With just one day to go until Litecoin’s (LTC) next halving event, Cointelegraph sets out all you need to know about the cryptocurrency”s reduction in block rewards. In spite of their reputation for creating price hikes, the lead up to the halving has witnessed a 25 percent decline in valuation over the last month.

What is halving?

Halving is a process that occurs when the mining reward for a cryptocurrency is reduced by 50%. Miners receive crypto rewards for solving problems that create each new block on a given blockchain. The rewards differ for each cryptocurrency. With Litecoin, miners are currently awarded 25 coins per block. After Aug 5, miners will only receive 12.5 Litecoins per block.

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Litecoin rewards halve every 840,000 blocks, a process that occurs every four years. The block speed for Litecoin is roughly 2.5 minutes, with around 576 blocks generated per day. One of the key factors to take into account is that, according to the coding behind cryptocurrencies such as Bitcoin (BTC) and Litecoin, only a certain amount will ever be mined. This distinct characteristic sets it apart from fiat currencies, which can theoretically be printed infinitely.

Although it’s difficult to say when the final Litecoins will be mined, the Litecoin Foundation estimates that it will be around 2142, when the maximum of 84 million Litecoins will be reached. As of press time, there are 62,983,450 Litecoins in circulation, representing 74.93% of all Litecoins that will ever be mined. This leaves roughly 21 million coins left to be mined up until 2142. Comparatively, it’s estimated that the final few Bitcoins (BTC) will be mined around 2140.

Halvings are closely followed by investors, as the consequent reduction in mining rewards affects the profitability. Accordingly, this has a knock-on effect on the price. For investors, this can be a mixed bag. According to the theory of supply and demand, halvings should drive up the price of the cryptocurrency. As they receive fewer coins per block solved, miners stop producing them until the work once again becomes profitable. As fewer coins enter circulation, the price consequently goes up, as demand — in theory — will overtake the supply. Although this sounds like a sure-fire win for investors, halvings can bring about even greater instability to an already volatile market.

Previous halvings have stoked investor interest, and the upcoming Litecoin event is no exception. According to Google Trends, searches for “Litecoin halving” peaked between June 9 and June 15, although data shows that this trend is once again increasing.

Searches for “Bitcoin halving” on Google are typically more numerous than entries for Litecoin, although this trend has reversed as of July 30.


What could happen?

In the time leading up to the halving, miners ramp up operations to maximize their returns until the whole process becomes unprofitable. Miners need to invest in powerful, specialized equipment to take on the computing challenges required for creating blocks. As the difficulty of mining blocks rises, so do electricity costs. Mining is no longer a game for individual hobbyists, with even the biggest mining farms struggling to remain profitable during the so-called crypto winter of 2018. Mining is now a big business, and businesses need to make a profit. So, when profitability falls, activities tend to cease.

The fact that miners will feel the heat after the halving is no secret, with Litecoin creator Charlie Lee predicting that many will shut up shop after Aug 5. Lee told Australian crypto news site Mickey that halving the block rewards by 50% always has an impact on the Litecoin mining ecosystem:

“When the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine.”

Despite the commonly accepted theory that a decrease in supply results in a corresponding increase in demand, Lee suggested that market sentiment also plays a role in ramping up the price:

“In terms of the price, the halvening should be priced in because everyone knows about it since the beginning. But the thing is people kind of expect the price to go up. So a lot of people are buying in because they expect the price to go up and that’s kind of a self-fulfilling prophecy. So, because they’re buying in, the price does actually go up.”

After Litecoin’s 2015 halving, the coin peaked in July of that year before losing nearly 50% of its value by the time of the reward reduction, culminating in a decrease of 75% in the aftermath, Mickey reports. Naeem Aslam, chief market analyst at ThinkMarketsFX, told Cointelegraph via email that reducing block rewards for miners is an effective filtering process and agreed that the effect on the price is usually positive:

“Reducing the incentive for miners is good for LTC because only serious people will remain in the space. As for the price action, it is difficult and it depends a lot on the sentiment but usually this kind of action is positive for the price.”

If the price bombs following the halving, the network hash rate will tail off as mining begins to shut down, leaving only the largest mining farms operational. Once the hash rate drops below a certain point, the mining difficulty will adjust itself and smaller miners may be able to begin mining once again.

Supply and demand: Experts weigh in

Although halving events are widely considered to result in a price hike for the given cryptocurrency, market experts do not foresee any dramatic changes in valuation. Mati Greenspan, a senior market analyst at eToro, told Cointelegraph that halving events are usually priced in before they actually happen:

“It seems to be the case here as well. Litecoin has outperformed the rest of the market during this year's rally and some say that it was a root cause of the upward momentum in the first half of this year. It's difficult to say how or even if the price will react to the event in the short term. In the long term, reduced supply supports higher prices all else being equal.”

Renowned crypto trader and technical analyst Crypto Rand also agreed in email conversations with Cointelegraph that the halving event has already been priced in:

“I don't think the halving event will have much impact on Litecoin price, it's already priced in since one month I would say. LTC is looking pretty solid here. It just broke up the local downtrend channel after bouncing on the key $88 range support. If the downtrend of volume finally comes to an end I'm expecting a rise on the price back to $105-$110. Right now looks like a solid option among the rest of big caps.”

