Litecoin is a global decentralized p2p payment network based on the Bitcoin source code with the same curious naming style – Litecoin, LTC – despite having notable differences with Bitcoin.
In October 2011, LTC was launched by the developer Charlie Lee, who wanted to improve the system of the first cryptocurrency by using a different mining algorithm and reducing the time to confirm transactions. Charlie Lee is a former software engineer at Google.
The digital silver project code was released under the free MIT/X11 license, which means Litecoin’s code can be modified, copied, and redistributed in a modified form.
Litecoin was often referred to as the ‘silver’ of cryptocurrencies when at its height as one of the most popular digital tokens in the world, while the more popular Bitcoin was the ‘Gold’.
Once peaking as the third biggest cryptocurrency on the market, Litecoin currently rests in the 15th spot, with a market cap of about $11 billion.
History of Litecoin
The rise in popularity of Litecoin (LTC) began immediately after it was created.
Following its introduction in 2011, it took only sixteen months for Litecoin to record a market cap of $1 billion.
Over the past years, Litecoin’s price has continued to surge, despite occasional dips and bearish spells as is common with the crypto market.
One of the most momentous periods in the history of the cryptocurrency would be the sale of Charlie Lee’s Litecoin’s holdings.
Lee, Litecoin’s creator and founder sold all of his LTC assets in December 2017, to wave off accusations that he actively manipulated news about Litecoin to his advantage. To avoid potential conflicts, and to assure that Litecoin was just as decentralized as its model coin, Bitcoin, Lee sold his LTCs.
Lee would afterward reveal that he had started the Litecoin project just for fun and wasn’t expecting it to blow up and be as successful as it turned out.
Though he believes that Bitcoin would gain more trust among the populace and would be considered as a major store of value while Litecoin would be a tool for smaller transactions.
How Does Litecoin Work?
Two technologies within the Litecoin network are worth highlighting. The first one is SegWit.
This feature contributes to the security of the network. By deleting signature data from a transaction, Segregated Witness (SegWit) technology allows you to modify the block size limit.
The SegWit soft fork was created with the intention of increasing the Bitcoin network’s bandwidth, a consequential reflection in Litecoin’s code too.
The second feature is the Scrypt Proof-of-Work algorithm. Scrypt is pronounced as “Ess-Crypt” which (like the Bitcoin SHA-256 algorithm) is a mining algorithm.
It makes use of the Proof of Work consensus mechanism. In this case, a user who wishes to mine will choose a nonce value (also called a variable value).
PoW consensus mechanism can be energy-intensive since most of the mining process involves solving really difficult math problems, where the answer/solution is expected to be lesser or equal to a particular value. If the desired value is below the permissible block, creating a new block will be difficult and vice versa.
This is because the Litecoin block generation period is 2.5 minutes. Therefore, the target value is always automatically modified to make sure that a new block is still being generated every two and a half minutes.
The platform rewards only the miner who solves the challenge with the supplied hash value below the target. The reward goes to the one who solves the task faster than others.
Differences between Litecoin (LTC) and Bitcoin (BTC)?
Litecoin can be considered as a currency that is forked from Bitcoin. The lightness of its network allows it to confirm transactions 4 times faster than in the Bitcoin blockchain.
Both systems use the Proof-of-Work (PoW) consensus algorithm, but Bitcoin uses the SHA-256 hashing algorithm, while Litecoin uses Scrypt, which requires more RAM but is easier to configure.
The main differences between LTC and BTC are:
- Speed;
- Mining
- The number of coins.
Each of these features is further explained below.
Speed
Blocks in the Litecoin chain are mined every 2.5 minutes. While, in Bitcoin, the time of this operation is 10 minutes. This basically signifies that Litecoin transactions are 4 times faster than Bitcoin.
What does this mean in general terms?
Imagine you have to wait 10 minutes to validate every purchase with Bitcoin you make while you can complete this same transaction in a quarter time frame. Thus, Litecoin is considered to be suitable for everyday transactions as opposed to Bitcoin.
In recent times, Bitcoin has been regarded as a store of value, without much applicability in everyday operations.
Mining
Litecoin uses an encryption protocol called hash scrypt: a version that requires less computing power than the hash function used to mine the Bitcoin network.
In this way, Litecoin allows any type of more modest computer to be able to mine the currency, making this process a little more decentralized.
Maximum Supply of Coins
The total supply of Litecoin (LTC) tokens is 84 billion, which is four times more than Bitcoin (BTC).
