Security ratio of Litecoin
is 0.083
Last 24h compared to period average
The Security Ratio is an important indicator for assessing the security of a proof-of-work (PoW) chain, such as Litecoin.
By monitoring the Security Ratio, stakeholders in a PoW chain can make informed decisions about the security of the chain and take appropriate measures to maintain its integrity.
Calculation of Security Ratio is simple and can be determined as follows:
ratio (SR) = Total Block rewards Total Circulation supply * 1 000 000
Block rewards represent the total reward that a miner receives for mining a block. This includes not only newly minted coins, but also all transaction fees from that block.
Since the security ratio is calculated on a unit basis, it is independent of the currency expression, such as dollars.
Look into the composition of rewards in Litecoin
Fixed reward for newly mined block in Litecoin
Chart 1 - Fixed reward for newly mined block
The Block reward Security Ratio focuses solely on the rewards associated with block minting.
This fixed reward for each mined block is an important factor in the economics of a PoW blockchain as it determines the rate at which new coins are created and added to the supply.
security ratio = Block reward Circulation supply * 1 000 000
With each block mined, a certain amount of new currency is released = block reward. This amount may vary over time.
In a nutshell, to maintain current security over time, the decreases in block rewards must be offset by the revenue from transaction fees (grey full). Transaction fee revenue (grey solid) is a function of the number of transactions (blue) and their price.
Variable transaction fees reward in Litecoin
Chart 2 - Variable transaction fees reward
The Fee Security Ratio focuses solely on the transaction fees paid by users, rather than incorporating newly minted coins as part of the block rewards.
This ratio provides a more accurate representation of the security level ensured by transaction fees alone. It can be calculated using the following formula:
ratio = Total Transaction Fees Total Circulation Supply * 1 000 000
The Fee Security Ratio highlights the proportion of network security derived from transaction fees, making it an essential metric to understand a blockchain network's sustainability in the long run. As block rewards diminish over time, particularly in networks with a decreasing issuance schedule like Bitcoin, transaction fees become increasingly critical for maintaining network security.
Comparing Fee Security Ratios among blockchain networks with similar market capitalizations can provide valuable insights into the sustainability and long-term security of these networks, as it shows their reliance on transaction fees to incentivize miners and secure the network.
Percentage composition of the total reward for Litecoin
Total Security Litecoin budget
Litecoin over time
About Litecoin
Litecoin is a digital currency that was created in 2011 by Charlie Lee, a former Google engineer. Like Bitcoin, Litecoin operates on a decentralized network of computers, with transactions verified and recorded on a blockchain ledger.
One of the key advantages of Litecoin is its faster transaction times compared to Bitcoin. This is due to its use of a different mining algorithm and block time, which allows for faster verification of transactions and a higher transaction volume.
Litecoin also has lower transaction fees compared to Bitcoin, making it a popular choice for everyday transactions and micropayments.
Because Litecoin is a relatively new and unregulated currency, its value can be volatile and subject to sudden fluctuations. Investors should also be aware of the potential for fraud and theft, as Dogecoin transactions are irreversible.
Despite these risks, Litecoin continues to gain popularity and acceptance as a legitimate form of payment and investment. To learn more about Litecoin and its potential benefits and risks, check out the following frequently asked questions:
