Litecoin Is 'Halving' Soon: What's Happening and What You Should Know

A rule embedded within litecoin's code is set to soon reduce rewards for the miners who today ensure transaction processing on the world's fourth-largest blockchain by total value.

In approximately five days, litecoin will undergo a scheduled reward halving - a process aimed at preserving cryptocurrency's purchasing power.

The mining reward is currently set at 25 litecoins per block and will drop to 12.5 litecoins per block on Aug. 5.

The halving sounds similar to interest rate hikes and other measures initiated by central banks across the globe when combating high inflation, so investors may feel tempted to snap up litecoins while heading into the event.

Litecoin, which traded at $30 on Jan. 1, ended the first quarter at $61, representing a 100 percent gain.

Litecoin's non-price metrics have also risen sharply since mid-December, hitting new record highs several times over the last couple of months.

Litecoin leading the broader market higher with 100 percent gains in the first quarter followed by a rise to highs above $145 in June.

The mining profitability will likely drop by 50 percent along with block rewards, as mining difficulty - a measure of how hard it is to maintain and add to the blockchain - seldom adjusts immediately.

The computing power may tick higher over the coming months, as the drop in the inflation rate to 4 percent from the current 8.4 percent per year will likely bode well for LTC's price.

Litecoin image via Shutterstock; charts by Trading View.