This provides a more convenient and simpler Litecoin mining for crypto enthusiasts, which allows them to get more profit.
How to Mine Litecoin
It is still a mystery why mining LTC is much more difficult compared to getting BTC. The procedure for mining Litecoin is almost similar to Bitcoin. The main forms of mining are:
- Mining pool: a pool is created when different people come together, pooling the computing power they have available and mining the network. The mined profit is shared among the group.
There are a lot of litecoin mining pools that can be found online. You can simply vet and choose the one that offers the best reward system and has a good commission structure.
- Cloud mining: Cloud mining is when you outsource Litecoin mining and you pay a company to mine cryptocurrencies for you.
What makes it difficult to mine Litecoins?
After every 2016 block (every 4 days) in the Litecoin network, a parameter is automatically adjusted, reflecting the number of computational processes required to find new blocks i.e, mine a new coin.
This is necessary to preserve the time for creating a new block within about 2.5 minutes against the background of changes in mining capacities.
Note that it can be quite difficult and costly to mine and discover a new LTC block with solo mining. This is because a single entity may not have the required processing power.
Your electricity expenses will also skyrocket at the same time. Cloud and pool mining, on the other hand, offer you a high chance of completing a new block.
Is Litecoin (LTC) Mining Profitable?
Mining Litecoin (LTC) is profitable depending on price volatility and your initial investment.
Because of its long-term profitability, Litecoin (LTC) mining is still very much in practice. According to Statista, you can make over $ 5 every day with just one Gigahash per second.
Where Can I Buy and Sell Litecoin?
You can purchase your Litecoins through brokers or exchanges. Best of all, you can buy it using fiat money/traditional currencies via the site itself (Litecoin.com).
Popular brokerages offering Litecoin in the U.S. and Canada include Coinbase, Crypto.com, Kraken, NDAX, Binance, and several others.
In addition, you can buy Litecoins with other cryptocurrencies from brokers as well.
Popular Litecoin Projects
There are hosts of crypto projects that are supported by Litecoin’s network. Some of the most popular ones are Crypttex, SImcoin, and Crypto Bar. The main goal of all these projects is to make using the blockchain easier and more convenient.
PayPal is one of the most common uses for Litecoin (LTC). People that live in the United States can use Paypal to purchase, sell and hold their LTC coins.
Apart from this, Litecoin (LTC) has also managed to forge partnerships with various companies. Some organizations allow LTC tokens to be used to purchase goods and services.
Litecoin Controversies
There might be no single greater controversy in the history of Litecoin than Charlie Lee’s decision to sell his entire LTC holdings. When the founder sold his assets, the LTC coin experienced an all-time high. There are fewer controversial events than this in crypto’s history.
People now criticize the Litecoin platform for not having any distinct and unique features anymore. This is because many other services now offer the same incentive that Litecoins used to offer.
Some alt platforms now provide even faster transaction speeds and lower transaction fees. This means that the Scrypt algorithm’s two advantages are no longer usable.
Another important factor that many crypto experts and critics talk about Litecoin is the difficulty of mining. It is no longer possible to mine Litecoin (LTC) and make a profit from home.
This is due to cryptocurrency mining becoming more industrialized.
Mining farms with unbelievable computing power have been created just for the sole purpose of mining, with thousands of GPUs and ASICs running in series, making solo mining virtually impossible.
Should You Invest in Litecoin?
There are about 84 million LTC currencies in circulation. This share is 79% of the maximum emission. Due to its limited supply, it is considered a safe haven for the long-term store of value.
If cryptocurrency truly becomes the currency of the future and replaces the current traditional government currency, then Litecoin (LTC) coins will undoubtedly have more value.
Litecoin has been on a growth wave since October 2017. The currency’s value rose from US$4.3 million to US$11 million in 11 months between 2017 and 2018.
It’s slow but steady growth. Furthermore, Litecoin has proven to be a very secure cryptocurrency. No fraud has been recorded so far on this coin.
Irrespective of all the backlash that Litecoin gets, it still remains one of the most significant digital currencies today.
On the other hand, it is important to note that some cryptocurrencies perform better than Litecoin, even though they were created later.
This does ’t mean that Litecoin doesn’t generate profit. The rapid price fluctuations seen in the cryptocurrency market still account for Litecoin’s profitability.
In any case, it is very important to do due diligence to ensure that buying Litecoin (LTC) is a good decision.
With the recent flurry of DeFi tokens and meme coins, and even far more exciting blockchain projects, Litecoin continues to hold its own.
It will certainly be interesting to see how LTC will fare in the coming future.