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