For Aslam, those trying to jump on the halving gravy train are already too late:

“The most important factor to remember is that these kind of planned events are already fully priced in and traders have already positioned themselves for this. Running up to the event, it is not usually wise to participate in that move because you are already too late for the party. Therefore, smart money always buy the rumour and sell the news.”

Greenspan predicts that there won’t be many surprises in mining activity, due in part to Litecoin’s scrypt algorithm:

“Litecoin's scrypt algorithm is pretty unique so the hardware used to mine it is not easily adaptable to mining other tokens. Therefore it doesn't have quite the same of competition over hashrate that some of the other cons have. My feeling is that LTC miners have had ample time to prepare for the halving so we shouldn't see any major changes.”

When asked about what investors holding LTC should be doing, Greenspan had advice:

“Holding. But more importantly spending. Litecoin's value proposition specifically involves being a more durable token for making payments. The more people use it for this purpose, the stronger the network gets.”

Some members of the crypto community are commenting that the Litecoin halving can be viewed as a test run for the upcoming midyear 2020 BTC halving and that we can consequently expect similar results. For Greenspan, the comparison is sound, although he warned that results will not be identical:

“The market has matured a lot since the last Bitcoin and Litecoin halvings. Though we couldn't possibly expect a mirror reaction, the LTC halving should give us some indication of what to expect when BTC does the same next year.”

Crypto Rand is not so sure, however, stating that investor understanding and even awareness of Litecoin juxtaposed to Bitcoin is incomparable:

“I don't think LTC halving can work as test for Bitcoin, I would say 95% of the traders/investors are not aware of the halving on LTC or they don't know what means. The coverage for BTC it's and will be a fully mainstream event, everyone will be aware of it.”

Strix Leviathan says halving profits are a myth

A blog post published on July 21 by institutional-grade algorithmic investment management platform Strix Leviathan reported that cryptocurrencies do not outperform the market in the months leading up to and following block reward reductions.

The report found that the supply and demand theory, while “certainly feasible as a logical theory,” does not result in a rapid increase in price. Per the report, Strix Leviathan analysts found that LTC outperformed the market twice prior to a reduction in block rewards, yet fell to the bottom 25% of the market in the ensuing six-month period. The report also postulates that the performance of a crypto asset both in and out of halving periods are more or less the same:

“What we find is that the return distribution of an asset’s halving periods versus the return distribution outside of its halving periods reveals that they are statistically the same at a 99% confidence level. In other words, we did not find evidence that a halving event results in abnormal pricing action and we are dealing with a circumstantial illusion. It appears more likely that the return behavior before, during, and after a halving coincides more with increasing levels of speculation than with an underlying shift in sell side pressure.”

Merged mining could mitigate block reward reductions

A report published by binance Research, an arm of major crypto exchange Binance, found that the impact of halvings for both BTC and LTC miners could be mitigated by merged mining. Binance researchers analyzed Charlie Lee’s prediction that many miners would have to halt operations and looked into how merged mining could help keep miners on-board even after rewards have been reduced.

Merged mining uses the work done on a parent blockchain and spreads it across other smaller “child blockchains” by using auxiliary proof-of-work (AuxPoW). The three most prominent examples of merged mining are the Litecoin-merged Namecoin (NMC), Bitcoin-merged Dogecoin (DOGE) and Myriadcoin (XMY), a cryptocurrency merged with both BTC and LTC.

The report theorized that merged mining could help mitigate the impact of reward reductions by future block rewards scheduled for both Litecoin and Bitcoin. Binance researchers also reported that smaller chains could incorporate AuxPoW in future to support greater network security and reduce the need for an independent mining operation. The report did, however, find some potential shortcomings. Researchers said that miners may not turn to merged mining due to the risk of operational costs when supporting child blockchains and potential declines in the market price.

The report cites Dogecoin as the most successful examples of merged mining, which adopted the model in August 2014. After the switch, the coin’s mining hash rate skyrocketed 1,500%. The report also found that, as of July 2019, 90% of Dogecoin’s total hash rate is sourced from Litecoin mining pools

Choosing which cryptocurrency to invest in can be a headache, especially as the markets change so quickly. One of the most successful coins of 2017 was Litecoin, which increased its value by more than 5000% in just 12 months.

Litecoin was originally created in 2011 after it forked an updated version of the Bitcoin client. This is why it’s sometimes called Bitcoin-Lite! Don’t worry, this will all be explained!

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In this complete guide, we will tell you everything you need to know about Litecoin. This will begin with some background information on what Litecoin is, and whether we think it is a good or bad investment. We are also going to show you how to buy Litecoin, and which wallet you should store it in.

So, by the end of this guide, your question “Should I buy Litecoin?” will be a little easier to answer. Well… what are you waiting for?! Let’s dive in!

Should I Buy Litecoin: What Is Litecoin?

Litecoin, also known by its currency code LTC, was created by Charlie Lee in 2011. Lee wanted to change the Bitcoin blockchain to make it “lighter”, meaning that it can process transactions quicker and cheaper. To do this, he forked the Bitcoin blockchain.

Are you wondering what a fork is?

