The Litecoin community is quickly turning into much less safe. Because the new quantity of Litecoin being mined was reduce in half on August 5, the community’s hash rate—computing energy that protects the community from assault—has equally fallen.
Each 4 years, Litecoin undergoes a halving, the place the mining rewards that cryptocurrency miners obtain for mining new blocks get reduce in half—it’s the identical with Bitcoin. Nonetheless, when this occurs, it implies that miners obtain much less cash when mining new blocks—making it uneconomical to proceed spending computational assets incomes new cash. Whereas Litecoin founder Charlie Lee argued that miners would proceed defending the community, the miners had different concepts.
Because the newest mining block rewards decline, the overall hash charge on the Litecoin mining community has dropped over 60 p.c from round 500 TH/s to its present degree of simply 193 TH/s. It’s heading quickly in the direction of its lowest level since March 2018—at 146 TH/s.
Whereas this isn’t the primary time the community’s hash charge has been in a downturn, it’s falling quicker than it has ever earlier than. And this may very well be an issue for the community’s safety.
The rationale why a excessive hash charge is essential is as a result of it protects the community from assault. Earlier this yr, Ethereum Traditional suffered a 51 percent attack—the place malevolent actors took management of the community by having extra hashing energy and stole greater than $1 million. It was straightforward to take action as a result of its hash charge was so low. (To place it in context, Ethereum Traditional’s hashing energy was about 20 instances smaller than Litecoin’s is now).
Whereas Litecoin continues to be tougher to assault than Ethereum Traditional, there’s more cash on the road, making it an even bigger goal. It has a present market cap of $3.8 billion.
On high of this, the rise of cloud computing is making it simpler for hacks to happen. Final yr, a crypto fanatic generally known as geocold51 live-streamed a 51 p.c assault on Bitcoin Personal. He instructed Coindesk that utilizing cloud computing and companies like Nicehash—the place you may lease hashing energy—made an assault 100 instances cheaper.
After the halving, Lee tweeted, “Looks like miners haven’t shut off their hashrate in any respect. As an alternative, we’re mining at a charge of a block each 1.4 minutes on common, which is way quicker than the anticipated 2.5 minutes. Litecoin community is wholesome!”
However because the community’s hash charge continues to drop, it now presents a distinct image. And if Litecoin’s price retains falling, its hash charge may drop even additional. Lee is now engaged on such radical plans as bringing privateness transactions to Litecoin—will this be sufficient to show its fortunes round?