Jul 262015
 

Litecoin Difficulty Rises Modestly

Litecoin difficulty rose modestly earlier today, with less than 1 month remaining for the expected Litecoin Reward Halving date, which will cut the mining rewards per block of Litecoin mined from 50 Litecoins to 25 Litecoins. Bitcoin had the same block rewarding halving back in November 2012 going from 50 to 25 Litecoins, at a time when the cryptocurrency movement was still in its infancy. Litecoin has long been the second-most popular cryptocurrency after Bitcoin.

Litecoin has the same reward halving schedule as Bitcoin, which is once every 4 years. However, the blocks are generated every 2.5 minutes instead of 10 minutes for Bitcoin, so the total supply of Litecoin is 4x the supply of Bitcoin for the same time frame. The reward-halving staggers between Bitcoin and Litecoin since Litecoin was introduced around 2 years after Bitcoin.

The recent difficulty increase comes after a huge surge in Litecoin prices in the few weeks prior, when the price rallied more than 10x in a matter of weeks, before falling and settling down. This was also the first time that Litecoin trading volume exceeded that of Bitcoin temporarily.

Difficulty Adjustment Around Reward-Halving

Litecoin uses Scrypt algorithm instead of SHA-256 for mining as its choice of proof-of-work. Scrypt is more memory intensive than SHA, and therefore specialized ASICs are rare for Litecoin and offer only modest improvements over GPU mining. For this reason, Bitcoin has seen a proliferation of ASICs and specialized hardware and infrastructure around mining that is missing from Litecoin.

Still, the effect on difficulty would be interesting to note around the block-halving period, before and after, and perhaps give clues to how Bitcoin difficulty will behave around its own reward-halving a little more than 1 year from now. It is expected that Bitcoin will have a more serious effect than Litecoin since miners will cut down on new hardware in anticipation of reward halving a few months before the event takes place.

Litecoin, often called the ‘silver to Bitcoin’s gold’, has been a good experimental cryptocurrency to test the effects of small changes and whether these should be incorporated into Bitcoin. Litecoin has maintained a good community and developers even as many other altcoins have faltered after launch. Litecoin is also active in incorporating changes to Bitcoin Core, especially the important BIPs that provide new functionality to the currency.