Well, a fork is when a new blockchain takes the original code from a previous blockchain but makes changes to the technology to improve what it can and can’t do. That is exactly what Litecoin did. It used the original Bitcoin blockchain but made it quicker and cheaper to use!

Forks happen all the time in the cryptocurrency world. Other coins such as Bitcoin Classic, Bitcoin Unlimited and Bitcoin Cash are all forks of the original Bitcoin blockchain. Ethereum was also a fork of Ethereum Classic! Here are some improvements that Litecoin made from the Bitcoin blockchain.

Mining

Mining Bitcoin has now become very difficult for people who do not own expensive hardware. When people mine Bitcoin, they use their computing power to help verify transactions on the network and receive extra Bitcoin as a reward.

Although you never actually see what is happening, this extra power solves really difficult mathematical problems. These problems are so difficult that no human could solve it, that’s why we use supercomputers! This is what makes blockchain technology so secure and decentralized.

However, as more and more people use Bitcoin, the network becomes larger. There are more computers trying to mine Bitcoin, which means more competition. So, the hardware needed to be a successful miner becomes more and more expensive and requires more electricity.

Litecoin solved this problem by changing how the blockchain verifies transactions. Instead of using expensive ASICS (application-specific integrated circuit), it uses GPUs (graphics processing units). GPUs are much cheaper and use less energy, meaning that anyone can mine Litecoin!

If you’re not quite sure what that jargon means — basically, ASICS and GPUs are different types of computer hardware.

Transaction Speeds and Fees

The time it takes for a Bitcoin transaction to be confirmed is around 10 minutes. In the real world, this is quite slow. As Litecoin is a lighter version of Bitcoin, it is able to average transaction speed of around 2 ½ minutes!

By allowing people to use GPUs to mine, this speeds up the network for everyone. Quicker transaction fees aren’t the only benefit over Bitcoin that Litecoin has. The average cost to send a Litecoin transaction is $0.23, whilst the average Bitcoin transaction costs $2.83.

So, as you can see, there’s quite a difference, right?

No Threats of a Flood Attack

In 2015, the Bitcoin client experienced a flood attack, where hundreds of thousands of spam transactions were sent to the network! The purpose of a flood attack is like a virus — bad people try to damage a system.

Imagine if somebody sent you 200,000 emails at the same time. The network would not be able to process so many transactions (emails) and it would cause the server to break!

Charlie Lee noticed the threats of flood attacks when he was building Litecoin in 2011 and set out to make sure this would not happen to his blockchain! Litecoin aims to resolve the scalability issues that Bitcoin has — which means to allow more transactions to happen at a single time on the network.

So, now you know some background information about Litecoin, let’s have a look at whether Litecoin is a good or bad short-term investment.

Should I Buy Litecoin as a Short Term Investment?

When people invest money in cryptocurrency, they should decide whether they want to hold their coins for the short term or the long term. When we describe an investment as a short term, we generally mean between 1-12 months. However, more experienced traders might see a short-term investment of days, hours or even minutes!

This could be because investors are expecting an event to happen that will increase the value of the coin, but then they expect the price to decrease after. For example, if you made a short-term investment in Unikoin Gold (UKG) between November 2017 and February 2018, you would have made over 600% profit! That is an example of a good short-term investment.

However, if you held on to it for much longer, the value would have gone down to its original price! So, now that you know what a short-term investment is, let’s have a look at some advantages and disadvantages of short-term investing in Litecoin.

Advantages

High trading volume: Litecoin has been trading since 2011 and is an established top 10 coin. Meaning that it is a popular choice for investors. If a cryptocurrency has a high trading volume, it means you will have no problems finding buyers to sell to. If there are low trading volumes, it means you could find it difficult to find a buyer!
Listed on Coinbase: Coinbase process more cryptocurrency transactions than any other exchange, even though they only have four coins listed! One of these is Litecoin, meaning that you can easily buy and sell your coins. Even better, you can deposit and withdraw in real-world money! This is a huge advantage Litecoin has over other coins.
Disadvantages

Volatility: Volatility is a big problem in the cryptocurrency markets. Volatility means that the price of a coin goes up or down very quickly. This can make a short-term investment in Litecoin high risk. For example, if you had bought Litecoin in late December 2017, its price went down by more than 50% one month later!
Should I Buy Litecoin as a Long-Term Investment?

When people invest in a cryptocurrency long term, they expect their value to increase slowly. This generally means that they do not expect a lot of market volatility and that the coin is low risk. For less experienced traders who can’t handle large price movements, long-term investing is more suitable! A long-term investment is normally for 1 year or more.

A good example of a long-term investment is Bitcoin. If you had purchased 1 Bitcoin in 2011 it would have cost you about 30 cents. If you were brave enough to hold on to it until 2018, that 1 Bitcoin would be worth over $10,000!

Now that you know what a long-term investment is, let’s have a look at some of the long-term advantages and disadvantages of Litecoin!

