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What’s Causing the Price of Litecoin to Surge?
Litecoin has been spotted on Coinfeed’s trending news lately, and its price has surged over 20% in the past seven days. What might be driving this uptick? Let's take a closer look.
There are a couple of significant occurrences on Litecoin's horizon that could be influencing its recent surge. The first is the imminent halving event - a fundamental shift in the mechanics of Litecoin that will see a 50% reduction in the generation of new coins. This in itself is an event that often stirs interest in the cryptocurrency market.
The second key development is the introduction of the new token standard, LTC-20. This standard, a derivative of Bitcoin Ordinals and BRC-20s, has been introduced without fanfare, aligning with Litecoin's history of consistent, steady innovation.
These phenomena—the introduction of LTC-20s and Litecoin's upcoming halving—may well be the fundamental catalysts sparking the recent bullish trend in LTC's price.
Litecoin (LTC) was created by forking Bitcoin’s original source code in 2011. It is an open-source, peer-to-peer network which also uses Proof of Work (PoW). Litecoin’s most notable features differentiating it from Bitcoin are its reduced block times from 10 minutes to 2.5 minutes, increased maximum supply from 21,000,000 to 84,000,000, and converting its algorithm from Bitcoin Core to Scrypt.
These features improve transaction throughput by increasing transaction speeds and reducing fees, however, at the detriment of decentralization.
Upcoming Halving Schedule
Litecoin has a built-in mechanism where block subsidies denominated in LTC are cut in half every 840,000 blocks or roughly every 4 years. This halving schedule resembles that of Bitcoin and reduces mining rewards over time decreasing newly minted tokens that are introduced into circulation.
Nine months following the halving in August 2019, coinciding with the spark of a bull market, LTC’s market capitalization grew from ~$5.8B to ~$23.2B (~3x growth). The total crypto market capitalization during this peak was ~$2.5T. As the scarcity of LTC increases due to a decrease in newly minted tokens brought into circulation, could the next halving be a driver of upward price pressure as markets mature?
Although there are magnitudes more cryptocurrency tokens today since the prior halving, the implications of the upcoming halving are worth monitoring as crypto markets continue to develop. In addition to this embedded deflationary phenomenon, the emergence of LTC-20s creates an interesting environment for LTC as we approach the halving in less than a month (August 2, 2023).
So what are LTC-20s?
Think Litecoin NFTs. The same Bitcoin Ordinals and BRC-20s that stirred up debate and drove revenue to the Bitcoin ecosystem now have their forked version in the Litecoin ecosystem. Litecoin Ordinals, also known as LTC-20s, is an experimental token standard that enables more flexibility than its Bitcoin counterpart. Ordinals allow users to inscribe arbitrary data like text, image, and audio files.
Remember Litecoin block speeds were 4x faster? This allows users to mint or inscribe Litecoin Ordinals at greater speeds with substantially lower fees.
Since the deployment of Unilit, LTC-20’s first marketplace on June 15 and the rollout of the Litescribe Wallet’s (UniSat wallet fork) Google Chrome Extension on June 22, Litecoin’s median block size experienced a massive surge shortly after as users quickly began inscribing Litecoin Ordinals. The increase in usage typically results in growing network fees which benefit miners who secure the network.
How to get started with LTC-20s?
The infrastructure and tooling around LTC-20s are still in their infancy and continue to be developed. However, the Unilit.io marketplace allows users to create an account and buy and sell LTC-20s. Additionally, users can inscribe arbitrary data onto Litecoin using Litescribe. Below we share details on how to get started on Unilit.
Sign Up: You can create an account on Unlit using an email, Google, Twitter, or Discord account, followed by a quick email verification.
Link External Wallet: To sell LTC-20 inscriptions, an external wallet must be linked to a verified Unlit account to receive payment. The default internal Unlit wallet does not accept LTC balances or any tokens except LTC-20 inscriptions. The external wallet can be linked by clicking on the Wallet tab and submitting the external wallet address.
Buying Inscriptions: To buy an inscription, select it from the "Choose your next LTC-20" section. The marketplace lists all the confirmed sell orders in ascending price order. Select the listed order to be purchased using the buy button, and adjust the quantity in the following window. Then, proceed to MixPay, where various cryptocurrencies can be used for the purchase. Once the transaction is successful, the order will appear in the wallet tab, and the transaction will be marked with a green checkmark.
Selling Inscriptions: Select an inscription in a wallet and click sell in the wallet tab. A prompt will enable you to set the quantity and price to be sold. The minimum total sell order should be over $50, and the total number of inscriptions sold should exceed 50. Once a sell order is confirmed, it will appear in the Pending Orders column. These orders can be modified or canceled until the transaction is processed.
Builders are working through updates and implementing changes to improve indexing and the display of Litecoin Ordinals, introduce new marketplaces, release compatible wallets and continue experimenting with this new token standard. The emergence of LTC-20s has onboarded more than 90,000 users, inscribing over 1 million ordinals.
The Litecoin ecosystem has remained relatively quiet over the years. However, as we quickly approach the next Litecoin Halving in August and the new spotlight on LTC-20s, time will tell if these could be catalysts that continue to draw more attention to the ecosystem or if it is just another fad.