On August 6, the Litecoin (LTC) block reward will be reduced by half. Binance Research has put out a report analyzing the implications of this move with comparisons to the past Bitcoin (BTC) ‘halvenings.’
Binance Research has detailed four potential scenarios in its new report. Using historical data, the company outlines the possible consequences of the move — which is expected to go into effect on August 6, 2019.
It should already be assumed that Litecoin’s halving of block-mining rewards will have a significant impact on its price. For comparison, Litecoin’s last halving in 2015 was preceded by a price rally of more than 200 percent.
Here are the four scenarios Binance outlined in its new report.
- A Possible Price Rally: A price rally will occur until mining profitability approaches the average levels before the halving went into effect. Because rewards for mined blocks will be halved, Litecoin will, as a result, be harder to earn — which will possibly push the price upwards.
- An Increased Hashrate: Because rewards will be lower, the computational power needed to mine the same amount of LTC will be greater. This will arguably create more network security.
- Self-adjustments: If the price does not rally, miners will exit the market. Block difficulty will, in this case, fall and mining will become more profitable in the short-term.
- A Permanent Drop in Mining Profitability: If the price does not spike with the halving, miners will incur permanent losses in their rewards.
Image courtesy of Shutterstock.
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Anton Lucian
Raised in the U.S, Lucian graduated with a BA in economic history. An accomplished freelance journalist, he specializes in writing about the cryptocurrency space and the digital '4th industrial revolution' we find ourselves in.
Raised in the U.S, Lucian graduated with a BA in economic history. An accomplished freelance journalist, he specializes in writing about the cryptocurrency space and the digital '4th industrial revolution' we find ourselves in.
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