In a recent interview, Litecoin (LTC) founder Charles Lee touched on a lot of things regarding the future of Litecoin (LTC). For instance, he hinted on completely leaving the Litecoin team completely in the future, to make the coin completely decentralized. However, one of the most important things he mentioned was about increasing the coin supply of Litecoin.
Like Bitcoin, Litecoin has a capped number of coins, standing at 84 million. But have you ever posed to wonder what will happen, once all the coins have been mined? Well, in case you didn’t know, it will be a crisis! That’s because there will no more incentive for miners to provide security to the network. Charles Lee has foreseen this problem and is proposing an increase in the coin supply of Litecoin.
His idea is for a minor inflation in Litecoin (LTC) every year, to give miners the incentive to continue making fees, and hence provide much needed security to the Litecoin network. This would be a major change in strategy for Litecoin. But what would be the implications of adopting an inflationary model?
If Litecoin were to take this strategic direction, one of the biggest implications will an increased trust in it by merchants. As a merchant looking to make use of cryptocurrencies, you want a crypto whose long-term security is assured. That’s why taking this strategic direction makes Litecoin an instant winner in the eyes of merchants looking to integrate crypto.
Increasing the coin supply could also serve to stabilize the price of Litecoin. If Litecoin were to stick to the current fixed supply model, the price could become unstable in the long-run. For instance, the fees would rise so high that it would be impossible to make micro-transactions. Already Litecoin, like Bitcoin, has this problem of making micro transactions. That’s why they are both seeking out solutions such as the Lightning network. Now imagine how worse it will be once the maximum number for mineable coins is reached? It would instantly eliminate the appeal of Litecoin as a currency, making it irrelevant in the market. However, if it adopts the inflationary model, the price will always remain stable, and transaction fees will remain in manageable levels. This will place it in the forefront of crypto coins that can be used as currencies, and drive up its long-term value.
However, those against the idea of inflation believe that it will lead to a decline in price. That can’t be further from the truth. As long as the demand stays strong, the value of an inflationary crypto would continue to rise. In the case of Litecoin (LTC), there is every indication that its demand will continue to rise in the long-run. That’s because it is one of the cryptos that are getting adopted by different players, for its low costs and high transaction speeds. This will continue to push up demand, and drive up the price. It’s not inflation or lack of it that affects the value of a crypto. It is the number of people demanding it, at whatever level of supply.