Cryptocurrencies are getting higher popularity every single day. One of the first cryptocurrencies created was Litecoin, hence it is among the most popular coins. You’ve most likely heard about this cryptocurrency before and since you are here you are probably wondering what is Litecoin. Here is what you will learn:
What Is Litecoin?
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 it, 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. Nowadays, Litecoin is the fifth-largest cryptocurrency in terms of market capitalization after Bitcoin (BTC), Ethereum (ETH), XRP, and Bitcoin Cash (BCH).
Charlie Lee – the LTC Creator
Charlie Lee is the founder of Litecoin. He earned bachelor’s and master’s degrees in computer science and he graduated in 2000. After leaving MIT, he worked for different fintech companies, including Google and Guidewire Software.
Mr. Lee started to learn about Bitcoin from an article on Silk Road in 2011, as he said back in July 2018 on Twitter. At that time, he was working in Google on different projects, including YouTube Mobile or Chrome OS.
Lee started mining Bitcoin, as many other computer scientists that were interested in Bitcoin and the whole blockchain space. This is why he decided to create his own digital asset following Bitcoin’s model.
How Does Litecoin Work?
After trying to create his own digital asset called Fairbix, Lee released Litecoin. Fairbix was not able to succeed, Litecoin, however, attracted the attention of many individuals around the world. Although the virtual currency was very similar to Bitcoin, it had noticeable differences with the latter.
Litecoin was published as an open-source client on GitHub on October 7, 2011. A few days later, Litecoin went live.
Compared to Bitcoin, Litecoin has a total supply of 84 million, a mining algorithm called Scrypt, and 2.5 minutes blocks. Bitcoin, instead, has a total supply of 21 million, a mining algorithm called SHA-256, and a block time of 10 minutes.
The Litecoin network adjusts its difficulty every 2016 blocks or three and a half days. This means that miners tend to have their Litecoin difficulty adjusted faster compared to Bitcoin, where the difficulty adjusts every 2 weeks.
Although Bitcoin and Litecoin work in a similar way, Litecoin is behind in terms of halvings. Bitcoin is going to experience its third halving next year and Litecoin has recently experienced its second block reward reduction. Every four years, both Bitcoin and Litecoin experience a reduction in the rewards that miners receive, which is one of the most important attributes of some cryptocurrencies, specifically of Proof-of-Work (PoW) currencies. The new issuance of coins is reduced by 50% after 840,000 blocks for Litecoin and 210,000 blocks for Bitcoin.
With a lower issuance and an increased demand for the digital currency, the price of the virtual currency is expected to increase faster if there is a demand shock in the market. There are going to be fewer LTC available from miners released to the market for a larger number of investors.
Litecoin has also implemented atomic swaps, which allows individuals to make a cross-chain exchange of coins without having to depend on a third party. By implementing hashed timelock contracts, it is possible to send payments after a pre-agreed deadline.
There were some Atomic Swaps performed between Litecoin and Decred (DCR) and Vertcoin (VTC).
Proof of Work Algorithm on Litecoin
With the PoW algorithm that Litecoin has, it is possible to keep the network decentralized and also running confirming transactions. Miners use the computational power they have 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.
At the time of writing this article, Litecoin’s hash rate increased substantially since the beginning of 2019. At the end of 2018, the hash rate reached 146 TH/s. A few days ago, the network had a hash rate of 523 TH/s, representing an increase of 258% since December.
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 are 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?
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 that 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 they are hacked or the exchange stops operating, the funds will be gone.
Litecoin Price and Worth
Litecoin is one of the best performing digital currencies in the market. This is why the Litecoin value has usually been among the top ten since it was released to the market. Over the last months, Litecoin has been traded between the 8th and 4th position.
The highest price reached by Litecoin was back on December 12, 2017, when the digital currency surpassed $420 per coin. At that time, the whole cryptocurrency market was excited about which was the highest price the digital currency could have.
After this, the worth of Litecoin entered a bear market that lasted until December 2018. On December 14, 2018, Litecoin was traded close to $22 the lowest point in more than an entire year. Since that moment, Litecoin value surged to $140 and it is currently traded around $50 per LTC.
In terms of BTC, Litecoin has also surged above 0.025 BTC and it dropped under 0.00023 BTC per LTC. Now, Litecoin is currently being traded around 0.007705 BTC. For most of its history, Litecoin was traded above that level. Currently, Litecoin has a market capitalization of $5.87 billion, according to CoinMarketCap.
If you want to know more about what is the price of Litecoin, you can read our Litecoin price prediction.
Litecoin is one of the most recognized and oldest digital currencies in the space. It showed that it is possible to be resilient throughout the years and how it is possible to follow Bitcoin and propose several improvements. This digital currency has been implementing 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 there is going to be a bull run in the cryptocurrency market in the near future. The Litecoin Foundation is also working with many entities and organizations to keep promoting Litecoin and expand adoption.
Clearly, Litecoin has been among the largest digital assets and it is expected to remain in this way in the coming years. what is litecoin what is litecoin