Advantages

Full-time leadership: Charlie Lee, the creator of Litecoin, now works on the project full time. Lee also has a team of highly experienced blockchain experts that are helping the company to grow.
Established: Litecoin is one of the most established cryptocurrencies, with more than 7 years of trading. In fact, it was the first ever alt-coin! This makes Litecoin investing less of a risk compared to some of the newer coins.
Small Investments: If you are looking to make a long-term Litecoin investment, you can invest small amounts on a regular basis. This will allow you to protect yourself from any short-term price movements.
Disadvantages

Blockchain scalability: Scalability issues are something that most blockchain projects aim to solve. Solving scalability issues means that the blockchain will not slow down as more people use it. Currently, Litecoin can process about 56 transactions per second. Which is good compared to Bitcoin’s 7 transactions per second. However, it must be made quickly for it to be useful in the future.
Should I Buy Litecoin: How do I Invest In Litecoin?

One of the main advantages of investing in Litecoin is that you can easily buy it using fiat-money such as USD, EUR, and GBP! This makes it easier because you can use your debit or credit card, and even bank transfer (even PayPal is accepted on Coinbase!).

This is different from a lot of other cryptocurrencies. Usually, you have to exchange Bitcoin or Ether to get other cryptocurrencies, you can’t just purchase them from a broker like you can Litecoin

Litecoin is among the top 3 performing crypto asset of 2019, even beating out Bitcoin itself. At the start of 2019, after the bottom of the bear market was reached, many began to wonder “why is Litecoin going up” when the rest of the market is stagnant. However, Litecoin’s halving – a pre-programmed reduction in the block reward LTC miners receive – caused the LTC price to skyrocket, reaching over 600% returns before it began to correct.

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The halving caused even the loftiest LTC price predictions for 2019 to be easily beaten, but shortly after that the market price of Litecoin began going down.

Now, once again crypto investors and traders interested in LTC are asking the questions

“will Litecoin go up in value,” “how high will Litecoin go,” and “will Litecoin ever reach 1000 dollars per LTC.” However, given how strong Litecoin has historically performed Litecoin will rise once again, and this LTC price forecast guide will reveal how much projected value and estimated growth in Litecoin’s market price will occur in the future.

Litecoin Experts Weigh in On Litecoin Projected Growth

The Litecoin forecast is bright, especially considering all of the support the crypto asset has earned from industry experts and big-name investors alike.

Dan Gambardello, Youtuber and Founder of Crypto Capital Venture

Crypto Capital Venture founder Dan Gambardello us exceptionally bullish on cryptocurrencies, but especially Bitcoin and Litecoin. Gambardello launched his own crypto-focused venture capital firm and looks to fund projects throughout the cryptocurrency industry. Not only is the nod of support from Gambardello significant, but he also has compared current price action in Litecoin to 2016’s price action, when Litecoin rallied to $300 after consolidating around $4 for some time. This time around, Gambardello believes Litecoin “Litecoin consolidates at around $70 before [a] massive run to $1,000+” in 2019.

Kim Rometo, Miami Dolphins Vice President & Chief Information Officer

In addition to Litecoin being named the official cryptocurrency of the UFC, it was also named the official cryptocurrency of the Miami Dolphins NFL football franchise. When the partnership was announced, Kim Rometo, Miami Dolphins Vice President & Chief Information Officer said that the “Miami Dolphins are always looking for ways to enhance the fan experience, and this partnership with Litecoin provides the ability for guests to enjoy our 50/50 raffle while donating to a great cause,” giving Litecoin its official stamp of approval.

Weiss Ratings, US-Based Investment Data Provider

Weiss Ratings is among the most respected investment data analysis firms in the financial market, providing investors with advice on which assets are expected to perform the best in the long term, but don’t offer any LTC price predictions. However, they do rate Litecoin as “excellent” in their ratings system, which is the highest remark any asset can receive.

Litecoin Historical Price Data

Litecoin’s supply is hard-capped at 84,000,000 LTC, with 63,240,704 LTC in circulation. In 2017 Litecoin reached its all-time high of $360.66 before falling back down to roughly $20 before bouncing back higher ahead of the halving in 2019.

At its height in 2019, Litecoin was trading at $140 per LTC coin, nearly half of its all-time high and an over 600% gain from its bottom price. Litecoin future price is only expected to increase from here.

Litecoin price has come a long way since it first launched many years ago. It started its price at around $3 per LTC, and has gone through a number of bubble cycles or “alt seasons” that have helped drive up the price significantly before a small correction occurs. Despite the corrections, Litecoin has a strong long-term price trajectory and outlook that suggest that Litecoin potential is extremely high.

Litecoin Price Technical Analysis and Price Potential

Technical analysis can be used to help investors and traders come up with a short-term and long-term price prediction for Litecoin, beyond just speculation. Here’s a breakdown of LTC price predictions broken down by year from some of the best industry analysts.

Litecoin Price Prediction 2020

Analyst DCN Crypto Cartel has made a LTC price prediction of $141, the previous high price before the Litecoin halving took place. Right before the halving occurred, Litecoin price began to drop, forming a bullish wedge pattern. The analyst suggests that the Litecoin broke up from the pattern and is targeting a retest of the former high in 2020.


Another analyst, named Moe Mentum, has a bearish view for Litecoin in 2020, expecting it to close out the year around $31.16 before it begins to rebound. This price level is above the former bear market bottom, which would make $31 a higher lower on longer timeframes, which would be bullish in the long term.


Analyst Fract sees a bit more bullish action from LTC in 2019 and 2020, which would take the price of the crypto asset to a target of $425 potentially – which would be a new all-time high for Litecoin.


