What is Litecoin (LTC)? Litecoin was created in 2011 by Charlie Lee. A good resource to learn about it is from a presentation given by Charlie Lee in this video, which explains why it was created, how it differs from Bitcoin, and why it has been successful. Here is a short summary:
Litecoin uses the same concepts as Bitcoin except it uses a slightly different algorithm and the coin processes quicker than Bitcoin. Each Bitcoin block is created on average every 10 minutes while each Litecoin block is created every 2.5 minutes. In addition to having 4 times shorter block creation interval, there are 4 times as many total minable coins (84,000,000). Some people like to view Bitcoin as digital gold and Litecoin as digital silver. Litecoin is a good alternative to Bitcoin because most exchanges support Litecoin and it’s transactions typically take less time and require less transaction fees than Bitcoin.
Key Features of Litecoin
In order to truly understand Litecoin and what it offers to users, it’s important to take a look at the key features of the coin. Some of these features are present in most cryptocurrencies, while others are unique to Litecoin. A full understanding of the below key features will provide you with a well-rounded comprehension of this digital currency.
Scrypt Algorithm – Mining
Mining is a popular method that cryptocurrencies use to distribute their coins and facilitate transactions. In order to incentivize individuals on the network to process transactions, cryptocurrencies reward miners by rewarding ‘prizes’ and transaction fees to miners. For every block that is added to the blockchain, a complex puzzle is solved by mining computers around the world. The miner that solves the problem is rewarded with a certain amount of Litecoin – this is distributed from the amount of coins that have yet to be released.
In terms of the Litecoin algorithm, it differs from Bitcoin because it uses a scrypt algorithm. On the other hand, Bitcoin uses a hash algorithm. Litecoin’s algorithm does its best to prevent ASICs – powerful purpose-built mining computers – from being able to mine Litecoin. This allows greater access to mining and prevents centralization by wealthy mining investors. This being said, it appears ASICs have effectively been developed for Litecoin in recent months.
As with many cryptocurrencies, Litecoin is deflationary in nature. This increases its appeal as an investment, as added demand should imply a price increase. Unlike with normal currencies, in which governments can simply print more money, there will only ever be 84,000,000 coins released into the network. This is a feature that makes it very attractive to investors seeking returns.
Like most cryptocurrencies, one of Litecoin’s major appeals is that it is completely decentralized – there is no central authority that dictates the future of the coin. While there is a core group of developers that works on improving the code for free, anyone is able to contribute as it is completely open-source.
The only way for a major change in Litecoin to occur is if the majority of the people on the network accept any changes. Anyone can ‘fork’ it, but it will only be effective if the community accepts it via their nodes on the network.
One of the major complaints with cryptocurrencies is that transactions can take too long. With Bitcoin, a new block is formed every ten minutes, but transactions can take even longer to be confirmed in some instances. This creates a problem for users who want to effectively transact their cryptocurrencies with merchants.
One of Litecoin’s primary aims was to improve this transaction speed for users. It’s blocks form in around two-and-a-half minutes. This makes it a more attractive coin for those who are looking to use it as a transactional currency.
One issue that cryptocurrency has helped solve is double transactions. Banks and financial institutions have long been prone to double transaction errors. With cryptocurrencies, the transactions are stored on the blockchain and accepted by the network – once this occurs, it cannot be reversed. Litecoin has improved this further by having faster transactions that can help protect against a double spend attack/hack.
Litecoin is one of the key revolutionary coins in the cryptocurrency space. It’s vastly popular with millions of investors around the globe. There is no doubt that the coin’s developers have done a wonderful job of improving problems that Bitcoin originally presented.
With much faster transaction speeds, Litecoin is considered one of the best transactional cryptocurrencies on the market. But its recent price level increases also show its potential as a solid store-of-value currency. As with most cryptocurrencies, time will tell if it can continue to progress with legitimate monetary value.