The sixth most capitalized digital asset, Litecoin, has – in the three months since a predetermined halving event – offloaded a significant amount of its hashrate. Possibly deterred by low mining profitability, miners have been opting out of supporting the Litecoin network, as the digital asset’s declining hashrate has coincided with a significant drop in value. This doesn’t seem to bode well for Charlie Lee’s cryptocurrency, as it has been previously report, that developers have been reluctant to contribute to its code.
Miners Quitting Litecoin
According to BitInfoCharts’ hashrate monitor, Litecoin’s hashrate has dropped by as much as 60% since Litecoin’s block reward decayed by half back in mid August. This is indicates that the asset’s network has experienced an exodus, in the way of mining support. Litecoin has historically gone bearish following a halving event, however the most recent reward halving occurred during a period when the overall cryptocurrency market had been struggling to break key resistance levels. Which may have exacerbated Litecoin’s decline.
Valued at just under $60, at time of writing, Litecoin has dropped from around $140 (value shortly after halfing), which translates to lower profitability from supporting the network. In fact, BitInfoCharts indicates that digital currency’s LTC mining profitability is at the lowest level it has ever been.
Developers Quitting Litecoin
Litecoin has historically lead in blockchain scaling efforts. It was the first to implement Segwit, later implementing a Litecoin version of the Lightening Network made famous by Bitcoin, as well as Atomic Swap. Recently however, Litecoin finds itself struggling to attracted the talent it needs to maintain and improve its blockchain. This, along with a falling hashrate poses significant risk the asset’s blockchain.
A Reddit post from back in August, revealed a private correspondence between Charlie and what remains of the Litecoin development team. In the leaked correspondence, Lee admitted that the Litecoin Foundation had been battling to attract developer talent.
“The honest truth is that no one is interested in working on Litecoin protocol development work. At least no one technically competent. You can’t just throw money at this problem. This is true for Litecoin since the beginning. It has only been me, Warren, and Thrasher.” – Charlie Lee
If things carry on at this rate, then Litecoin may well become the “gloried testnet for Bitcoin”, as Mike Novogratz of Galaxy Digital, called it back in April.
“Gold has an $8.5 trillion dollar market cap. Silver is $15bn That is .17%. $BTC has a $90bn mkt cap. $ltc is $5.7bn which is 6.4% of $BTC. Silver is at least useful for industrial production. $ltc is a glorified test net for $btc. I don’t get this rally. Sell $ltc buy $btc.” – Novogratz, in a tweet date April 3, 2019
Where to From Here?
With Chinese Prime Minister, Xi Jingping, having recently stated that the Asian nation will embrace digital assets. It is possible that the influx of a third of the world’s population into the fledgling asset class, may help LTC recover some value and offer miners incentive to support it’s network. However the Litecoin Foundation could need to up the coin’s public appeal, and attract developers or risk obsolescence.
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