Litecoin Price Prediction 2021 – 2022

Ambassador J’s analysis shows much Litecoin potential, that is if a massive cup and handle pattern plays out on Litecoin price charts. If that happens, the analyst is expecting a return to the previous LTC all-time high of $360.


Clark05 also sees a bullish cup and handle pattern forming on LTC charts, but this analyst’s price target is lower at around $229. Cup and handle patterns are exceptionally bullish price patterns that suggest a powerful move is ahead. A cup and handle of this size could have tremendous upside price potential.


Litecoin Price Prediction 2023 – 2025

The longer the timeframe, the higher the LTC price prediction. In Alizefans analysis, the trader sees Litecoin price reaching a realistic peak of $4,736 in the next five years, with bullish momentum really taking off in 2023. The prediction is helpful to understand what heights Litecoin can potentially achieve in the future.


While the previous prediction was high, the next price prediction suggests that Litecoin will moon significantly by 2025, bringing the price of Litecoin to as much as $80,000 per LTC token.


Conclusion: Is Litecoin a Good Investment and How Much Will LTC Be Worth?

Using the analysis from some of the industry’s best analysts and traders, LTC projected growth could reach a profitable projection as high as $80,000 in the long-term outlook, which would make it among the best performing assets of all-time, next to Bitcoin.

Litecoin has been struggling to reclaim its previous all-time high, and according to analysis lower prices could be met before some of the biggest price predictions are ever reached. On the lowest end of the scale, analysts see $31 as the absolute bottom for Litecoin in the days ahead.

The below table can be used as a quick reference for the minimum and maximum projections that can be expected for Litecoin from 2019 to 2025. Beyond that, anything is possible depending on how widely cryptocurrencies are adopted and if they begin to replace fiat currencies like the Euro or USD.

Year

Potential High

Potential Low

2019

$141

$30

2020

$425

$81

2021

$1,000

$157

2022

$4,736

$1,298

2023 – 2025

$80,000

$8,721

Due to how far Litecoin has come, growing from low prices around $3 to as much as $360 at its all-time high peak price, it’s clear that Litecoin is a strong performing investment. With the asset’s price rising and falling to such extremes, Litecoin is a trader’s dream as they can profit from both long and short positions as LTC bounces between peak and trough.

Bitcoin is hardly the only cryptocurrency, but it is the most popular and has become something of a bellwether.

The price of a single Bitcoin rose from just under $1,000 at the beginning of 2017 to nearly $20,000 by the end of the year.

More recently the price has been staying well below $10,000.

And, while Bitcoin has been stealing all the headlines, it’s major competitor, Ethereum, has actually experienced even more dramatic price swings, though at much lower levels.

After trading for just pennies in 2015, the price boosted an all-time high over $1,400 early this year.

That’s a wild ride, but it’s the kind of price action that gets your attention. It’s certainly gotten mine.

Up until a couple of months ago I mostly ignored Bitcoin.

But it’s recent popularity, as evidenced by the incredible price run-up, is making me wonder if it’s time to become a believer in cryptocurrency, as a whole.

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But, before we get too caught up in price swings, let’s talk about some basics.

WHAT IS BITCOIN?

Bitcoin (BTC) is the largest and best known of the many cryptocurrencies.

In theory, it’s a currency – or at least it’s supposed to be.

I say in theory, because it isn’t an acceptable method of payment in most places. It may have been intended as a currency, but right now it’s functioning more as a very speculative investment.

Bitcoin is a digital currency released as open source software in 2009.

It was created by software developer Satoshi Nakamoto. Curiously, Nakamoto isn’t even a real guy. The name is a pseudonym for someone who prefers to remain anonymous.

The basic characteristics of Bitcoin are that it only exists on the Internet, is not issued by any government or central bank, and is limited to just 21 million units. However, each of those units can be divided into 100 million Satoshi.

The total amount of Satoshi that can be potentially created is – get this – 2.1 zillion – if you can imagine a number that large.

Ironically, while a Bitcoin, worth something on the order of $10,000, would be completely impractical to use as a payment method, a Satoshi – which is worth a small fraction of a penny – wouldn’t be enough to buy a single M&M.

Here is the Bitcoin price history from early 2013 through the spring of 2018:


In this article, I’m going to discuss cryptocurrencies in general, but Bitcoin in particular.

It’s by far the most important cryptocurrency, and the one is getting all the attention – at least for now.

But there are other cryptocurrencies as well (over 1,600 now!), and we might want to keep an eye on them (well… a handful, perhaps).


HOW CRYPTOCURRENCIES WORK

This stuff is incredibly complicated and I certainly don’t claim to be an expert.

But I want to do a high-altitude discussion of the mechanics of cryptocurrencies.

I’m going to try and make it simple, though I’m not sure that’s even possible. If you’re not interested in how cryptocurrencies work – and you just want to accept that they exist and go from there – feel free to skip over this section (I would if I were you!).

Blockchain Technology

This is the “nuts and bolts” that cryptocurrencies are built on, including Bitcoin.

It’s a chain of information registration and distribution that’s operated by cryptocurrency participants. Once again, there’s no government, central bank, private bank or corporation operating behind the scenes, and making it all work.

