In just under a month, cryptocurrency litecoin will halve for the second time in its history and already the market is preparing.
For those who are not 100% up to speed with what the process is, or why it might be happening at all, read on and we’ll try to explain what to expect.
Halving is something several cryptos have set out in their terms as a regular occurrence, with bitcoin and litecoin already carrying out the procedure in the past few years.
The process of halving does not mean that the number of coins you have in your wallet will reduce overnight, rather it is talking about the amount that can be mined over the coming years.
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Mining is the processing of transactions carried out using cryptocurrencies and adding them to the ledger or blockchain. The more transactions you process, the more coins you mine.
Halving means that the number of coins you get for carrying out this process drops by 50%. In litecoin’s case, this means from 8 August 2019, miners will get 25 coins rather than 50 per block processed.
This might not sound much to non-miners, but it actually makes the whole process much less lucrative, so the supply can go down as, in theory, only the most efficient farms will continue to do it.
What does it mean for the rest of us? Expect volatility in the price of litecoin until the halving date of 7 August 2019.
Simple supply and demand dynamics mean if there are to be fewer coins available, people think the price will go up so are getting their hands on what they consider to be “cheap” coins now.
The price of a litecoin has been around £94 for the past few weeks, but if history is anything to go by, this may well rise.
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Cryptoassets are highly volatile unregulated investment product. No EU investor protection. Your capital is at risk. Past performance is not indicative of future results.
While there are not going to be fewer coins in circulation, they are going to be hitting markets at slower rate, meaning there might be a bumpy ride with prices moving around as people get used to a more restricted supply.
Crypto-fans need to get used to this phenomenon though as both bitcoin and litecoin will be doing it every few years as will other popular coins. It ensures the market isn’t flooded with their currency and that demand stays high. Is now the time to buy litecoin?
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