Litecoin completed its four-yearly halving process yesterday to reduce to reward for mining the coin from 25 to 12.5 blocks. Litecoin founder Charlie Lee celebrated the event on Twitter before stating that the average mining rate had started out at 1.4 minutes “which is much faster than the expected 2.5 minutes”, adding that the network was “healthy”.
Litecoin halving was a success! And price just hit $100! 👍
Block 168,000 produced 12.5 LTC in block rewards.
Let’s do this again in August 2023! 🎉 pic.twitter.com/aBvDJtH4FV
— Charlie Lee [LTC⚡] (@SatoshiLite) August 5, 2019
History Repeats with Price Action
Historically, Litecoin and Bitcoin halvings have come with a price increase in the weeks and months leading up to them. Litecoin’s last halving in late August 2015 saw the coin topping out in mid-July, some five weeks before the event itself, after jumping 390% in a little over a month. This time around has seen a similar story – LTC reached a peak of $141 in the third week of June, six weeks before the halving. The short term price rise has been a little less dramatic, gaining a little over 55% in the month prior to the peak, but those who were lucky enough to buy back in December when LTC hit its lows of $23 would have enjoyed a 5x return, no doubt driven in huge part by the halving narrative.
What is a Block Reward Halving?
The idea of a block reward halving was instituted by Bitcoin creator Satoshi Nakamoto as a way to guard against inflation of the currency. Fiat currencies can in theory be printed indefinitely, thus reducing the purchasing power of each unit of value, but both Bitcoin and Litecoin reduce the amount of coins added to circulation periodically to make sure that the finite supply is fed into the system slowly and at a reduced rate over time. This is one of the main reasons these types of coins are considered ‘hard money’.