What is Litecoin?
What is Litecoin?
Litecoin (LTC) is a peer-to-peer cryptocurrency that was first created in 2011 by Charlie Lee. Litecoin shares many similarities with Bitcoin and is based on bitcoin’s original source code.
Charlie Lee, Founder of Litecoin
While the author of Bitcoin who named Satoshi Nakamoto is quite mysterious, Litecoin’s creator Charlie Lee is very active and well-known on social media. He is an ex-Google employee who had the ambition to create a lighter version of Bitcoin, which is Litecoin today. Technically, Litecoin uses Scrypt being the hash function while Bitcoin uses the SHA-256 hash function.
Litecoin was designed to be used for cheaper transactions and to be more efficient for everyday use. While bitcoin was being used more as a store of value for long-term purposes, Litecoin is much higher in limit market cap than bitcoin, and the mining process far quicker. This means transactions are faster and cheaper, although generally smaller in size.
Like bitcoin, Litecoin is a form of digital money. Typically developed using blockchain technology, Litecoin can be used to transfer funds directly between individuals or businesses. This ensures that a public ledger of all transactions is recorded, and allows the currency to operate a decentralized payment system free from governmental and institutional control.
Like many other blockchain lovers, Charlie believed that the Bitcoin code had too many flaws. These flaws related to:
- Bitcoin’s failure to speed up transactions
- The way it was mined
- The scalability – the ability to perform more transactions per second.
The Charlie Lee’s goal is to create a lighter version of Bitcoin, and therefore he needed to perform something called a fork – i.e. changes are made to an original blockchain to make it better. In other words, blockchains are upgraded or separated, depending on types of fork: hard fork or soft fork.
What Charlie Lee did with Litecoin is a hard fork.
The main differences between Litecoin and bitcoin
Though there are many similarities between bitcoin and Litecoin, we need to differentiate these two coins in some features.
- Transaction speed
While Litecoin requires more complicated technology to mine than bitcoin, blocks are actually generated up to four times faster. Litecoin also processes financial transactions much quicker, and can also process a higher number of blocks in the same time period.
- Total number of coin
Bitcoin has 21 million coins available, comparing to 84 million coins of LTC available – four times more than bitcoin.
- Market capitalization
Litecoin has a much smaller market cap than bitcoin but is still one of the most traded cryptocurrencies.
Miners must successfully solve hash functions in order to add new blocks of a cryptocurrency to the blockchain. Litecoin and bitcoin use different mining algorithms, with Scrypt being the hash function used for Litecoin, and SHA-256 the hash function used for bitcoin. Scrypt was initially chosen by the Litecoin Development team to avoid mining being dominated by ASIC-based miners. This would allow CPU and GPU-based miners to compete. The Scrypt mining algorithm is more memory intensive, and this was initially less suited to ASIC miners, giving other miners more opportunity. However, Scrypt-capable ASIC-based miners have developed over time. This means CPU and GPU-based miners no longer have valid mining tools due to the inferior computational powers, and ASICs are able to generate far more hashes per second.
The following table shows the detail specs of Litecoin versus Bitcoin:
|Coin limit||84 million||21 million|
|Average transaction time||2.5 minutes||10 minutes|
|Difficulty retarget||2016 blocks||2016 blocks|
|Block reward||Halve every 840,000 blocks||Halve every 210,000 blocks|
|Initial reward||50 LTC||50 BTC|
|Current block reward||50 LTC||25 BTC|
|Market cap (as of Nov.2019)||$3,583,915,808||$149,884,114,860|
|Creator||Charles Lee||Satoshi Nakamoto|
|Created date||October 7th, 2011||January 3rd, 2009|
What factors affect Litecoin’s price?
Litecoin’s volatility is likely to be driven by similar factors to bitcoin, such as:
Regulation: cryptocurrencies are currently unregulated by governments and central banks. There are questions about how this could change in the next few years, and what impact this could have on value.
Supply: there is a finite number of Litecoin available to be mined (84 million). Availability can also fluctuate depending on the rate at which the coins enter the market.
Press: prices of Litecoin can be affected by public perception, security, longevity and the prices of other cryptocurrencies such as bitcoin.
Adoption: Litecoin hasn’t currently been adopted by businesses or consumers as a method of payment. But, some see potential in the blockchain technology and think this could become more widely adopted in the future.
About Charlie Lee
Charles Lee is a computer scientist. He serves as the managing director of the Litecoin Foundation. As of July 2013, he also worked for Coinbase.
Charlie Lee was born in the West African nation of Ivory Coast, his parents have lived in that country for decades. When he was 13, Lee moved with his family to the United States, graduating high school in 1995 and attending MIT. Lee earned bachelor’s and master’s degrees in computer science, graduating in 2000.
Even from the earliest stages of his professional career, Lee showed a keen interest in and aptitude for computer technology. In the early 2000s, Lee spent years working for a number of top tech companies, including Google and Guidewire Software. It was during his stint at Google as a software engineer that he began to develop the idea of Litecoin.
Here’s a quick recap of some of the features of Litecoin:
- Litecoin Total Supply: 84 million coins
- Litecoin Transaction Time: 2.5 minutes
- Maximum Transactions Per Second: 56
- First Launch: 13 October 2011
- Mining: Proof-of-Work (Scrypt)
It is hard to cover every aspect of this cryptocurrency in such a small amount of words. Anyhow, you should have a fundamental understanding of what it is and how the technology works, as well as how it is different from Bitcoin.
Because Litecoin transactions are quicker and cheaper than Bitcoin’s, you may assume that it is the better option for trading.
Should it be a better alternative to Bitcoin? The answer is the future tense!
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