Table of contents
Table of contents
1. Fundamental analysis of Litecoin
1. Market analysis
3. Technical Analysis
3.1 Segregated Witness and Lightning Network
3.2 Script algorithm
3.3 Mining method
3.4 Distribution of mining pools
4. Network performance
5. Token Analysis
5.1 Currency holding dispersion
5.2 Exchange Acceptance
6. Ecological construction
6.1 Code update
6.2 Interest rate
6.3 Offline payment ecology
7. Competitive product analysis
8. Summary
2. Analysis of Litecoin Production Reduction
1. Introduction to the concept of production reduction
2. Litecoin production reduction
3. Analyze the Litecoin halving event from the perspective of supply and demand
3.1 Consensus demand is the main factor determining the price of Litecoin
3.2 Factors Affecting People's Demand for Litecoin Consensus
3.3 Price is the main factor affecting the computing power of the entire network
3.4 The feedback cycle between price, computing power difficulty and mining cost
3.5 Factors Affecting Litecoin Mining Costs for Miners
5. Impact on Stakeholders
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Market analysis
Market analysis
At this stage, the transaction payment and settlement of commercial trade must go through multiple organizations such as account opening bank, counterparty bank, liquidation organization, and overseas bank through the banking system, with relatively cumbersome processing procedures. The cryptocurrency payment represented by Bitcoin can directly carry out end-to-end payment for both parties to the transaction, without involving an intermediary agency, which is highly efficient and greatly reduces costs. However, in practical applications, Bitcoin payment also has problems such as slow transaction speed, low system throughput, easy concentration of computing power distribution, and lack of scalability due to non-Turing complete language. Due to its own performance limitations, it is difficult to meet the needs of a large user group in actual payment.
In order to solve this dilemma, many altcoin projects dedicated to improving or different from the Bitcoin payment system have emerged, such as Litecoin, Dogecoin, Futurecoin, Infinitecoin, Primecoin, etc. Inspired by Bitcoin, Li Qiwei, the inventor of Litecoin, modified some of the core content on the basis of Bitcoin, and developed Litecoin, a payment token with faster confirmation time and lower transaction costs than Bitcoin. Litecoin shortens the interval between block generation to increase the speed of transaction confirmation, and adopts a workload proof mechanism based on the Scrypt algorithm in the consensus mechanism to lower the threshold for mining participation.
It was dug up for the first time in October 2011, and then stood out from many altcoins. Today (April 14) the market value in circulation has reached 5.012 billion US dollars, accounting for about 5.4% of the market value of Bitcoin in circulation. fifth place.
There is a saying in the digital currency community that "bit gold, lite silver". Litecoin was once the digital currency with the largest market value after bitcoin. In the case of Bitcoin not expanding, transaction congestion, and expensive handling fees, the value of Litecoin as a supplement and backup will be even greater, sharing more of the overflow value of Bitcoin.
So far, Litecoin and Bitcoin have been more closely linked, and with the help of Bitcoin's huge user base to attract traffic, the consensus of Litecoin has been further improved.
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Three Notable Differences Between Litecoin and Bitcoin
1.) The block generation time is shortened from 10 minutes in Bitcoin to 2.5 minutes, providing faster transaction confirmation.
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technical analysis
technical analysis
Segregated Witness and the Lightning Network
According to statistics from 1ml.com, as of April 19, the carrying capacity of the Litecoin Lightning Network was 302.91 LTC; the number of nodes was 184, an increase of 6.36% in the past 30 days; there were 1339 channels, an increase in the past 30 days 21%, 183 nodes, a total of 291.09 LTC mortgaged. The carrying capacity of the Bitcoin Lightning Network is 1063.42 BTC; the number of nodes is 8065, an increase of 7.48% in the past 30 days; the number of channels is 38637, a decrease of 1.6% in the past 30 days.
algorithm
algorithm
Script is a memory-dependent POW algorithm. The first digital currency to use the Scrypt algorithm was Tenebrix, which was then used by Litecoin.
Bitcoin mining uses the SHA-256 hash algorithm. The performance of this algorithm is closely related to the processing speed of the CPU. In order to be able to mine more bitcoins, professional mining machines such as GPU mining machines, FPGA mining machines, and ASIC mining machines have been manufactured one after another.
When the Scrypt algorithm was developed, it was to reduce the dependence on the CPU, so this algorithm actually uses the idle time of the CPU for calculation. The Scrypt algorithm not only takes a long time to calculate, but also requires a lot of memory. Because the calculation of the Scrypt algorithm will generate an array with several block elements, for each block element, a series of operations must be performed to generate a hash value, and then the entire array is operated to obtain the final result .
Among them, each block element must be stored in the memory to ensure that the final correct result is obtained, so the Scrypt algorithm requires a huge memory space, and the cost of its own operation is very high. The hardware cost of a large amount of memory will be high, and the mining pool will not be able to carry out low-cost mining. One result of this is that it is difficult to concentrate computing power and form a large mining pool, thereby reducing the possibility of 51% attacks. This also promoted the establishment of consensus at the beginning. However, with the widespread use of the Scrypt algorithm, FPGA mining machines that were born later can also perform large-scale mining when using this algorithm.
In addition, the feature of the Scrypt algorithm makes it extremely difficult to calculate multiple summaries in parallel, so it is more difficult to use a rainbow table (rainbow table attack, a pre-calculated table for cracking password hash values) to carry out brute force attacks. Because the Scrypt algorithm belongs to a key derivation (KDF) algorithm, this algorithm is very suitable for generating keys, which can prevent hackers from generating a large number of keys at low cost to test passwords, so it can provide a highly secure network environment for backup services.
Mining method
LTC relies on blockchain distributed technology to exist. It runs and circulates on the global distributed network. To obtain enough LTC, you need to master enough computing power. Litecoin has also evolved from a personal computer using the remaining computing power to mine, and has evolved into a professional mining machine for mining.
Pool Distribution
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Mining pool computing power distribution, the picture comes from litecoinpool, April 19
Combining the distribution of Litecoin hash rate in the last 22 hours, it can be seen that the current largest Litecoin mining pool accounts for 23% of the computing power, and the top four mining pools account for more than 51%. In order to lower the entry threshold for mining and increase the difficulty of centralizing computing power, Litecoin, which proposed the Scrypt algorithm, will inevitably move towards centralization with the development of corresponding mining machines. The logic behind it is the same as the Bitcoin mining pool. The most basic function of the mining pool is to gather the computing power of its users and miners to mine together. Compared with individual mining, this method can reduce the uncertainty of individual miners mining. , to smooth the income.
1.) Number of block transactions:
image descriptionhttp://explorer.litecoin.net，
Litecoin block data, image source
2. ) block size:
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The picture comes from the LCT block explorer
3.) Block generation time-consuming:
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The picture comes from the LCT block explorer
4.) Average price of handling fee:
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The picture comes from the LCT block explorer
5.) Active and new addresses:
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The picture comes from the LCT block explorer
The above data reflect the advantages of Litecoin's low transaction fees and fast transaction speed, and the number of new users reflects the current consensus that people's demand for Litecoin is growing.
Token Analysis
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The picture comes from Feixiaohao, April 19
According to Feixiaohao data, as of 18:00 on April 19, LTC was about $81.6 a piece, with a market value of 5.012 billion, ranking 5th in market value, with a circulation of 73.1% and a turnover rate of 19.61%.
The figure below shows the data on the dispersion of Litecoin (LTC) holdings. The top 100 holding addresses of Litecoin account for 42% of the total, and the chips of LTC are relatively concentrated. The top 10 currency holding addresses accounted for 9.42% of the total, and the largest single-person account accounted for 1.57%.
image descriptionhttps://chainz.cryptoid.info/ltc/#!rich, February 19
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According to the statistics of coinmarketcap on April 19, LTC is currently listed on 164 exchanges, with a total of 400 LTC trading pairs. Among the 164 exchanges, 86 have LTC transaction records, and they are listed on the top ten exchanges by trading volume. As shown in the circle, there are 22 exchanges that account for more than 1% of the trading volume. OKEX launched LTC trading in October 2017 and currently accounts for 4%. There are many exchanges listed on it, and the acceptance of large exchanges is high.
Litecoin exchange volume fan chart
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Ecological construction
Check the code update status of Litecoin. As of April 19, 2019, the code has 3,292 fans and 544 followers, which reflects the high degree of attention of the project from the side. Litecoin's github home page shows a total of 18,119 code submissions and 572 contributors. In addition, the number of project code submissions can reflect the technical update of the project to a certain extent.
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Combined with the trend of the number of code submissions in the following figure since the start of the project, it can be seen from the figure that the number of code submissions of LTC in 2010~2011 was mostly below 20. In 2011, the number of code submissions increased, and most of the time the code submission curve was high On the 20th, entering the middle of 2018, the number and frequency of code submissions decreased, and there were almost no code submissions in recent months. Last submission was February 10, 2018. This has a lot to do with the technical progress of the Litecoin Lightning Network, and reflects that it has stagnated in the upgrade and expansion of the public chain, and may lag behind other emerging public chains in the increasingly fierce blockchain competition.
Contribution to master, image from Github, April 19
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Code submission diagram, the picture comes from Github, April 19
Follow the heat
Litecoin has a total of 73,891 followers on reddit, twitter, and facebook (there may be overlapping personnel), and the focus is high.
(The numbers represent the search popularity relative to the specified area in the chart and the highest point in the specified time), and in the Litecoin Google search index in the past three months, it can be seen that the main fluctuation of the index is between 25-50, and in early April There is a peak of attention. Although the expected heat of Litecoin's production reduction continues, Litecoin's search popularity is still far lower than that of Bitcoin's search index.
Media attention (picture source coingecko)
Google index, picture from google trends, April 19
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Offline payment ecology
When Litecoin is used as a payment instrument, the demand for it comes from using it to buy goods and services. As a payment token, LTC's offline payment ecology is the part to focus on. According to the information on the litecoin.com website, Litecoin’s cooperative institutions include cryptocurrency payment gateways, debit card institutions, other blockchain projects, and physical retail merchants. We analyze from three dimensions: cooperative institutions, merchants, and ATMs .
1. )debit card
In May 2018, Wirex, which has long provided cryptocurrency debit cards, announced that it will start supporting Litecoin, and users can even exchange dozens of altcoins to Litecoin, which will simplify the process of withdrawing cash from ICOs or cryptocurrencies. In September, Bitnovo launched Litecoin debit card support, allowing users to conveniently store crypto and instantly receive euros that can be spent at any traditional institution. Another cryptocurrency debit card provider, TenX, also announced on their blog their future plans for a Litecoin debit card.
2.) Partner merchants
In addition, according to the information compiled by the Reddit encryption pass enthusiasts in the Litecoin community, hundreds of e-commerce websites and physical stores have accepted Litecoin payment last year. Merchants who accept Litecoin payment cover a variety of goods and services, including artwork, clothing, catering, precious metals, electronic digital, culture, education and entertainment, legal advice, etc. However, most of these merchants currently accepting Litecoin payments are relatively small and have a limited duration, and some of the merchants mentioned in the above list are currently out of business.
ATM machines can provide users with services including encrypted token exchange, cash transfer, encrypted token purchase and cash transfer. As of April 19, 2019, there are a total of 4,607 encrypted ATMs in the world. They are distributed in 81 countries, most of which are located in North America and Europe, accounting for 72.6% and 23.1% respectively, and only 2.4% in Asia. Of all crypto ATMs globally, 60.8% of the machines are one-way devices that only sell cryptocurrencies, and only 39.2% are two-way devices that support the sale and purchase of cryptocurrencies.
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The world's first ATM machine supporting Litecoin was put into operation in May 2017. At present, there are 2,999 ATM machines in the world that provide Litecoin withdrawal or deposit and withdrawal services, accounting for about 65.1% of all cryptocurrency ATM machines, ranking first among all Third in the total number of crypto ATMs. Its quantity is also mainly distributed in North America and Europe.
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According to coinmap.org, there are 14,650 physical stores around the world that accept bitcoin for offline payments. These include merchants and ATMs that accept bitcoin payments. At present, the offline ecology of Litecoin is constantly enriched, and the support rate of encrypted ATMs is relatively high. However, compared with the offline payment ecology of Litecoin, the current consensus in the field of encrypted tokens is still more concentrated on Bitcoin, and Litecoin will not become the first choice of merchants in most cases.
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Competitive Analysis
Competitive Analysis
According to Feixiaohao’s data, there are currently 137 projects that meet the payment concept. We selected the top 15 projects by market capitalization for competitive analysis. They are BTC, BCH, XRP, XLM, XMR, and Dash.
Entering 2019, the rise of the Bitcoin Lightning Network has paid a boost to the increasing resistance of BTC. According to the statistics of 1ml.com, the current carrying capacity of the Bitcoin Lightning Network is 1063.42 BTC; the number of nodes is 8065, and the number of channels is 38637, which is larger than the distribution number of Lightning Network of Wright. In addition, in terms of payment ecological construction, the offline and offline payment ecological data of Bitcoin is far ahead of other currencies. According to the data of Google Search Index, the market attention of Bitcoin is also much higher than other currencies such as Litecoin. At present, the consensus formed in the field of encrypted tokens is more concentrated on Bitcoin.
BCH is generated from a fork of BTC, and adopts the method of expanding blocks to solve the problem of transaction congestion, focusing more on the "currency" attribute. BCH ranked in the top 5 in market value for most of last year, but in the BCH community split in November 21018, two coins, BCHABC and BCHSV, were produced. BCHABC finally inherited the name of BCH, and its market value shrank sharply.
Ripple (XRP) and Stellar Lumens (XLM) focus on the cross-border payment track, and the market value of both ranks among the top 10 encrypted assets. They have clear application scenarios and fast landing speed: XRP is the first cryptocurrency to enter the mainstream financial world. According to Ripple’s official website, it has served more than 200 banks and financial institutions, including Standard Chartered Bank and other first-line institutions; In October 2017, Stellar and IBM cooperated deeply in the payment field. The WorldWire payment network developed based on the Stellar protocol has supported 72 countries, including 47 currencies and 44 bank terminals.
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Summarize
Summarize
In terms of function, the value of LTC in the early days lies in its better transaction advantages than BTC. It also adopts the workload proof algorithm, and its transaction speed is faster than BTC, so it quickly gained a group of users.
From the point of view of attention, due to the expected halving, it is currently attracting more attention, but it is still far lower than Bitcoin, and it is also inferior to Bitcoin in terms of payment ecological construction. Network and other methods to improve its own transaction speed, its dominance in the encrypted world is difficult to shake. In addition, public chains with innovations in transaction speed design continued to appear in the later period, and the advantages of Litecoin's fast transaction were continuously weakened. Once a new generation of payment tokens that can geometrically improve transaction efficiency appears, other payment tokens will face elimination.
Although Litecoin no longer has functional advantages, in terms of circulation, Litecoin, which ranks fifth in market value, has already occupied a large amount of network effects, and its exchange acceptance is very high. People's consensus is the biggest value support of Litecoin at present. However, the consensus, capital, and computing power accumulated by Litecoin over time are difficult to be overtaken by corners in the short term.
2. Analysis of Litecoin Production Reduction
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When Satoshi Nakamoto designed the Bitcoin system, in order to control the overall circulation of Bitcoin (essentially simulating gold, due to the limited reserves of gold, the mining rate will become slower and slower, so Bitcoin is also called digital gold. Bitcoin production is also commonly known as mining), which stipulates that after every 210,000 blocks are generated, the Bitcoin production will be halved. At the beginning, each block will generate 50 bitcoins, and then gradually halve until it approaches zero. Since Bitcoin sets the difficulty coefficient according to the computing power, a block is generated in about 10 minutes on average, so it is halved about every four years. According to this rule, Bitcoin will reach its set limit of 21 million by 2040.
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Looking at the historical bitcoin market response to price halvings, the bitcoin asset has shown a clear upward momentum. For example, in the year between the first halving in November 2012 and November 2013, the price of Bitcoin rose by 82.1%. Similarly, after the second halving in July 2016, the price of Bitcoin jumped from $651 to $2,518 in just one year, achieving a 3-fold surge. The two Bitcoin halvings were followed by a bull market in the cryptocurrency market. At present, everyone generally has a positive expectation that the price of the currency will rise after the halving.
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Like Bitcoin, Litecoin will be reduced every 4 years, and the Litecoin mined in each block will be halved. The last halving occurred on August 26, 2015. The block reward of Litecoin will be reduced from 50 Half to 25 pieces. The halving of production will give investors the expectation of a decline in supply for a period of time in the future, breaking the original balance of supply and demand. According to the analysis of the economic pricing principle, assuming that the demand growth rate remains unchanged, the supply growth rate decreases, and the price theory will rise. Of course, the actual price change results are also affected by many other factors.
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Litecoin chart
Review and analyze the market trend before and after the last Litecoin production reduction. As shown in the picture: before the LTC production reduction date on August 26, 2015, the production reduction market broke out 3 months in advance, and the unit price of LTC rose from 1.30 USD/piece to a maximum of 8.96 USD/piece, an increase of 689.23%, and then the price fell. The unit price is 2.95USD/piece. Within one year after the production reduction day, the price trend of Litecoin failed to follow the price trend of Bitcoin after the production reduction, did not form a mid-term slow bull, and failed to set a new price high.
Through the horizontal analysis of the historical data of Litecoin’s own output reduction and the longitudinal comparative analysis of the historical data of Bitcoin’s two output reductions, we can draw the following analysis results:
1) Both Bitcoin and Litecoin will have a short-term (several months) upward trend before the production reduction day.
2) The reaction of Litecoin price to the production reduction event is mainly concentrated in the few months before the production reduction day. Within one year after the production reduction date, the impact of the production reduction event on the price is lower than that of Bitcoin.
3) The price changes before the production reduction of Litecoin not only contains the growth of value, but also is full of speculative opportunities. The market is hot and the price fluctuates violently. Excessive hype makes the price deviate from the value, forming a bubble.
After four years, Litecoin will be halved again in August 2019. What impact will it have on the Litecoin ecosystem?
Analysis of the Litecoin halving event from the perspective of supply and demand
The relationship between supply and demand is the law at the bottom of economics. The price is determined by supply and demand. If the demand remains unchanged and the supply decreases, the price will rise. In practice, however, demand is not fixed. When the obvious event of supply reduction is approaching, most people will overdraw the positive expectations of supply, so that the price increase caused by the supply reduction will be transformed into unquantifiable demand, resulting in a price bubble. When the reduction in supply is fulfilled, but when the demand continues to return to balance, then the price will show a decline. Therefore, the halving of Wright will also follow this price law.
Consensus demand is the main factor determining Litecoin price
Due to the limited supply of Litecoin, on the premise that the public is optimistic about Litecoin, the price will continue to rise, so that Litecoin can obtain a valuation premium, then the computing power of the entire network used to mine Bitcoin will increase, and the mining cost will also increase. It will increase; if fewer people recognize Litecoin, people’s purchase demand will decrease, and the price of Litecoin will fall. Once it falls below the mining cost, some miners will give up mining. At this time, the computing power of the entire network will decrease, and the mining cost will also decrease will decrease. Therefore, the consensus demand determines the price of Litecoin, and the price of Litecoin affects its entire network computing power and mining costs.
Factors Affecting Demand for Litecoin Consensus
There are many factors that affect the demand for consensus. In addition to the maturity of the Litecoin network itself and the maturity of altcoins, people's awareness of Litecoin, popularity, and policies of various countries also determine the demand for Litecoin. The factors that specifically affect people's demand for Litecoin consensus are as follows:
1.) Network performance and technology updates
Network performance is a key factor in determining user consensus. Litecoin has accumulated a broad consensus in the early stage because it has improved transaction efficiency compared to Bitcoin. Technological innovation will also affect the price of Litecoin. For example, the implementation of Segregated Witness and Lightning Network will improve the transfer efficiency of the Litecoin system.
2.) Competitive product development
The development and improvement of competing products will divert the consensus of the group on the same track.
3.) Public opinion influence
Mass media attitudes towards the crypto industry influence potential investors and businesses. For example, hype about Litecoin can cause the price to surge, while negative news can cause the price to drop.
4.) Policies of various governments
Because Litecoin is not regulated by any government, it has instead become the object of government efforts to regulate it. Litecoin prices fluctuate whenever there are official announcements about digital currency regulation.
5.) Security incidents
Price is the main factor affecting the computing power of the entire network
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The picture comes from the LTC block explorer
This figure reflects the daily average mining difficulty trend of Litecoin. The increase of the whole network computing power will lead to the increase of the whole network mining difficulty, so the increase of the whole network mining difficulty means that the whole network computing power has increased. Generally speaking, since February 2018, the difficulty of Wright mining has gradually increased, and its increase and decrease trend is positively correlated with the rise and fall of the currency price.
Feedback cycle between price, hashrate difficulty, and mining cost
Under the premise that the infrastructure remains the same, the higher the price of Litecoin, the stronger the attractiveness of mining. At this time, the competition among miners is becoming more intense, the computing power of the entire network increases, and the difficulty of mining becomes higher (the system will adjust the difficulty in the next cycle, with a certain lag), and the cost of mining becomes higher. Once the price cannot cover the cost of mining, mining It will no longer be profitable, and small miners will exit or be merged.
As the number of miners decreases, the computing power of the entire network decreases, and the difficulty of mining also decreases (plus the gain effect of the system itself adjusted according to the difficulty of the previous cycle). the decline. The accumulation of selling sentiment in the market leads to a further decline in the price, and more miners will withdraw from mining until the new equilibrium currency price does not fall anymore. Once the market warms up and the price of coins rises, mining is less difficult, mining profits increase, mining becomes more attractive again, miners join again, competition returns to fierce, and this cycle continues.
Therefore, the cost of mining also reacts on the price through the behavior of miners.
Factors Affecting Litecoin Mining Costs for Miners
The essence of mining can be simply understood as all the mining machines in the world come together to draw lots by calculating the hash value of random numbers, and the probability of winning the lottery is the computing power of the mining machine / the total computing power of the world. Factors that affect miners' Litecoin mining costs are:
1.) Block rewards
Block Reward is the reward that miners get after solving related mathematical problems and creating new blocks through computing power.
2.) Computing power
Hashrate refers to the number of hash values calculated per second, which is used to measure the computing power of miners. The higher the computing power, the greater the probability of mining a block.
3.) Total network computing power
The computing power of the entire network is the sum of the computing power of all mining machines participating in mining in the network. The greater the computing power of the entire network, the better the overall stability and security of the Litecoin network.
4.) Operating costs: (power costs, mainly water and electricity and network broadband costs, mining machine costs, mainly mining machine purchase costs)
The shutdown currency price is mainly related to the performance of the mining machine itself, power costs, block rewards, and the computing power of the entire network. Among them, the two factors of mining machine performance and power costs are basically fixed, while the block reward is a factor. There are changes (involving handling fees), but the overall changes are not big, and the only thing that fluctuates greatly is the computing power of the entire network.
The shutdown currency price is mainly related to the performance of the mining machine itself, power costs, block rewards, and the computing power of the entire network. Among them, the two factors of mining machine performance and power costs are basically fixed, while the block reward is a factor. There are changes (involving handling fees), but the overall changes are not big, and the only thing that fluctuates greatly is the computing power of the entire network.
Therefore, the formula for mining machine breakeven is:
Therefore, the formula for mining machine breakeven is:
The daily operating cost of a single mining machine = the average number of coins mined by the mining machine in one day * the price of the currency when the machine is turned off
Shutdown currency price = one day operating cost of a single mining machine / average number of coins dug by a single mining machine per day
The operating cost of a single mining machine is basically unchanged, and the Litecoin mining reward is halved. In theory, the average number of coins dug by a single mining machine per day will be halved, so the calculated "shutdown currency price" is about the original double. In other words, the "intrinsic value" contained in a single Litecoin has been doubled, and the "bottom mining cost" will also be doubled.
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OK mining pool data
The shutdown currency price is actually adjusted dynamically, and the influencing factors include the proportion of a single mining machine’s computing power in the entire network, mining difficulty, block rewards, operating expenses, etc. we mentioned above. In the early stage, the number of miners involved was small, and a single mining machine accounted for a relatively high proportion of the computing power of the entire network, and the daily mined coins would be more, exceeding the current 0.0283 coins, so the shutdown price of the early calculations would be lower.
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Litecoin historical bottom price analysis chart
According to the data of Litecoin's historical bottom price analysis chart, the recent bottom price range is 23.15-41.81, and the average price around the bottom is around 32.49. The difference between this price and the shutdown price of 37.63, which we calculated above as the "mining cost bottom", is only 5.14 US dollars. Looking at the changes in the bottom price before and after the production cut four years ago. Before the production cut, the bottom price was around 1.80. After the reward was halved, the bottom price rose to around 3.88, which was 2.15 times the average bottom price before the production cut.
According to the changing law of historical data, we predict that a new round of Litecoin production cuts will likely rebuild a new "mining cost bottom".
Commodity prices are affected by the relationship between supply and demand, and fluctuate around the value, which is the manifestation of the law of value. The rise in mining costs will prompt LTC to fluctuate around a higher value line.
Impact on Stakeholders
1.) Mining machine manufacturers: The essence of the relationship between Litecoin price and mining machine orders is the balance between supply and demand. When the price of Litecoin rises, mine owners or mining machine investors expect future Bitcoin revenue to rise and mining machine orders to increase; When the price of Litecoin falls, mine owners or mining machine investors expect future Litecoin earnings to decline, and orders for mining machines decrease. However, it does not rule out that large-scale mining machine manufacturers affect mining efficiency by controlling the pace of new mining machine shipments, which in turn affects the mining cost of mining machines.
Taking advantage of the sharp rise in currency prices, Bitmain sold 100,000 Wright mining machines. It is understood that the mining machine model is L3, which has not appeared in the market for a long time.
2) Miners: For Litecoin mining machines produced independently, as the global total computing power continues to increase, the income from mining LTC must gradually decrease and gradually approach zero. Outdated mining methods or equipment will face disuse. The halving will halve the mining rewards of miners. When the currency price does not rise in the same proportion, the absolute income of miners will decrease. Once the price drops too much, high-cost miners will not be able to make ends meet and have to choose to shut down.
In fact, the computing power of LTC decreased to a certain extent after the last halving. On August 27, the difficulty of Litecoin was adjusted for the first time after halving, which decreased by 7.61%. This represents the behavior of some miners quitting mining.
3) Mining pool: Halving leads to an increase in mining costs, which will prompt LTC to fluctuate around a higher value line
, which makes miners have higher requirements for the minimum price of Litecoin. In the case that the mining hardware remains unchanged, the halving of LTC will reduce the probability of individual miners digging coins, so the way individual miners mine will make the profit time more uncertain. This will hinder the speed at which ordinary users enter the market to become miners and encourage more miners to join the mining pool to smooth their income. Therefore, the halving of LTC will increase the risk of mining pool centralization.
4) Bimin: The increase in the price of Litecoin caused by the reduction of Litecoin production will increase the wealth of Litecoin holders, which will lead to the attention and buying behavior of the same concept of halved coins.
Contributors: Zhang Xiuxiu, Zheng Haiming (Master K), Zhang Kaiqiang
references:
references:
Litecoin rating (TokenInsight)
2019 Q1 Mining Industry Report
Cryptocurrency Top10 Shuffle History: 6 major currencies are fully present
Mining Research Report: Bitcoin Mining Industry Inflection Point and Economic Cycle
