Is Litecoin LTC completely out of favor this time with the halving going unnoticed and ecological development slowing down?

Author: Grapefruit, ChainCatcher

On the evening of August 2nd at 23:00, Litecoin (LTC) completed its third block reward halving at block height 2520000, with the current block reward set at 6.25 LTC.

Typically, halving events attract market attention and discussion, often accompanied by narratives of rising cryptocurrency prices.

However, this halving narrative of Litecoin, which has long considered itself the "silver to Bitcoin's gold," has not garnered much attention from cryptocurrency market users. Discussions related to Litecoin in the crypto community are also rare, with only a few news articles related to the countdown before the halving.

As a representative of ancient POW tokens, the price performance of Litecoin after the halving will determine user interest. Before and after the halving, the LTC token has performed modestly in the secondary market, showing a 5% decline over the past 14 days according to Coingecko. The price on the day of the halving also saw little fluctuation, with a slight drop of 4.4%, currently quoted at $86.3.

However, just a few days before the halving, Litecoin founder Charlie Lee and his brother announced the joint launch of 500 "Litecoin Halving Silver Commemorative Cards," each made of 50g of silver and containing 6.25 LTC, with a tentative price of $1000, estimating revenue of at least $500,000. This move has been mocked by users, suggesting that Litecoin seems to have lost its utility, and the founders can only rely on selling cards to raise funds during this hot topic.

While the founders are selling cards during the halving, users are more concerned about whether the halving can bring back attention to the long-silent Litecoin and whether it can positively impact its ecosystem development.

Litecoin Halving Ignored, Secondary Market Quiet After Halving

This halving is the third in Litecoin's history since its launch in 2011. However, the response from the crypto market has been somewhat subdued, with the LTC token even experiencing a decline in the secondary market.

The design of Litecoin's halving is modeled after Bitcoin, with the halving schedule defined in its protocol occurring every 840,000 blocks (approximately every four years), meaning miners will only receive half the rewards after each halving.

As of August 3, 2023, Litecoin has completed three halving events. The first was in 2015, when the block reward decreased from the initial 50 LTC to 25 LTC; the second was in 2019, when the block reward halved from 25 LTC to 12.5 LTC; and the third occurred on August 3 of this year, reducing the block reward from 12.5 LTC to 6.25 LTC.

Following this pattern, the fourth halving of Litecoin is expected to occur around 2027, at which point the block reward will decrease from 6.25 LTC to 3.125 LTC.

The total issuance of LTC tokens is 84 million, with approximately 73.5 million currently in circulation, meaning about 87% of Litecoin is in circulation, with a current market cap of approximately $6.34 billion, ranking twelfth among crypto assets.

The halving narrative, which occurs every four years, is often viewed as positive news in the crypto market, especially since Bitcoin's halving typically coincides with bullish market trends. This is because the design of halving or reduction is usually aimed at avoiding token inflation issues, controlling supply to make prices more favorable for increases. Therefore, whenever a halving occurs, it attracts attention and discussion in the crypto market.

Halvings occur in POW mechanism tokens, having the most significant impact on their networks and related parties (such as mining pools and mining machine manufacturers), as halving means a reduction in mining rewards, increased difficulty, and significantly higher mining costs, which can have a direct negative impact on the network. After a decrease in earnings, some miners may exit or switch to mining other mainstream tokens, putting the network's security to the test.

People generally believe that halving will lead to price increases for two main reasons: first, the reduction in miner rewards after halving equates to increased costs, which theoretically drives up token prices; second, from a supply perspective, halving disrupts the dynamic balance of output, leading to a decrease in token supply speed. If demand remains constant or increases, the reduced supply may cause demand to exceed supply, potentially triggering a price increase.

However, price increases after halving are not guaranteed, as cryptocurrency prices are influenced by various factors, including macroeconomic conditions and overall market sentiment. For instance, the price of the DASH token, which completed its reduction on June 23, remained around $30 for over a month after the reduction.

In contrast, discussions and news related to Litecoin in the crypto community before and after this halving have been scarce. Some users even asked in the community, "Is LTC halving tomorrow?" to which multiple users replied, "No one cares anymore; everyone is not really interested in this ancient POW coin."

Additionally, most users' views on Litecoin's halving lean towards "shorting." Crypto player Lin mentioned, "During the 2021 bull market, the Litecoin Foundation's official Twitter retweeted a false message about Walmart supporting LTC payments, which was later deleted, but it caused significant market fluctuations. So it became clear that the once mainstream coin now relies on news manipulation to move the market, lacking the consensus to lead it. In the long run, LTC halving is not worth paying attention to."

