Beginner’s Guide to Litecoin: The Silver to Bitcoin’s Gold?
Litecoin (LTC) is one of the oldest cryptocurrencies in existence and launched in October 2011 as a fork of Bitcoin. It shares many of the same characteristics as Bitcoin but strives to be lighter and faster and as a result, exhibits shorter block generation times of approximately 2.5 minutes. This allows for both faster transaction clearance and in turn, lower transaction fees than Bitcoin.
The team behind Litecoin describe it as a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, mathematically secure, global payment network that is also fully decentralized. The Litecoin team also look to incorporate technology that improves the coin’s key functions and as a result, Litecoin enjoys substantial industry support, trade volume and liquidity, it is a proven medium of exchange and one of the most established digital currencies with regards to web commerce and internet spending. Litecoin aims to facilitate an increase in everyday digital transactions and also aims to operate complementary to Bitcoin.
Who is behind it?
Litecoin was developed by Charlie Lee, an ex Coinbase employee who quit working at the exchange in the summer of 2017 in order to focus on Litecoin full time. Lee envisaged creating a currency that would be complementary to Bitcoin and operate as “digital silver” to Bitcoin’s status as a digital store of value similar to gold. Lee acts as a vocal and transparent front man for the project and can often be found sharing his thoughts on a number of topics affecting the general cryptocurrency community.
Whilst being in charge of all the day to day operations involved with running Litecoin, Lee is also a member of the Litecoin Foundation, a non-profit organization registered in Singapore that strives to advance Litecoin for the good of society by developing and promoting state-of-the-art blockchain technologies.
Litecoin is also made up of the Litecoin Core development team which includes all developers of the Litecoin project and both the Litecoin Foundation and Core team work closely together and share technical and financial support.
Litecoin is open source software and is open to independent verification of binaries and their corresponding source code. Litecoin also seeks to implement technological advances that allow it to maintain its position as a leading cryptocurrency. These include:
Blockchain – The Litecoin blockchain is geared to handle a high volume of transactions when compared to Bitcoin. By implementing frequent block generation, Lightening, and Segregated Witness (SegWit), the Litecoin network supports high volume transactions without needing to modify the software in the future. This makes Litecoin more efficient for merchants and customers who benefit from faster confirmation times and lower fees.
Mining – Litecoin uses an algorithm called Scrypt which determines the mining process for new coins, and Scrypt allows for a higher degree of parallel processing and is generally more accessible for new miners than a more traditional algorithm. Using Scrypt helps to facilitate the mining of Litecoin without using the ASIC-based mining hardware needed to mine coins using the SHA-256 algorithm. Miners are currently awarded with 25 new Litecoin per block, an amount which is halved every 4 years or approximately every 840,000 blocks. The Litecoin network is scheduled to produce 84 million Litecoin, which is exactly 4 times as Bitcoin’s maximum supply.
Industry Integration – Litecoin was originally a fork of Bitcoin and as a result the two currencies still share many of the same characteristics. Litecoin is therefore one of the most well integrated cryptocurrencies in the sector and enjoys a wide range of support across the entire industry. Litecoin is well supported by exchanges, ATMs, online and offline merchants, web casinos, and developers. It is also backed up by a loyal and passionate community.
Litecoin vs. Bitcoin
Bitcoin and Litecoin are generally seen as being complimentary and Litecoin often acts to steam ahead with implementing changes and upgrades that can also benefit the Bitcoin network.
Litecoin has focused on being faster and more efficient than Bitcoin and has deliberately aimed at becoming adopted by merchants and vendors. In addition to implementing frequent block generation, Litecoin also makes use of the Lightening Network and Segregated Witness (SegWit) to help guarantee that users will be able to rely on the network being capable of handling a high volume of transactions at a high speed and low cost. Litecoin was also recently used to perform a cross chain atomic swap which allows users to swap cryptocurrencies directly through the use of a smart contract and without the need for a third party such as an exchange.
These upgrades give Litecoin the upper hand with regards to overall efficiency; however it’s almost inevitable that these features will eventually be incorporated by the Bitcoin blockchain.
Despite establishing itself as a top 5 cryptocurrency, Litecoin still trails in Bitcoin’s wake when it comes to popularity. Bitcoin currently trades at around $7000 and holds a market cap of around $117B and it is also capable of recording 24 hour trade volumes of up to four times greater than any other cryptocurrency. Litecoin currently holds a market cap of $3B and trades at around $60 ( as of 15th November 2017 ).
Bitcoin is seen as the superior store of value and The Bitcoin network can never exceed 21 million coins. Litecoin can accommodate up to 84 million coins and its lower price makes it more suitable to purchasing low-priced goods or services, and as cryptocurrencies edge closer to mass adoption this should help Litecoin to close the gap on its older brother.