Litecoin, if you're not otherwise familiar, has an architecture that is interestingly similar to Bitcoin. Far from being a coincidence, it's because it started off as a 'spin-off' from BTC Core before hard forking into the iteration we know now.
it was announced over this week by Litecoin's creator, Charlie Lee, on Twitter, that the blockchain solution will be undergoing a series of 'halving's' in the coming few days, but also in the next few years.
"I'm announcing today that in 4 days, I will be cutting Litecoin mining rewards in half for the first time in 4 years. This should help prevent the possibility of a cryptocurrency downturn. And I will cut it in half again in 2023!”
According to the developers behind the peer to peer solution, Litecoin will be halving during this weekend/early next week.
Much like what has happened in the Bitcoin ecosystem, the halving relates directly to miners within the ecosystem. With every block that's processed by these miners, they are rewarded with 25 LTC, contributing to the growing volume of LTC in circulation.
This adds a whole lot more context to the titular occurrence; with block rewards being halved. Meaning that miners would begin to receive 12.5 LTC going forward, reducing the rate of annual growth in the number of coins in circulation.
One of the ways that Litecoin sought to differentiate itself from Bitcoin, apart from improved scalability and faster transactions, was the total volume of coins generated. To put it in perspective, Bitcoin will only ever have 21 million circulating, while Litecoin would have 82 million.
The process of halving, while interestingly unique to the cryptocurrency sphere, can be thought of as a method of controlling inflation and the underlying value of a currency. We see this with the traditional fiat world whenever there are alterations to the amount of money printed or the annual interest rates.
By using the same kind of logic, we can see this reduction in block rewards leading to an increase in Litecoin's value over time. This remains to be seen, however. According to reporters like Tony Spilotro, even if a reduction in block rewards does drive up scarcity, it would have to battle uphill against an ongoing downward trend.
"#Litecoin Not trying to be a Debbie downer but don't get too bullish on LTC just yet. Downtrend still intact. However, a breakout with a retest would be a high probability buy-in opportunity." - (@NebraskanGooner)
Even though Litecoin has been among the altcoins to benefit from the uptick in the market, it has yet to really break out of this trend. The chances of LTC making a breakthrough aren't looking good, but if it does manage to: that could represent a big signal to start adding Litecoin once again.