Key Takeaways:

• Litecoin (LTC) offers quicker transaction processing than Bitcoin, thanks to its shorter block generation time.

• Transaction fees on the Litecoin network are generally lower than those on Bitcoin, making it cost-effective for various uses.

• Litecoin suits various transactions, including daily payments, international money transfers, and microtransactions.

Cryptocurrencies are becoming more popular every day. One of the first cryptocurrencies created was Litecoin, which is among the most popular coins. You have probably heard about this cryptocurrency before, and since you are here, you are probably wondering what it is.

What Is Litecoin (LTC)?

Litecoin (LTC) is one of the most recognized blockchains and digital assets in the cryptocurrency market. The virtual currency was created by Charlie Lee back in 2011 and it is considered to be the silver to Bitcoin’s gold.

One of the organizations behind Litecoin is the Litecon Foundation. According to the Foundation, Litecoin is a digital asset that is built on the premise of quick confirmation times and low transaction fees. This is why Litecoin is used for paying for goods and services.

Litecoin is also one of the oldest virtual currencies in the space and was one of the main Bitcoin competitors years ago.

History

Litecoin started its journey in 2011 when Charlie Lee created an online currency to improve Bitcoin’s major tenets while fixing some of its drawbacks.

Lee graduated from MIT with bachelor’s and master’s degrees in computer science in 2000. After leaving MIT, he worked for various fintech companies, including Google and Guidewire Software.

Mr. Lee started learning about Bitcoin in 2011 from an article on Silk Road. At that time, he was working at Google on different projects, including YouTube Mobile or Chrome OS.

He then started to mine Bitcoin, as did many other computer scientists who were interested in Bitcoin and the whole blockchain space.

Lee thought of creating a new kind of cryptography or virtual money to provide faster transaction confirmations and promote inclusive mining. Over time, Litecoin has changed from one state to another and earned the reputation of being a stable and innovative digital asset that keeps progressing alongside Bitcoin and other new virtual currencies.

How Does Litecoin (LTC) Work?

Litecoin is a decentralized digital currency using blockchain technology to facilitate secure and fast peer-to-peer transactions. Here’s how it functions:

• Blockchain Structure –  Litecoin’s blockchain works like Bitcoin’s in that it consists of a chain of blocks, and each block contains transactions. However, Litecoin has a shorter generation time for blocks, producing new ones approximately every 2.5 minutes, while Bitcoin takes about 10.

• Proof-of-Work (PoW) Mechanism – To verify transactions and protect the network, Litecoin employs a proof-of-work consensus algorithm. Decision makers compete to solve difficult mathematical puzzles, and those who are successful are rewarded with new blocks added to the blockchain, new LTC coins, and transaction charges paid by customers.

• Scrypt Algorithm – Unlike Bitcoin, which utilizes the SHA-256 hashing method, Litecoin uses the Scrypt hashing algorithm. This makes Litecoin more accessible to miners using regular hardware, as Scrypt requires less memory than SHA-256.

• Transaction Processing – When initiating a transaction in Litecoin, it is sent over the network and grouped into blocks. Miners check these blocks to validate them before they can be added to the main block chain, with an updated record sent to every part of the system.

• Security and Decentralization –  Litecoin’s decentralized nature implies that no single party controls the network. A distributed network of nodes verifies transactions, ensuring their transparency and security. The proof-of-work system also defends the network against assaults by requiring enormous computational power to modify the blockchain.

Overall, Litecoin’s design enhances transaction speed and reduces costs while maintaining a high level of security and decentralization.

Litecoin Chain

The Litecoin chain is a decentralized digital ledger that stores information about all Litecoin transactions.

Furthermore, it is based on a proof-of-work process, with minors responsible for mining, verifying, and jointly constructing new blocks. The Scrypt hashing algorithm protects it. In this sense, the phrase refers to the technology that allows Litecoin to work, transfer it without intermediaries, and keep it secure through transparency and immutability.

Proof-of-Work Consensus

With Litecoin’s PoW algorithm, it is possible to keep the network decentralized while also running and confirming transactions. Miners use their computational power to solve cryptographic puzzles. Once a block is found by a miner and all the transactions processed, this miner receives a reward in LTC, which is currently 12.5 LTC per block.

Bitcoin miners have to purchase specialized machines called ASIC if they want to mine the most popular digital asset. Same, you need specialized equipment to mine Litecoin efficiently and remain competitive in the mining industry.

As mentioned before, Litecoin uses a Scrypt algorithm, compared to Bitcoin that uses SHA 256. The goal behind the Scrypt algorithm is to ensure that everyone is able to mine Litecoin rather than just a few individuals with ASIC miners. Although it was possible to mine Litecoin with CPUs and GPUs, nowadays it is very inefficient and Scrypt ASICs dominate the market.