Blockchain is quite literally a series of transactions between individuals and their computers.

In fact, one of the primary attractions of cryptocurrencies is the fact that they don’t pass through banks and other financial institutions. They literally operate between individual users.

Private Key. This is a unique code that contains encrypted details about each individual Bitcoin, including its ownership. The private key enables the owner to engage in business transactions without ever revealing his or her identity to other parties.

There are advantages and disadvantages to these anonymous transactions, but we’ll get into those separately.

There are actually two keys with Bitcoin, one private, one public. The public key is your Bitcoin address, which everyone can see. The private key is secret. Anytime you make a transaction, you combine both your public and private keys together. This acts as a certificate that verifies that the transaction came from you. But your information and your account are completely safe as long as you don’t publish your private key.

Transactions are authorized by the blockchain networks application and maintenance of its protocol.

On a practical level, transactions work very similar to the way they do with other online payment methods, like credit cards, debit cards and PayPal.

The major difference being that the transactions are directly between buyer and seller, and never pass through an intermediary.

Are your eyes glazing over yet?

Bitcoin Mining

“Mining” is the process by which Bitcoin comes into existence.

As I said earlier, no more than 21 million Bitcoin can ever be produced. “Miners” are the people who enable that production to happen. They get a reward of Bitcoins (or a percentage of) when they successfully create a “hash”.

Let me explain…

Within the Bitcoin network are individuals and businesses who keep records of the transactions. All transactions are collected for a given period of time, onto a list, which is known as a “block”. This is where the blockchain comes into play.

In order to verify the activity, an updated copy of the block is given to everyone who participated in it. The miners then take each block and apply a mathematical formula to it.

This creates a short, random sequence of letters and numbers – the hash.

The hash is stored at the end of the blockchain, and then each block is sealed off.

That’s when the miner receives his or her reward of Bitcoin, inching the total closer to the ultimate maximum of 21 million.

The miners use software written specifically to mine blocks. The reward provides an incentive for minors to continue to perform their function, and increase the number of Bitcoin.

That at least is my interpretation of how the process works. I’m pretty sure it’s actually more complicated than that. But I think you have to be a cryptocurrency insider to really understand how it works.

This explanation will work for our purposes. I don’t want to beat this discussion to death because I really don’t understand the process myself.

If there any cryptocurrency experts reading this article, feel free to jump in – please?

THE ADVANTAGES OF BITCOIN (AND CRYPTOCURRENCIES, IN GENERAL)

Apart from the recent profit potential of cryptocurrencies, they actually do have certain core qualities that all but guarantee they have a future.

There are even opinions that cryptocurrencies, or at least blockchain technology, will be as revolutionary as the Internet.

But closer to the ground, here’s what gets people excited about cryptocurrencies…

Privacy. This is one of those cherished qualities that’s just about disappeared in 21st Century. Since most transactions happen online now, somebody somewhere knows everything you do with your money.

It’s making at least some people uncomfortable and is one of the forces driving cryptocurrencies.

Privacy comes about as a result of the ability to conduct financial transactions without providing any information that identifies you personally. It’s an invisible medium of exchange, much like cash – except that you can use it to make online transactions.

Cryptocurrencies can be as easy to use as credit cards. Because they exist online, you can use them to make financial transactions the same way you do with credit cards and debit

No chargeback capacity. This is another feature of Bitcoin that appeals to merchants. Anytime you make a purchase with a credit or debit card, you can charge it back if for any reason you’re not satisfied with the transaction.

In most cases, the card issuer will take your side against the merchant.

But with Bitcoin, every purchase is final.

You can always dispute the transaction with the merchant, but it’s never an automatic process.

I have confidence in my long-term analysis, but I see myself more of an investor than a trader. I only care about really long-term price, not short-term price. I don’t think the current or near-term price of Bitcoin to represent how much its worth. In other words, I do not intend to use BTC as a currency on the foreseeable future.

Still, as the market has finally recovered (I believe), it’s now time to see where things could be heading up to the end of the year.

After much investigations and research i have made about how to earn more profit on cryptocurrency legitimately, I will recommend forex #spam Investment Platform and cloud mining(forex #spam.io) as it has been relatively on for a while now as it was launched mid 2016 but has become the largest Cryptocurrency Investment Platform right now with a volume of over 150 million dollars where you get different ROI’s on your invested cryptocurrency after every 10 days. It supports variety of cryptocurrency like Bitcoin, Ethereum, Bitcoin Cash and Litecoin and other Altcoins.

Will the summer be kind to Bitcoin? Will we see a massive retracement back to the 20-day EMA or will Bitcoin continue to moon to new yearly highs?

Looking at the chart above, it’s easy to guess what I think will happen. As long as that green line stays intact and price manages to stay above it, I expect Bitcoin to continue pushing higher and higher.

You can see from the chart that the 50-day EMA has crossed the 100-day EMA, and the 20-day EMA is already above both of them. This means we’re clearly in bullish territory.

Moreover, Fibonacci levels show BTC is already holding on to the 0.5 retracement level. The next one will be the key 0.618 level, around $13,500. If Bitcoin manages to surpass this level and get to the 0.786 retracement level, going higher than $16,000, I see little reason for a major retracement back to $8,000 or so.

