Litecoin: What do you need to know? [A Guide To Understanding Litecoin]
Litecoin: What do you need to know? [A Guide To Understanding Litecoin]

By DoRi | A guide to crypto | 23 Oct 2019


Image Source

If bitcoin is the gold of crypto, then Litecoin is the silver. Litecoin is often called the little brother of bitcoin. The coin has grown explosively in recent times. But what exactly is Litecoin? What are the differences with bitcoin? And how can you make money with it? In this article we will tell you everything you need to know about Litecoin.

What's Litecoin?

Litecoin (LTC) is an open source cryptocurrency that serves as a means of payment between two parties, without the intervention of a bank. Litecoin is designed to make payments quickly and cheaply. The goal is to make cryptocurrencies accessible and usable for everyone, with LTC as a means of payment.

Litecoin was conceived in 2011 as an improvement of bitcoin (BTC). Litecoin was one of the first bitcoin splits (also called fork). You can see Litecoin as a copy of bitcoin, with some modifications. The two coins have a similar source code. Both are cryptocurrencies with which payments can be made. Both can also be divided into smaller quantities, up to 8 decimal places. Where 0.00000001 BTC is called a Satoshi, 0.00000001 LTC is a Litoshi.

Characteristics of litecoin vs bitcoin

Litecoin is different or mayby even better than bitcoin on several levels. This is explained in detail below.

  • Litecoin is 4 times faster than bitcoin. For example, not every 10 minutes a block is mined (as with bitcoin), but every 2.5 minutes. For each individual bitcoin block that is attached, 4 different LTC blocks of the same size are attached.

 

  • Transactions via Litecoin are cheaper than via bitcoin. Sending LTC costs about $0.30 on average. This ensures that you pay small amounts earlier via LTC than via BTC. After all, it makes little sense to pay a product of 8 euros with bitcoin, if you have to pay more than half of the transaction costs extra.

 

  • Litecoin is safer. The faster transaction time ensures a safe environment by reducing the chance of double-spending attacks. These are attacks in which a hacker uses the same crypto to make multiple transactions.

 

  • Litecoin has a larger offer. The supply of Litecoin coins is 4 times greater than bitcoin, because Litecoin is made to be 4 times faster than bitcoin. Bitcoin has a maximum of 21 million coins, while Litecoin offers up to 84 million coins.

 

  • Mining Litecoin is more accessible and fairer for everyday users. Litecoin uses the hashing technique scrypt hashing. Bitcoin uses the technique SHA-256. Litecoin has modified the bitcoin protocol to reduce the impact of special mining hardware. This ensures a fairer playing field for LTC miners than is the case with BTC.

 

  • Finally, Litecoin has an actively involved founder. This is in contrast to bitcoin, where the identity of the founder is unknown (Satoshi Nakamoto). The fact that there is a founder with a face can help to convince others to support Litecoin's vision as well.

Despite these advantages, Litecoin is less successful than bitcoin. Bitcoin has more brand awareness among the general public. In addition, bitcoin has a larger market capitalisation than Litecoin. As a result, bitcoin is often called crypto's gold and Litecoin's silver.

351665157-cbb8d7218d1fdf316995a8389b1ce45cae04d7043221d27ab621284a766486d8.jpeg

Image Source

Mining

Like bitcoin, litecoins are generated by mining. LTC mining is a complex process, for which you need quite some technical knowledge. Every 2.5 minutes a block is mined and 12.5 coins are generated. This means that about 14,400 coins are mined per day. Every 4 years, or 840,000 blocks, the number of coins generated per block (currently 12.5) is halved. The maximum supply of Litecoins is 84 million pieces. Currently, more than 55 million of these have been mined.

The mining of Litecoin cannot be accelerated by using parallel processors, which is possible with bitcoin. The introduction of special hardware for mincing, called application-specific integrated circuits (ASICs), has made bitcoin mincing increasingly difficult for the daily user. Large mining pools therefore have a lot of power with bitcoin. With Litecoin this is less the case, because it is made to distribute the hash power more evenly over the network. For example, Litecoin is less susceptible to special mining hardware, which makes LTC mining more accessible to the daily user than bitcoin mining.

Innovations

Litecoin is a pioneer in the field of innovative technology:

  • In May 2017, Litecoin was the first cryptocurrency to introduce Segregated Witness (SegWit). SegWit removes the signature of a transaction from the original data. This ensures that transactions on the network run faster. Bitcoin only introduced this technique later, in August 2017.

