Litecoin is one of the most popular cryptocurrencies in the industry and over the past two years, we have seen a rapid increase in the hash rate of the Litecoin blockchain network, which represents computing power that protects the protocol. Specifically, this quick increase comes with the strong performance of Litecoin over the past few months.
Even though the significant increase in the hash rate of any blockchain network is generally considered a positive indicator of confidence, arguments are commonly made that improvements in hardware and mining equipment can lead the hash rate to rise.
The recent surge in the hash power of the LTC network was more than likely affected by the momentum of the short-term price trend of Litecoin. With this, it is possible that the overall improvement in the efficiency of mining equipment might have triggered the hash rate on the network.
An early team member at Litecoin, Franklyn Richards has spoken on the recent rise saying:
“Another potential explanation for the recent rise, besides price, may be more efficient mining hardware being issued /used. If this were the case we are not expressly aware of it.”
JP Vergne is a professor at the Ivey Business School in Canada and in 2017, Vergne discovered in a study that developer activity is the most accurate predictor of the price movement of cryptocurrency.
The study released by Vergne, dubbed “Buzz Factor or Innovation Potential: What Explains Cryptocurrencies’ Returns?” noted that while new cryptocurrencies are always surfacing, if they aren’t backed by active development, investors may lose confidence. The study states:
“Besides, a new cryptocurrency may look more appealing than its older competitors at the time of introduction, but if it is not backed by a solid team of developers who continually improve its underlying software, over time it will be unable to maintain its initial technological advantage.”
Also speaking on Litecoin was its creator, Charlie Lee who has said:
“Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy. I am now focused on making Litecoin more fungible by adding Confidential Transactions.”