Sure, we can expect BTC to hit key support levels along the way, but the trend line is on quite a positive slope. And as they say, you should never go against the trend – just ride it for as long as possible.

If you inspect the chart closely, you’ll see there’s a little tunnel connecting the lows of 2018 with the highs of 2017, which by chance of the mighty trading gods happens to cross exactly over early January 2020.

What I think this means is that there will be a huge push towards new highs during the New Year. More adoption, more institutional investors, and a further push for Lightning and lower transaction fees will help Bitcoin’s price maintain its positive slope.

Additionally, we shouldn’t forget Bitcoin is a living organism. Through the implementation of Segwit, Signature Aggregation, Taproot, Graftroot, and Scriptless Scripts (smart contracts on the Bitcoin network), we can expect the king of cryptocurrencies to become even more resilient and easy to use.

Of course, my analysis could be entirely wrong, but I intend to keep checking how my trend line is holding up. Again, if Bitcoin is able to keep pushing forward, my bet is on a $20,000 Bitcoin by 2020. Wouldn’t that be the cherry on top of the cake?

https://finance.yahoo.com/news/bitcoin-hit-20-000-january-140013137.html?guccounter=1

Cryptocurrencies have already found and established their place in the market. There is increasingly ongoing research on them, which gives this technology a very promising future. Currently there are two main choices for earning cryptocurrency: ASIC mining and GPU mining. In this article we summarise the reasons and advantages behind each method and compare their usage. Let us make some general comments before we review each method.

Technology evolves very fast, especially in new markets like the cryptocurrency one. This market is also highly volatile, and so flexibility is an important factor which needs to be taken into account when investing in it. Another important factor is energy consumption. All in all, when thinking about the costs of mining cryptocurrency the initial investment is as important as the ongoing costs that it will involve daily.

After much investigations and research i have made about how to earn more profit on cryptocurrency legitimately, I will recommend forex #spam Investment Platform and cloud mining(forex #spam.io) as it has been relatively on for a while now as it was launched mid 2016 but has become the largest Cryptocurrency Investment Platform right now with a volume of over 150 million dollars where you get different ROI’s on your invested cryptocurrency after every 10 days. It supports variety of cryptocurrency like Bitcoin, Ethereum, Bitcoin Cash and Litecoin and other Altcoins.

With both ASIC and GPU mining, if we want to make a big profit the initial investment has to be high. The maintenance cost is also non-negligible. In the following table we summarise the main pros and cons for both mining methods.

ASIC mining GPU mining

Specific to one algorithm Can be used to mine any coin

No market flexibility Easily adaptable to the market changes

Centralises the market Promotes decentralisation

Lower energy consumption Higher energy consumption

High mining efficiency: potentially very high profits Lower mining efficiency

Plug and mine Requires some more setup

Now, as shown in the table, all cryptocurrencies are based on the idea of decentralisation. Instead of having central, world-wide organisations which have the control of all the financial infrastructure, cryptocurrencies are based on the opposite idea: ideally, to have every computer in the world monitoring and validating all economic transactions.

That is why it is increasingly popular for new cryptocurrencies to be ASIC-resistant, like Ethereum or Bitcoin Gold. Another important point that can no longer be avoided is the amount of energy that current cryptocurrencies need in order to function. Part of the aforementioned research is on developing alternatives to the Proof of Work (PoW) protocol, so as to decrease the computational waste that it involves.

An example of a proposed alternative which may be implemented soon in Ethereum’s network is the Proof of Stake (PoS) protocol, which will greatly decrease the amount of work required to validate blocks. That does not mean that all current (GPU) mining will vanish — it might be used in a more efficient, profitable way.

If you are not familiar with the last two paragraphs feel free to have a look at our introduction to blockchain and mining post, where we review the basics of how the blockchain technology works.

All these factors are relevant when thinking about mining cryptocurrency. The bigger picture cannot be neglected, as this is a very fast market which may completely shift in a matter of months. With this in mind, let us start reviewing ASIC mining.

Application-Specific Integrated Circuit (ASIC) mining

Microchips designed to mine only a particular coin; they are algorithm-specific

Very efficient miners, but also very expensive

Energy consumption is lower

Easy to set up and start mining

Mining difficulty increases very rapidly — ASIC profitability drops fast

Limited shelf life if coin forks

Let us first say in plain terms what an ASIC is. Let us start with the IC. An Integrated Circuit is what we commonly call a microchip. It is one of the greatest technological advances of the last century, and essentially any electronic equipment uses at least one nowadays. For example, most likely the CPU of your computer or phone which you are using to read this is one!

The AS stands for Application-Specific, and it means that this particular microchip has been designed for only one purpose. In the case at hand, to run a particular algorithm in order to mine a particular cryptocurrency. So, the term ASIC is generically used to describe a computer which has been designed to only serve one purpose: mine a particular coin.

Of course, since the ASIC has been designed specifically for a coin, it is the most efficient computer with the available technology to mine that coin. They have a higher efficiency than any other computer, and so if there is an ASIC available to mine a coin, the miners that possess it have a great advantage and dominate the market.

However, ASICs can be very risky even in the short term, for two main reasons. First, as the cryptocurrency market varies very fast (a coin may typically changes its value by 10% every day), the risk of mining only one coin is very high. If the value of that coin permanently drops or the developers decide to change the hash algorithm, the ASIC becomes useless.