On the day of the halving, LTC experienced a brief decline in the secondary market, with a daily drop of 4.4%, currently quoted at $86.3. This seems to further validate users' bearish predictions regarding the halving.

Founders Launch "Halving Commemorative Silver Cards"

While Litecoin community users are focused on the halving market, Litecoin founder Charlie Lee and his brother Bobby Lee jointly launched a physical collectible card made of 99.9% pure silver, the "Halving Commemorative Silver Card," to commemorate Litecoin's quadrennial halving event, with an expected price of $1000 each.

On July 27, Charlie Lee and his brother announced during a live stream about Litecoin's halving that they had collaborated with Ballet to produce 500 collectible silver cards made of 99.9% pure silver to commemorate Litecoin's third halving.

Ballet is a manufacturer of special cryptocurrency cold storage cards (similar to supermarket gift cards), and Bobby Lee is its CEO and co-founder.

According to the introduction, each silver card is made entirely of 50 grams of 99.9% pure silver (also known as "999 pure silver"), with the silver value of each card being $40. Additionally, the card will be preloaded with 6.25 LTC, valued at approximately $555, meaning the card itself is currently estimated to be worth about $595. The expected selling price is around $1000, with the premium being a potential expectation for buyers. Furthermore, Charlie Lee stated that all proceeds from the sales would be donated to the Litecoin Foundation to promote blockchain adoption and development.

Bobby Lee mentioned that these collectibles are about the size of a credit card and feature dual-layer QR code stickers, with the top layer displaying the Litecoin deposit address and the hidden bottom layer showing the encrypted private key (EPK). Users can access the password for decrypting the private key by scratching off the second part below the QR code.

Charlie Lee explained that since this is a silver card, it will still hold the value of 50g of silver even if Litecoin drops to zero. He also mentioned that some of these silver cards might be auctioned, such as the first 20, 21, etc., while the rest will be sold at a fixed price, which has yet to be determined.

Currently, the Litecoin halving commemorative silver cards have not yet launched, and it is reported that sales will begin sometime after the halving in August.

The joint launch of this "Halving Commemorative Silver Card" by the two founding brothers of Litecoin can be seen as a win-win situation. Leveraging the Litecoin halving event, the Ballet cryptocurrency gift card website not only gained user attention but also casually raised at least $500,000. This move has been humorously referred to by users as the two founders being the most adept at creating buzz in the crypto space, effortlessly raising $500,000 while promoting their project.

Halving May Struggle to Resolve Litecoin's Ecosystem Development Dilemma

In fact, beyond the short-term price impact of the halving narrative, users are more concerned about the long-term ecological development of Litecoin.

Today, Bitcoin, the leading POW token, has seen its ecosystem flourish since the birth of the Ordinals protocol in 2023, showcasing the potential for Bitcoin beyond just holding value, as well as providing miners facing the next halving with the possibility of on-chain fee income in addition to block rewards.

Naturally, as a representative fork of Bitcoin, Litecoin is also expected to develop its ecosystem.

During the peak of the BRC20 craze in May this year, the Litecoin community launched a forked version of the BRC20 standard, LTC20, allowing users to inscribe NFTs, text, and other content on Litecoin.

Driven by the wealth effect of BRC20, LTC20 briefly attracted a large number of users into the Litecoin ecosystem. Data once showed that on May 9, the daily transaction count on the Litecoin chain exceeded 570,000, and the number of active wallet addresses surpassed 810,000.

However, as the popularity of BRC20 cooled, LTC20 fizzled out before entering the mainstream market.

According to the Litecoin inscription trading market Litescribe, as of August 3, the total market value of LTC20-related assets was $27.91 million, with a trading volume of only 12.65 LTC.

Many users originally hoped that the narrative surrounding Litecoin's halving in August would attract market funds and traffic, thereby promoting the development of the Litecoin ecosystem.

However, from the current situation, the LTC20 project within the Litecoin ecosystem is mostly a copy of the Bitcoin ecosystem, with more speculation than substance. The expectations for the halving narrative to empower ecosystem development have yet to be realized in the current development, which is not good news for this long-established mining coin that has faded from public view.

If Litecoin continues to rely solely on price speculation without addressing its ecological challenges, it is destined to be eliminated by the market and gradually disappear from the annals of cryptocurrency history.