Litecoin Cryptocurrency
author avatar Steffi November 1, 2021 13:06 pm

Litecoin Cryptocurrency: What is it and How Does it Work?

Table of Content

 

Overview

Litecoin (LTC) is a cryptocurrency created to enable quick, secure, and low-cost payments by using the unique characteristics of blockchain technology. It was built on the Bitcoin (BTC) system, but it varies in the hashing algorithm, hard cap, block transaction timings, and a few other details. Litecoin has a block period of 2.5 minutes and meager transaction fees, making it ideal for microtransactions and point-of-sale payments.

On October 7, 2011, Litecoin was published as an open-source client on GitHub, and the Litecoin Network became online five days later, on October 13, 2011. Since then, it has skyrocketed in both use and merchant acceptance, and throughout most of its life, it has been ranked among the top 10 cryptocurrencies by market capitalization.

Litecoin (LTC) was created by a former Google employee, Charlie Lee. Mr. Lee’s intention was to create a lighter, more stable, and less volatile coin than Bitcoin. While Bitcoin is the ‘gold’ of cryptocurrencies, Litecoin would be the ‘silver’. When Bitcoin was more of a long-term investment, LTC would be used for everyday transactions. Along with Bitcoin and Ethereum, Litecoin is one of the main cryptocurrencies traded on exchanges. The idea was to make a “lite version of Bitcoin,” It has many of the same characteristics as Bitcoin but is lower in weight.

Litecoin was released on October 13th, 2011. It’s important to note that Litecoin is essentially the clone of Bitcoin with some differences, such as:

  1. The number of coins: Bitcoin’s limit is $21 million, Litecoin’s limit is $84 million.
  2. Market capitalization: Bitcoin is $19 billion, while Litecoin is $450 million.

If you’re wondering where to purchase Litecoin coin, the major exchanges are presently Binance, FTX, OKEx, Huobi Global, and CoinTiger.

 

History

As previously stated, Charlie Lee, an early cryptocurrency user and a person well-known in the cryptocurrency sector, created Litecoin. Charlie Lee, also known as “Chocobo,” is a pioneering Bitcoin miner and computer scientist who previously worked as a Google software engineer. In addition, Charlie Lee served as Coinbase’s director of engineering from 2015 to 2017 before moving on to other endeavors.

Today, Charlie Lee is an ardent supporter of cryptocurrencies and the managing director of the Litecoin Foundation. This non-profit organization collaborates with the Litecoin Core Development team to further the development of Litecoin. However, aside from Lee, the Litecoin Foundation has three additional board members: Xinxi Wang, Alan Austin, and Zing Yang, all of whom are successful in their own right.

 

What Makes Litecoin So Special?

Litecoin is the second most popular cryptocurrency after Bitcoin. This success can be attributed in large part to its simplicity and obvious utility benefits. As of January 2021, Litecoin is one of the most widely accepted cryptocurrencies, with over 2,000 merchants and stores worldwide getting LTC.

Its main advantage is its quickness and low cost. Transactions in Litecoin are usually completed in minutes, and transaction costs are minimal. This makes it an appealing alternative to Bitcoin in underdeveloped nations, where transaction costs may be a decisive factor in choosing which cryptocurrency to support.

The MimbleWimble (MW) test net, used to test Mimblewimble-based confidential transactions on Litecoin, was also released in late 2020. Litecoin users will benefit from significantly improved privacy and fungibility once this functionality is enabled on the mainnet.

 

How Many Litecoin (LTC) Coins Are in Existence?

Litecoin, like other proof-of-work (POW) cryptocurrencies, grows in circulation with each freshly generated block. As of January 2021, 66.245 million LTC has been mined out of a total supply of 84 million. Since the amount of LTC mined each block drops every four years as part of the block reward halving schedule, the Litecoin Foundation recently predicted that it would be well over 100 years until Litecoin achieves complete dilation (around the year 2140).

On the first day after the LTC genesis block was mined, about 500,000 LTC was unstained, and Charlie Lee and other early Litecoin developers were likely among the initial miners.

Despite this being a widely dispersed asset, the Litecoin creators or Charlie Lee get no direct income from the functioning of Litecoin—aside from what they may make as part of the usual mining process.

 

How Secure Is the Litecoin Network?

Litecoin, being a blockchain-based cryptocurrency, is protected by full cryptographic protections, making it almost difficult to break.

Litecoin, like Bitcoin and other cryptocurrencies, employs the PoW consensus method to guarantee that transactions are verified fast and without mistake. The combined power of the Litecoin mining network prevents double-spends and a variety of other threats while also ensuring network uptime of 100%.

Digital Silver, Litecoin

However, one of the most fundamental differences is how cryptocurrencies are mined. The mining of coins is the process of using computational power to solve complicated cryptographic puzzles. These puzzles are extremely complex in order to prohibit the mining of Litecoin coins is slightly different from that of Bitcoin. Bitcoin uses a different algorithm from Litecoin, called SHA 256. The algorithm requires a lot of processing power, which has to lead to the creation of mining pools and the rise of ASIC (application-specific integrated circuits) plants. These plants defeat the idea envisioned by Satoshi Nakamoto, that any average person can become a miner as long as they have a laptop and internet connection. An average person cannot compete with large powerplants. Furthermore, mining is a very wasteful process where a lot of power is wasted.

Litecoin, on the other hand, uses Scrypt. Scrypt was intentionally created to ensure that mining is accessible to everyone. The main limiting factor on Scrypt is not processing power but memory. Therefore, ordinary people can mine LTC too. Of course, there are companies that have managed to produce super-specialized ASICs still and weaken Litecoin’s plan of democratized mining.

Need for speed

Another fundamental difference between the two cryptocurrencies is their transaction speed. Litecoin’s average block mining speed is 2.5 minutes, while Bitcoin’s is 10 minutes. The delay usually happens to slow block mining times and network congestion. This makes Litecoin a lot more useful to those looking for several mini transactions per day.

In 2013, Litecoin experienced exponential growth and achieved a market capitalization of $1 billion. The value of LTC is related to that of Bitcoin. Cryptocurrencies are highly volatile, and Litecoin follows the trail of Bitcoin, so you will often see dramatic changes in its price. Furthermore, just as with BTC, there is a chance that Litecoin will be adapted as a payment method which should, in hand, will decrease its price. Furthermore, as Bitcoin’s blockspace is becoming a scarce and pricey resource, LTC shows the opposite.

The Future

On the other hand, Litecoin is often criticized for being a ‘follower, not a leader’. It carries the stigma of being the ‘silver’ to Bitcoin’s ‘gold’. And even though Litecoin adapts to technology developments faster than Bitcoin – such a the implementation of SegWit – Bitcoin does eventually deploy the same changes. The developers of LTC do not innovate features that not in Bitcoin’s pipeline.

Experts have a fairly positive outlook on the future of Litecoin, but even its creator Charlie Lee once said: “I don’t like to speculate on prices because I’m always wrong.” Cryptocurrencies remain highly volatile, and their price is hard to predict – traders should expect price fluctuations in the near future. LTC is one of the cryptocurrencies on the front of the crypto charge. Its differences from Bitcoin (or better yet, upgrades), are in fact, its culprit of growth and expansion.

Where Can I Purchase Litecoin (LTC)?

When you purchase Litecoin, you may exchange it for US dollars (USD), Korean won (KRW), euros (EUR), and more. Huobi Global, Binance, Coinbase Pro, OKEx, and Kraken are among the most well-known.

Litecoin is one of the few cryptocurrencies that can be traded for a broad range of fiat currencies, including US dollars (USD), Korean won (KRW), euros (EUR), and others.