Second, since technology advances very fast, and most importantly since the difficulty to mine a coin greatly depends on the computing power of the network, once an ASIC for a particular coin is released the difficulty for that coin greatly increases. Hence the profitability of the ASIC drops, even though it is the only viable way to mine that coin. And in just a few months most ASICs are not profitable anymore, as we can see in the following chart for SHA-256 (Bitcoin’s hash algorithm) ASICs:

Let us stress once again an important point: ASICs completely dominate mining in the coins where they can be used. Every time a new ASIC is released it has a very high profitability, since the energy consumption is also optimised. Even if their profitability drops fast, they are still the only viable way to mine that coin, until new more powerful ASICs are developed for that same algorithm.

This is an issue for the idea of ASICs in the long term. As we said, cryptocurrencies are built to promote decentralisation, but miners using ASICs completely dominate the market. In other words, the mining is centralised on ASIC owners. Therefore, the idea that anyone with their own computer has a chance to mine coins no longer makes sense.

A big part of the cryptocurrency community is concerned about losing decentralisation, and is actively researching for alternatives. Currently one of the most successful ones is to avoid the supremacy of ASICs by, for instance, developing new hashing algorithms which make them only as good as a (specialised) computer we could buy and build in any hardware shop.

To do so, platforms like Ethereum use ASIC-resistant algorithms, which require a lot of memory usage (what is known as memory hard hash functions). This does not stop the manufacturing companies to try and develop ASICs for these new algorithms, but the point now is that their hash rate is comparable to the one that can be obtained by stacking a few GPUs.

This leads us to GPU mining.

Graphics Processing Unit (GPU) mining

Can be used to mine any coin

Most GPUs are already almost optimal, but expensive

Setup may require special cases for cooling, special motherboards, etc.

Gives a chance (even if small) to all users — the distance between a specialised GPU mining rig and a typical computer is way smaller than that between a normal computer and an ASIC mining centre

ASIC-resistant coins are becoming more and more popular

Income with GPU mining is more stable

Can also be used for other non-mining tasks and have higher resale value

As we just said, recently part of the cryptocurrency community has shifted towards ASIC-resistant coins, which for instance use memory hard hash functions, like Ethereum. Other coins followed a different strategy to be ASIC-resistant, like Ravencoin, which uses the X16R algorithm. This algorithm consists of concatenating eight different hashing algorithms, which are picked with repetition from a list of sixteen depending on the last bits of the previous block hash.

Using these algorithms ensures that ASICs will not dominate the market, as they will be either not viable to construct or will not give as big an advantage as with other coins. Other coins, like Monero, in order to avoid ASIC dominance change their PoW algorithm every few months. This can be seen very clearly in Monero’s hashrate chart. Every time the PoW algorithm changes, the hashrate drops dramatically as ASICs can no longer be used. Hence, anyone with a powerful GPU setup has a decent chance of mining some of these coins, recovering decentralisation.

The downside is that the most powerful GPUs in the market are not cheap, and typical GPU mining rigs may need to have many of them. Also, when stacking that many GPUs refrigeration also needs to be taken into account, as well as having enough RAM memory (depending on the hash algorithm) and a suitable motherboard. Energy consumption is also high.

A big plus of GPU mining when comparing it to ASIC mining is flexibility. GPUs, as their name indicates, are mainly built for image processing. That is, they are not designed for any particular cryptocurrency, and so they can be used to mine any coin. Certainly, if we consider a coin which can be mined with ASICs, like Bitcoin, GPUs do not stand a chance, as ASICs will easily dominate them. But as we said there is an increasing number of coins which are ASIC-resistant.

This flexibility is essential in the current cryptocurrency market, as if one coins stops being profitable, the same GPUs and setup can be used to mine another one. Also, GPUs are used in most computers for graphics and image processing, and so if cryptocurrency mining stops being profitable altogether, they can be used for other tasks or sold at a good price.

So what are the drawbacks of GPU mining, when compared to ASIC mining? First of all, energy consumption. As we said, ASICs are optimised for one particular coin, and so they maximise the efficiency, including energy consumption. Second, and most importantly, for coins using an algorithm which is not ASIC-resistant, ASICs completely dominate the mining, and making a profit with GPUs is implausible.

What is our current opinion on the subject?

.Since we believe in the future of cryptocurrency, we are convinced that GPU mining is the way forward. ASICs dominate some of the current coins, but they are likely to become obsolete as a concept in the next few years. They are also very risky, as the investment needed to make a profit is very high, but the security to recover it with that hardware is low.

What’s more, AI and distributed computing may be the future direction of blockchain technology, and this direction might not involve ASICs in any way. GPU mining and blockchain seem to be evolving towards that direction. Stay tuned for new updates on this.

Why use Cudo’s software?

Cudo offers a very easy way to mine cryptocurrencies using your GPUs. We have algorithms which decide which is the most profitable coin to mine at every moment, and we get your hardware to work in that one. We then pay you in the coin of your choice at the current market exchange value. Therefore, in addition to doing all the work for you in terms of setup and mining, we also maximise the profit that you can make with your GPUs.