The Litecoin Halving is Nigh, Are You Ready?

Are you ready for a precursor to the main event? In the cryptocurrency space, litecoin is the silver to bitcoin's gold. So it's only fitting that the halving of the LTC block rewards will happen before the BTC blockchain undergoes its own forced monetary policy adjustment in approximately 291 days on May 18, 2020.

However, because litecoin initiated its genesis block on October 13, 2011, almost 3 full years after the bitcoin genesis block on January 3, 2009, the pace of the chain's halvings are different. In just 3 days, on August 5, we will see LTC block rewards drop from 25 every 2.5 minutes to 12.5 every 2.5 minutes.

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According to litecoinblockhalf.com, this "reward-drop" will reduce the amount of LTC generated per day from 14,400 LTC as occurs today, to 7,200 LTC after August 5. That reduction has an instantaneous and enormous impact on the monetary economics at play in the LTC ecosystem. From the perspective of monetary supply inflation, in a few days we will go from LTC being a crypto micro-economy with a 8.71% supply inflation rate to one that has a 4.26% supply inflation rate.

That's like a central bank changing from the monetary policy of Brazil to that of Australia. Overnight. Take a look at this table of comparative M2 growth rates among countries. Basically, litecoin will graduate from fledgling emerging market economy to a developed market economy.

For shits and giggles, let's take a look at how M2 growth in the US economy has evolved over the years, 1960 through today:

What is so interesting to me about cryptocurrency is that these monetary decisions are hard-coded into the crypto micro-economy, whereas in traditional economic systems a central authority must decide on the rate of money supply inflation. Notice how, when humans are involved, just how volatile that seemingly simple decision can be.

The broader point to be made, I think, is that as cryptoeconomic systems mature and their tokens get more fairly distributed across a wider array of people, we can expect the value of these tokens to go up in the long run. Obviously, I have no idea when LTC price will go up, or at what rate it will go up, or even if it will go up or down. Do your own research. This is not financial advice.

But I do know basic economics of supply and demand. When supply decreases, in general, NUMBER GO UP.

We can look to the previous halving to get some idea of what could happen at some point after litecoin's second halving in the next few days:

There may be some consolidation. There may not be. Past is not always prologue.

All I know is that, as I mentioned in a recent post about Robinhood, I am dollar-cost averaging into LTC. The risk-reward ratio here for me is just too darn attractive.

What do you think about the upcoming LTC halving event? Are you buying litecoin? Or are you just waiting for the main event? Let me know in the comments below 👇👇