Litecoin shares several similarities with Bitcoin. Both are open source projects that use proof of work to verify transactions.
But Litecoin also has notable differences from Bitcoin. Besides processing speed, there is the issue of supply. While Bitcoin is capped at a maximum supply of 21 million coins, Litecoin is capped at 84 million coins.
How Litecoin is mined
Litecoin miners solve complex mathematical problems called hashes to earn the right to record new transactions on the blockchain.
The blockchain cannot be changed once a block is closed. As a reward for being the first miner to correctly resolve the hash associated with a transaction through the proof-of-work consensus mechanism, the miner receives 12.5 LTC.
Litecoin mining is not something you’ll typically see running on a computer outside of someone’s living room. Solving hashes requires immense computing power, which requires significant energy and space.
In fact, the lion’s share of Litecoin mining is done by mining farms and pools of crypto miners using sophisticated hardware.
How Litecoin halves
To help control the supply of Litecoin, Litecoin splits into two, just like Bitcoin.
Litecoin supply is capped at 84 million coins. Yet, when miners add a new block to the Litecoin blockchain, they are rewarded with newly generated LTC. This could increase the supply of Litecoin indefinitely if there was no halving.
Through halving, the miner’s reward for successfully registering new blocks in the Litecoin blockchain is reduced (halved) at regular intervals. In the case of Litecoin, it is every 840,000 transactions. So, when Litecoin was first launched, the miner’s reward for adding a new block to the Litecoin blockchain was 50 LTC. Over the past few years, this reward has halved to 12.5 LTC as a block reward.
The next LTC halving is expected to take place in 2023.