to warm up and many projects even had their market values doubled. The entire cryptocurrency market newly attracted about 20 billion US dollars after the Chinese Spring Festival, and the cryptocurrency circle was stirred up again after half a year of quietness.

Search “Litecoin halving” in Google Trends, we can find the search of this keyword has ranked top recently.

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Apart from price changes, the hashrate of LTC network mining was also growing very fast from 170T at the beginning of this year to 270T nowadays, an increase of 50%. During the same period, the BTC hashrate only increased by 25%.

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“The increasing hashrate indicates that the community is optimistic about the future of the project.” The LTC worker Central (anonymous) who was closely focusing on the development of cryptocurrency technology told EastShore.

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It’s because of the rising electricity price, when the price was 0.05USD/kWh, the mainstream Litecoin miners can fully run nowadays. It also made the second-hand LTC miners in shutdown state be in great demand.

“Our 100,000 second-hand Antminer L3+ were suddenly ordered and packaged by several people at the price of 300 yuan each, and now the price has risen to more than 400 yuan.” The salesman of Bitmain miner told EastShore.

Of course, Litecoin has also been questioned as a bitcoin-like cryptocurrency, especially the title of “Silver Litecoin”.

Became “Silver Litecoin”

It’s been very popular by the slogan “Gold Bitcoin and Silver Litecoin”.

In 2018, a sound-recording event deepened people’s impression that the Litecoin project “had no technology”. Around that period, the market value of Litecoin continued to fall from nearly 20 billion US dollars to less than 1.4 billion and the price even dropped from 2,500 yuan on the top to 150 yuan in the bottom, and the global ranking also fell to the 8th.

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So, the voice “Silver Litecoin seems to empty words” started to appear.

However, is it really the case?

“As for the data, the slogan ‘Gold Bitcoin and Silver Litecoin’ is still true.” Zhou Xu told EastShore. “The user scale, network value and market value of Litecoin are worthy of the title of silver cryptocurrency.”

Zhou Xu is an analyst in a cryptocurrency investment institution. With long period of concerns on the development of LTC project, he has unique ideas on the development of the LTC community. According to him, the LTC projects sometimes exist as a supplement for Bitcoin to some extent.

90-day daily average active address: Litecoin accounts for 8.74% of the total number of Bitcoins;

90-day daily average on-chain transfer value: Litecoin accounts for 3.27% of the total number of Bitcoins;

90-day daily average transfer amount: Litecoin accounts for 7.75% of the total number of Bitcoins;

90-day daily average market value: Litecoin accounts for 3.39% of the total number of Bitcoins;

Global market share of silver and gold: gold market value is about 7 trillion US dollars and silver market value is about 350 billion US dollars; silver accounts for 5%;

For the necessary role of “Silver Litecoin”, Zhou Xu believes that Bitcoin needs silver as a supplement, just like the gold in the real-world needs silver as a supplement.

“In history, silver has served as a supplement and backup for gold. Sometimes the silver plays a dominant role in some areas. This rule may also adapt to the cryptocurrency market. Litecoin can serve as the supplement and backup of Bitcoin.” said Zhou Xu.

The data in history may prove such a viewpoint.

On December 18, 2017, bitcoin prices reached a high of 20,000 US dollar, when the transfer fee was also as expensive as 72.7 US dollar. Subsequently, Litecoin also reached a height of 360 US dollar on December 21, which Zhou Xu believed was caused by the transfer of partial bitcoin liquidity to Litecoin.

Some people might think that cryptocurrencies such as ETH, EOS and BCH can also “share” its liquidity once the bitcoin network was busy, but Zhou Xu didn’t think so.

“Currently, its daily transactions, active address and turnover at the exchange are much higher than that of BCH. The market value of Litecoin is also higher than that of BCH, so Litecoin can enjoy more opportunities.” Zhou Xu said, “EOS and ETH develop in a different way as Litecoin, so they are not comparable to each other.”

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According to Central’s view, the Bitcoin Cash fork is the most probable reason for it to lose the “bitcoin replenishment function”. It’s this reason that Litecoin returns to its silver status.

