Litecoin Explained – Chapter 3: Facts and Figures about Litecoin

Litecoin Explained – Chapter 3: Facts and Figures about Litecoin

23 August 2019

Vontobel now offers investors access to the crypto currency «Litecoin». But what is Litecoin (LTC)? In three chapters, we want to give you high-quality knowledge about the exciting topic of «Litecoin».

Did you know that...

Mining is easier than with Bitcoin?

While Litecoin and Bitcoin use the proof-of-work concept for their mining operations, the algorithms used by the two blockchain systems are very different. Litecoin's mining algorithms are much simpler than Bitcoin's, which means it can be run on less powerful computers and requires less power. Considering the fact that worldwide mining consumes enormous amounts of electricity and there is already a lack of powerful graphics cards for mining equipment, this could be a big advantage for the Litecoin miners in the future.

… a halving event took place on August 5th?

Litecoin has just reduced its block reward for miners by half. The Litecoin blockchain reached the trigger block level of 1,680,000 at 12:16 pm on Monday, 5 August 2019. The event marks an important threshold for miners as the Litecoin network is designed to reduce its mining rewards by half of all 840,000 blocks (about every four years). Now the mine reward for each block has been reduced from 25 LTC to 12.5 LTC. Given the block production time in the Litecoin network of about one block every 2.5 minutes, about 576 blocks are produced in 24 hours. This reduces the current daily level from around 14,400 LTC to only 7,200 LTC per day.

Halving this could have an impact on interest in participating in mining, as several widely used litecoin mining equipment may now have a difficult time generating enough LTC to cover electricity costs. This could have an impact on profitability and consequently on price. According to the theory of supply and demand, halving the quantity should drive up the price of the crypto currency. Since they receive fewer coins per block produced, this could mean that the miners would cease production until the work becomes profitable again. The fewer coins in circulation, the higher the price, as demand is theoretically higher than supply. Although this may sound like a profit to investors, halving can lead to a more volatile market.

… Litecoin already experienced a hard fork and «Litecoin Cash» (LCC) was developed from it?

Litecoin Cash was split off from Litecoin on February 18, 2018 at block 137,111,111 with a ratio of 10:1. For every 1 LTC held on this block, LTC holders can claim 10 LCC. Litecoin Cash offers ten times more coins than Litecoin with a maximum coin count of 840,000,000 LCC. After the fork, Litecoin Cash switched to SHA256 proof-of-work hashes. This enables a new use for previously obsolete Bitcoin Mining hardware. The target block time of 2.5 minutes results in 4 times Bitcoin's transaction range, while transactions are 90% cheaper than Litecoin's according to LCC developers.

However, according to CoinmarketCap.com, with a market capitalization of USD 10 million, LCC is just in 237th place with a price of USD 0.015781 (as of 22.08.2019). It is noticeable that shortly after the fork LCC reached a market capitalisation of USD 127 million at a price of USD 0.22, which has now collapsed very sharply. This shows that - as with Bitcoin and Bitcoin Cash - the forked crypto currency has a hard time to dominate parent currency.

... that Litecoin has a strong developer activity despite negative headlines?

Lately there have been some negative headlines regarding the number of Litecoin Core developers. These were largely caused by a report from Electric Capital claiming that developer activity in the token has slowed and that Litecoin lost over 90% of its developers in 2018. While the report uses its data from the programming portal Github, the analysis specifically excludes hard forks and activities from open source libraries, which gives a rather biased picture of reality.

However, Litecoin does not need a large team of developers as they receive most of the code from the Bitcoin team. In this respect Litecoin Core benefits from the advantages of Bitcoin Core developers. Litecoin has ultimately managed to become an interesting crypto currency in today's market despite little marketing.

... with respect to the coin supply, Litecoin should trade at 1/4 of the price of Bitcoin.

In a perfect world Litecoin would trade at exactly 1/4 of Bitcoin's price, as it will have a total of 4x more coins in circulation than Bitcoin. However, this is not a perfect world and Litecoin trades at USD 73.99 and BTC at USD 10,018.80 (as of 22 August 2019), according to Kraken.

Both crypto currencies experienced ups and downs this year. Since the beginning of this year, the LTC price has risen significantly from around USD 31 in January up to USD 137 in June, but has since fallen to around USD 70. Since the beginning of this year, the price of BTC has risen even more sharply from around USD 3,800 in January up to USD 12,700 in June, but has since fallen to around USD 10,000. The 4:1 ratio is therefore not yet apparent, but some Litecoin supporters expect this to change as soon as all coins of both crypto currencies are in circulation.

 

 

Important Notice:

This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the securities, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the sole binding sales documents for the securities. It is recommended that potential investors read these documents before making any investment decision in order to fully understand the potential risks and rewards of deciding to invest in the securities. The documents and the key information document are published on the website of the issuer on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information contains an indication of past performance. Past performance is not a reliable indicator of future results.

This document and the information contained in it may only be distributed or published in countries where such distribution or publication is permitted by applicable law. As stated in the relevant base prospectus, the distribution of the securities mentioned in this information is subject to restrictions in certain jurisdictions. This advertisement may not be reproduced or redistributed without Vontobel’s permission.

19/09/2019 17:05:46

 

Write a Comment

 

  

 

  

 

* Required fields need to be filled in