Litecoin

Litecoin (LTC) is a peer-to-peer cryptocurrency founded in 2011 by Charlie Lee (a former Google employee). It has many similarities with Bitcoin and is based on Bitcoin's original source code. Litecoin was created to be used for cheaper transactions and to be more efficient in daily use. In contrast, Bitcoin is used more as a store of value for long-term investment purposes. Litecoin’s coin limit market cap is much higher than Bitcoin’s and the mining process is much faster. This means that transactions using Litecoin are faster and cheaper, although transaction sizes are typically smaller.

Like Bitcoin, Litecoin is a digital currency. Leveraging blockchain technology, Litecoin can be used to transfer funds directly between individuals or businesses. This ensures that all transactions are recorded on a public ledger and allows the currency to operate a decentralized payments system without government control or censorship. 

History of Litecoin

The Litecoin network was launched on October 13, 2011. There were only eight altcoins at the time: Namecoin, Ixcoin, I0coin, Solidcoin V1 & V2, GeistGeld, Tenebrix and Fairbrix. With the exception of Namecoin, all of these altcoins are forks of Bitcoin, i.e. these projects are simply based on Bitcoin’s source code with minor changes.

Litecoin as a digital currency quickly encountered the same problems as Bitcoin: high volatility and large changes in price. Litecoin also encountered some problems initially while making a name for itself. When it was launched, cryptocurrency enthusiasts were fiercely loyal to Bitcoin. But Litecoin has managed to create a community that believes in its potential and long-term price appreciation by leveraging its “Bitcoin younger brother” image and Charlie Lee’s social media influence.

Before 2014, the vast majority of altcoins had only one goal: replicate Bitcoin's success with minor changes, such as trying to change the average time it takes to discover a new block or lower transaction fees. But 99% of these projects fail to surpass Bitcoin and therefore eventually disappear. However, Litecoin is an exception.

111 North Bridge Road Singapore Foundation has been promoting Litecoin since April 2017. Thanks to its push, the Litecoin exchange rate was included in the Bloomberg terminal. What’s more, Litecoin is now included in Google’s currency exchange tool. Fans of the American football team the Miami Dolphins can now purchase their game tickets with Litecoin, a true testament to Litecoin’s success. In 2019, Litecoin became the official cryptocurrency of the Miami Dolphins.

Litecoin is one of the oldest cryptocurrencies and therefore plays an important role in the world of digital assets. While it's not hot today, the fact that it survived the 2018 crash and its price is back to all-time highs is a testament to its strength. If Charlie Lee’s recent plans, which include making the token fungible, come to fruition, Litecoin could become a profitable investment.

How Litecoin Works

Litecoin has a lot in common with Bitcoin, the largest cryptocurrency by market capitalization. However, they are not exactly the same. Litecoin is an open source blockchain that uses a proof-of-work consensus mechanism that enables its users to invest computing power and earn Litecoin in exchange for validating blocks. Although the consensus mechanism is the same as Bitcoin, the algorithm used to verify blocks is completely different. Bitcoin uses the Secure Hash Algorithm (SHA), while Litecoin uses a consensus algorithm called Scrypt. Aside from its algorithm, Litecoin differs from Bitcoin in two major ways: its total supply and its block production rate. Litecoin solves blocks four times faster than Bitcoin, while its supply has also increased fourfold to 84,000,000.

Uses of Litecoin

Since Litecoin transactions are essentially just like Bitcoin, only faster, its greatest use is for paying for transactions that are too small and/or take too long for the Bitcoin network. Currently, Litecoin can be used in thousands of stores and businesses around the world, making transactions with it fast and cheap.

Pros of Litecoin

• Litecoin has been around since 2011 and is one of the most popular cryptocurrencies along with Bitcoin and Ethereum. It has an active community and almost all trading platforms support Litecoin.

• Litecoin’s blockchain has been running for 9 years without any major issues, so it is trustworthy in terms of security.

• Transaction fees on the Litecoin blockchain are lower than those of Bitcoin.

• Its creator is traceable, not some anonymous person. This shows that Litecoin is a serious project. The development of blockchain is also very promising.

Cons of Litecoin

• Litecoin has worked hard to differentiate itself from Bitcoin and prove its utility, but if Bitcoin continues to grow and increase transaction speeds further, Litecoin could be severely disrupted.

• Most new blockchains use “proof of stake” as the consensus algorithm. This technology consumes less energy and makes transactions faster than the “proof-of-work” used on Litecoin.

• Litecoin is being developed at a slower pace compared to new blockchains launching in 2021.

• Litecoin is not a cryptocurrency driven by major trends such as decentralized finance, NFTs, etc.

How to Mine Litecoin

Litecoin miners solve complex mathematical problems called hashes to gain the right to record new transactions to the blockchain. Once a block is closed, the blockchain cannot be changed. As a reward for being the first miner to correctly resolve the hash associated with a transaction via the proof-of-work consensus mechanism, the miner will receive 12.5 LTC. Litecoin mining operations require enormous computing power, which requires a lot of energy and space that is not achievable on ordinary home computers. The vast majority of Litecoin mining is performed by mining farms and crypto miner pools using complex hardware.

How Litecoin is Different from Bitcoin

The first difference between Litecoin and Bitcoin is their maximum supply cap. Bitcoin’s supply is capped at 21 million, while Litecoin’s supply is limited to 84 million.

Another difference between Litecoin and Bitcoin is the protocol for mining the coins. As mentioned before, Bitcoin uses SHA-256, while Litecoin relies on a modified version of Scrypt to generate coins. The differences in the protocols have an impact on transaction processing times for both coins. Litecoin is four times faster than Bitcoin in processing and confirming transactions.

The speed at which transactions are processed may come at the expense of security, as Litecoin is less secure than Bitcoin due to the fewer rounds of transaction verification involved. Litecoin’s 2.5 minute confirmation time (versus Bitcoin’s approximately 10 minutes to confirm a transaction) is very convenient for small merchants who don’t have high requirements for transaction security.

Future of Litecoin

In 2018, Litecoin implemented Lightning Network (LN) technology designed to significantly increase transaction fees and remittance speeds to enable micropayments (micropayments). Additionally, Mimble Wimble announced support for Litecoin in February 2019. Mimble Wimble is a technology that optimizes anonymity and protects user privacy. Therefore, Litecoin, as a crypto-asset suitable for daily use, aims to improve convenience and security in the future, as well as expand the scope of use.