Litecoin (LTC) Transaction Speeds And Fees

Litecoin has faster transaction speeds than Bitcoin and it works for cheaper fees. Litecoin block times tend to be close to 2.5 minutes fluctuating in a tight range between 2.2 and 2.75 minutes. This is very useful for many merchants and those accepting Litecoin that will receive the digital asset with two confirmations in just 5 minutes.

This is an advantage compared to Bitcoin, which requires ten minutes to be able to receive a single confirmation. Moreover, the fees paid by users are much cheaper than on the Bitcoin network. The average fee per LTC transaction is currently $0.059, while Bitcoin has an average transaction fee of $1.54.

Furthermore, Litecoin is also one of the digital currencies with the largest liquidity in the market. It is possible to purchase it or sell it across different exchanges around the world in a fast and secure way.

In order to be able to increase the number of transactions that the network can process, Litecoin introduced Segregated Witness (SegWit), which allows transactions to be smaller in size, resulting in more space per block.

Although the digital currency offers fast and cheap transactions, Charlie Lee and Litecoin developers had to work in order to be able to avoid flooding attacks. These attacks are related to a malicious entity that processes several transactions to congest the network. This increases fees and it also makes the whole network slower.

Confidential Transactions

Confidential Transactions were one of the most awaited features on the Litecoin network. Nowadays, digital assets such as Bitcoin, Ethereum and Bitcoin Cash register all the transactions processed on their respective blockchains. This is something that does not allow users to remain private every single time they make a transfer.

Indeed, it is possible to see which address sent funds, which was the amount transacted, the fees paid, and who received the transaction. Companies in charge of analyzing blockchain data can link IPs, emails, and more to specific addresses.

This is why Charlie Lee wrote on Twitter that fungibility is the only property of sound money that is currently missing from Bitcoin and Litecoin. This is why he decided to focus on making Litecoin more fungible by adding Confidential Transactions.

In order to do so, the network will be experiencing a soft-fork. Moreover, they are also exploring doing bulletproof MimbleWimble with extension blocks, which is a similar concept to sidechains. Although there is no specific date for launching, the intention is to do it sometime in 2019, as Mr. Lee explained.

With this implementation, Litecoin will be able to preserve the privacy of those transacting funds and protect their data, including the funds transacted. Although this is very positive for the whole network, it is worth mentioning that there will be an important increase in transaction costs.

How To Buy And Where To Store Litecoin (LTC)?

The digital currency can be acquired in many cryptocurrency exchanges around the world. As Litecoin is not a small virtual currency and it has been operating in the market for a very long time, it is possible to purchase it on a large number of crypto platforms.

Some of the best places to buy Litecoin are Binance, Coinbase, Bibox, Huobi Global, and KuCoin, among others. It is generally had for beginners to properly know where to purchase LTC. This is why we have written a guide for people and investors interested to buy Litecoin.

Through Binance it is possible to purchase LTC with Bitcoin (BTC), Ethereum (ETH), Paxos Standard (PAX), TrueUSD (TUSD), USD Coin (USDC), and Tether (USDT). Litecoin accounts for 2.5% of the total trading volume at Binance.

Users who want to hold LTC can do so using a cryptocurrency wallet that supports Litecoin. Although exchanges provide users with wallets, the private keys are managed by the exchange, which means that if the wallets are hacked or the exchange stops operating, the funds will be gone.

Litecoin (LTC) Tokenomics

Litecoin’s tokenomics are created with a finite quantity of 84 million LTC to ensure its value and accessibility across generations. With reduced block lengths of 2.5 minutes each, this coin may confirm transactions significantly faster than Bitcoin, which takes 10 minutes. Miners on the network are paid with LTC via a periodic halving mechanism that roughly halves each block reward every four years. 

Litecoin’s hashing method, Scrypt, is designed to make mining more accessible to consumer-grade gear. As a result of its high speed and larger block sizes, it charges cheaper fees. Technical advancements such as SegWit and Lightning Network improve scalability and performance, so this cryptocurrency stays a versatile and affordable alternative to BTC rather than just an investment bait.

Is Litecoin (LTC) A Good Investment?

Litecoin is a rapid, longstanding cryptocurrency with low costs and can be transacted swiftly. Compared to other cryptocurrencies, it is thought to be more cost-effective and efficient, thanks to continuous updates that improve stability.

Litecoin may not be as thrilling as Bitcoin. Still, it is one of the leading participants in the digital currency market due to its dependability and widespread acceptance, establishing itself as a reliable and secure way of trading free of central control.

Final Thoughts

Litecoin is one of the most recognized and oldest digital currencies in the space. It has shown that resilience throughout the years, following Bitcoin, and proposing improvements are possible. This digital currency has been implemented with many updates that were later used by Bitcoin, including Segregated Witness and, in the future, confidential transactions or atomic swaps.

Litecoin has recently halved, and many experts consider that the cryptocurrency market will experience a bull run soon. The Litecoin Foundation is also working with many entities and organizations to continue promoting Litecoin and expanding adoption.

Clearly, Litecoin has been among the largest digital assets, and it is expected to remain so in the coming years.