“In 2018, the performance of Litecoin was not so satisfactory, because Bitcoin Cash completed replaced Litecoin since its establishment. Bitcoin Cash served as the “silver” status and owned more consensus and hash support. But since the fork of Bitcoin Cash in December 2018, people realized the fork was completely unreliable, so they turned to Litecoin again.” Central said.

Meanwhile, Zhou Xu believes the exclusive mining algorithm is also one of Litecoin’s advantages.

“Like Bitcoin, Litecoin also has its own exclusive miners and it’s unnecessary to steal hash resources from Bitcoin. BCH doesn’t have such a feature.” Zhou Xu said.

According to Zhou Xu, it’s also one of the advantages of Litecoin to become a “test field” of Bitcoin in addition to its silver status.

As the “test network” for Bitcoin

“It’s OK for Bitcoin to be regarded as the test network of Litecoin. SegWit is one of the cases.” Zhou Xu told EastShore.

Those holding the same viewpoint include Bitcoin billionaire Tyler Winklevoss. In March 2018, he delared in public that Litecoin could basically be regarded as a test network for the potential function of Bitcoin.

SegWit was one way of blockchain expansion. By splitting the transaction record, the space occupied by each transaction was reduced for the purpose of expansion.

In the first half of 2017, the Bitcoin community was arguing over the final expansion of Bitcoin. One party insisted the Bitcoin blocks must be expanded from 1MB to 2MB, or even larger (big block). The other party believed that Bitcoin should maintain the block size as 1MB. The expansion should comply with the way of SegWit + Lightning Network (small block).

At that time, those who opposed the small blocks believed that “SegWit was so complicated that the bitcoin network was endangered”. According to them, “once the SegWit was activated, the mining workers would be able to steal bitcoin from certain type of address.”

Bitcoin expansion was entangled.

When the communities were arguing about the development route, on May 11, 2017, the Litecoin team took the lead in activating the SegWit on the 1201536th block of the main network.

The price of Litecoin also rose from around 3USD to nearly 43USD.

To verify the security of SegWit, the testers also created a US$1 million Litecoin prize with the SegWit Litecoin address. They left a note which read, “Let’s see if segwit really is ‘anyone-can-spend’ or not.”

But so far, no one has ever claimed to win the prize.

As for the influence of such an incident, Liao Xiang, CEO of LightningAsic, a hardware developer of Litecoin mining industry, commented, “This move will enable the Bitcoin community to activate the SegWit as soon as possible”.

Facts proved the community speculation was correct.

On August 24, 2017, the SegWit was officially activated at the 481824th block on Bitcoin network.

Of course, in addition to the SegWit, the Lightning Network was also activated on the Litecoin main network in June 2017, and then the Bitcoin main network was officially launched in March 2018 on the Lightning Network.

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Litecoin Lightning Network

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Bitcoin Lightning Network

“Litecoin took the lead to conduct SegWit and test on Lightning Network, which ensured the security of Bitcoin network. After all, Bitcoin was so bulky that the failure might be catastrophic.” Central told 31QU.

Litecoin has never stopped its “tests”.

At the beginning of 2019, Li Qiwei, the founder of Litecoin, announced that the anonymity function would be introduced to Litecoin network. When being asked about its possible influences, “Since the anonymity function has been introduced to Litecoin, will the Bitcoin stay far behind?” Central commented.

Postscript

As the world’s fourth largest cryptocurrency, Litecoin once encountered a lot of doubts.

“The test network of Bitcoin”, “Silver Litecoin”, do all such labels only enjoy false fames or really deserve them? The communities may continue their arguments.

However, during the process, Litecoin has constantly made contributions to the prosperity of cryptocurrency community and always “took the lead” in terms of the test SegWit for Bitcoin, the Lightning Network or the anonymity newly introduced.

Perhaps it’s just like what Central had commented, “As a decentralized project, Litecoin has been good enough.”

Appendix

Series articles on cryptocurrency introduction and analysis at EastShore: