Author: Xiaoyan
Author: Xiaoyan
Several positive lines changed the three views, and "Spicy Wanba" resounded through the currency circle. Since 2019, Litecoin has increased by more than 320%, far exceeding the more well-known mainstream currencies, such as XRP's 15% and ETH's 94%, even surpassing the 144% of the encryption king Bitcoin.
So, what is the reason behind Litecoin's rise this time? How does LTC enter the investor's field of vision and gain an advantage in the competition? The answer is simple, and the key lies in one word: halving.
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What is halving?
As the name suggests, halving means reducing the original value by half. In the context of cryptocurrency mining, a halving is the process of reducing the mining rewards of a cryptocurrency by 50%.
On August 26, 2015, Litecoin experienced the first halving, and the block reward was halved from 50 to 25. The second halving is expected to occur on August 6, 2019, and each The block reward was reduced from 25 to 12.5.
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Why design a halving mechanism?
The root cause is the consideration of supply and demand. Imagine an extreme situation: if a large number of coins are produced without restriction in a short period of time, the coins will inevitably become worthless due to excessive circulation. The reason why it is designed in this way is to control inflation. You can also compare this rule with gold. The total amount of gold on the earth is fixed. Now it is more and more difficult to mine. It is precisely because of these reasons that gold can circulate It has been in the world for thousands of years, and its value is still stable, becoming an internationally recognized value exchange medium.
How is the upcoming halving driving the price of the currency soaring?
Hence, it was the anticipation of a price surge that investors started moving their funds to Litecoin. The halving theory seems to be popular among most industry insiders. For example, Charles Hayter, CEO and co-founder of CryptoCompare, has described the halving as a "price catalyst" for Litecoin's value, while the CEO of BitBull Capital has flatly stated that the halving Anticipation is why Litecoin has risen recently. Regardless, this judgment may prove correct, as history has seen Litecoin’s first halving in 2015, which subsequently led to a 590% surge in Litecoin’s price.
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Is Inflation an Illusion Covering a Brutal Reality?
While most have expressed positive sentiments, some, such as Bloomberg, have expressed concern about Litecoin's adoption prospects. According to statistics provided by Bloomberg, Litecoin trading volume has fallen sharply by 84% since its peak in January last year. Although Litecoin's transaction volume has picked up since early 2019, its rapid price volatility has made Litecoin an unpopular option for developers looking to incubate projects on the Litecoin chain.
To quote Aaron Brown, a freelance writer for Bloomberg Opinion and avid cryptocurrency investor.
“Litecoin will only prosper if Bitcoin has value,”
“Litecoin is a mature, convenient cryptocurrency that is well suited to a world where bitcoin is a store of value. But in a world where bitcoin is cheap, I don’t think it has much value.”
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Summarize
Halving is often the best opportunity for investors who want to make a quick profit due to large price fluctuations. However, the price increase resulting from the halving is likely to be temporary and will continue until Litecoin sees a viable adoption.
(Source: Medium compilation: Xiaoyan)
