Litecoin is currently the world’s seventh most popular cryptocurrency by market cap. In this article you will find everything you wanted to know about this global decentralized currency.
So, what is Litecoin
Litecoin is a digital currency based on blockchain. It works in a similar way to Bitcoin and Ethereum, as a peer-to-peer cryptocurrency that allows for instant, low fee transactions to anyone in the world. The payment network is decentralized, which means it isn’t controlled by any central authorities. The network, just like other blockchains, is secured by mathematical algorithms. Users are able to control their own finances without the involvement of third parties – like banks or traditional financial institutions.
The Litecoin website informs us that the currency isn’t aiming to serve as an alternative to bitcoin, but rather as a complementary force.
One of the main advantages that Litecoin has over Bitcoin is its higher transaction volume. The Litecoin blockchain is able to generates blocks more frequently, which helps transactions to be processed more quickly (2.5 minutes as opposed to 10 minutes for Bitcoin transcations).
Now, let’s take a closer look at some of Litecoin’s features.
As of today, Litecoin offers all of the following features:
Widely Available Information:
You can find multiple information resources as well as a list of services and exchanges that accept Litecoin. For general information you can take a look at the Litecoin Wiki, while relevant network stats can be found at Litecoin Block Explorer Charts. Moreover, even the source code for Litecoin Core is all open to anyone and can be accessed through GitHub.
Similar to the most members of the cryptocurrency world, Litecoin is open source software. The software project operates under the MIT/X11 license, which gives users the power to not only run the software, but also copy, modify and even distribute modified versions of the software. Litecoin’s release process is fully transparent, which facilitates the independent verification of binaries and their corresponding source code.
The Litecoin Blockchain:
As we’ve already mentioned above, the Litecoin blockchain is able to handle higher transaction volume than that of Bitcoin. It is possible because of more frequent block generation. While Bitcoin community is constantly on the search for ways to improve its blockchain performance, Litecoin network supports more transactions without the need to modify the software. As a result, users enjoy quicker confirmation times while still having the ability to wait for more confirmations when making a bigger transaction.
Like all quality digital currencies, Litecoins can be encrypted. Litecoin project offers its own wallet, which allows you to secure it, manage transactions, and check your account balance. However, spending Litecoins isn’t possible without entering your password.
Mining rewards are a crucial part of any blockchain as it keeps the miners involved in the process of creating new blocks. As of December 2017, miners are currently awarded with 25 new Litecoins per every block mined. The reward gets cut in half about once every 4 years, every 840,000 blocks. The next estimated reward-drop date is August 12th, 2019. The Litecoin network capacity is 4 times as big as that of Bitcoin and is scheduled to produce 84 million coins.
Litecoin vs. Bitcoin
Litecoin and Bitcoin are are very similar as Litecoin was originally based on a Bitcoin fork (the code getting alternated). However, despite a common foundation, the two cryptocurrencies still have some key differences:
Faster adding of Blocks:
Litecoin adds new blocks every 2.5 minutes, as opposed to the 10 minutes taken by Bitcoin’s blockchain. There are pros as well as cons to such fast processing time: there’s a higher risk of releasing orphaned blocks, for example. On the positive side of things, Litecoin’s faster processing time means less possibilities for a double spending attack over the same period as Bitcoin. However, the total amount of work done is also a consideration – so if the Litecoin blockchain has 10 times less computing work done per block than Bitcoin’s, then its confirmation is about 10 times easier to reverse – even though the Litecoin network can add new blocks at a rate 4 times faster.
Unlike Bitcoin, Litecoin uses Scrypt in its mathematical algorithm. Being a sequential memory-hard function, it requires more memory than an algorithm that isn’t memory-hard. Basically, it means you need more memory in your miners compared to cryptrocurrency blockchains that don’t use Scrypt.
The Litecoin blockchain is scheduled to release 84 million digital tokens in total, or four times as many Litecoins as the total supply of Bitcoin.
The use of Scrypt was quite an interesting choice, allowing miners to mine both Bitcoin and Litecoin simultaneously. It was also chosen as a way to let CPU miners be involved without any disadvantages as compared to GPU, FPGA, and ASIC miners. Due to the Scrypt algorithm, FPGA and ASIC devices made for mining Litecoin are more complicated to create and more expensive to produce than they are for Bitcoin. This happens because the Scrypt hashing scheme is more memory intensive, and ASICs and FPGAs end up having higher memory requirements.
Litecoin was first introduced in October 2011. The internet release occurred on October 7, 2011, via an open source client released on GitHub. As mentioned above, it was a fork of the Bitcoin Core client, founded by Charlie Lee, who used to work for Google. The key improvement offered by Litecoin was its faster block generation time (2.5 minutes vs. 10 minutes for Bitcoin).
Other advantages included the increased total cap of coins, Scrypt-based algorithm and a modified GUI.
For two years, Litecoin remained a lesser-known altcoin, until it suddenly exploded in growth around November 2013. With a market cap of over $5.6 billion, Litecoin has grown from a minor fork project into a giant of the cryptocurrency ecosystem.
Our experts ranks Litecoin a strong 8 / 10