 

  • LTC was also the first currency to carry out atomic swaps. This ensures that different coins can be exchanged for each other without the intervention of a third party. For example, if you have 5 BTC, but instead want 100 LTC, you'd have to exchange it via an exchange. With atomic swaps this is no longer necessary, and you can exchange coins directly against each other. The first atomic swap took place in September 2017 between LTC and Decred. In November there was an atomic swap between BTC and LTC. Thanks to the technology of atomic swaps, you'll soon be able to spend Litecoin at any place where bitcoin is accepted.

 

  • Finally, Litecoin was the first currency to test transactions via the Lightning Network. The Lightning Network can be seen as a layer on top of the blockchain to process large numbers of transactions per second outside the blockchain, before they are finally processed within the blockchain. This way, transactions are executed immediately. The Lightning Network is currently still in the testing phase, but will be rolled out in the future for both bitcoin and Litecoin. Some say that if bitcoin will soon introduce the Lightning network (and transactions will be very fast), the advantages of Litecoin compared to bitcoin will be reduced. Others say that the Lightning Network will increase the adoption of bitcoin, which will then increase the adoption of Litecoin. Litecoin founder Charlie Lee has already given his vision of what this could mean for the currency.

Who invented Litecoin?

Litecoin was conceived in October 2011 by Charlie Lee, a former Google employee. He adapted bitcoin in a way that he thought would lead to large-scale adoption of the coin. After the creation of LTC, Charlie Lee worked for Coinbase, one of the largest exchanges in the world, from 2013 to 2017. In 2017 he started focusing on the development of Litecoin again. Charlie Lee does not see Litecoin as a competitor of bitcoin; he sees it more as a complement. He sees Litecoin as the best means of payment for small transactions, such as online shopping. He sees Bitcoin as more used for large international payments.

Charlie Lee has become a household name in the crypto world. He comments on Twitter on many things in the crypto world and has a lot of influence. He has more than 700,000 followers. However, he was accused of not being able to speak neutrally about the market, because there is a conflict of interest. Every tweet he sent about LTC drove the price up, which is of course in his own interest. As a result, Charlie Lee announced in December 2017 that he had sold all his Litecoin. Charlie Lee is still actively involved in the coin, even though he no longer has an LTC himself.

351665157-3e0df70e8993cbab781c31314495c43497866756462208d8cd5a43bf46f144a1.png

Image Source

Litecoin cash

In February 2018, a separation (fork) from Litecoin took place, which resulted in the establishment of Litecoin Cash (LCC). Charlie Lee, however, warned about Litecoin Cash. He calls every fork of LTC a scam. Furthermore, in an interview with CoinDesk, Lee says that Litecoin Cash creates confusion among people who may think that Litecoin has been split. He states that the Litecoin community is not interested in splitting at all, and that the founders of LCC only want to make money quickly. Lee believes that the founders of LCC want to use the name of Litecoin, and repeat the success of Bitcoin Cash. However, since the fork, LCC is not yet a success, the highest price for one litecoincash was $ 4,09. There is a low trading volume, little interest, and the currency is not traded on many exchanges.

Litecoin Foundation

The Litecoin Foundation is a non-commercial organization based in Singapore, with the aim of encouraging the use of Litecoin. The director of this foundation is also the founder, Charlie Lee. Although LTC is developed by the Litecoin Core team, the Foundation works closely with this team and also supports them financially. Ultimately, of course, they pursue the same goal.

Conclusion

Litecoin is an interesting crypto that facilitates payments between two parties. Litecoin is a modified version of bitcoin, with some advantages over its big brother. This makes LTC faster, cheaper and safer than bitcoin. Litecoin is better than bitcoin, especially for small transactions. In addition, the hash power is distributed more evenly across the network, so that there is a level playing field in the field of mining. Although LTC is an improved version of BTC, the currency does not yet have the name recognition of its big brother. Also the acceptance of the coin by vendors and webshops is not that high. Bitcoin is known to the general public. Litecoin is not. For these reasons bitcoin is often called the gold of crypto, and Litecoin the silver.

The biggest problem with bitcoin at the moment is scalability. If the bitcoin fails to become more scalable, Litecoin may be a good alternative. The name recognition and acceptance still have to be worked on, but in the crypto world, developments can be very rapid. But for now, Litecoin is doing exactly what it was made for: facilitating cheap and fast payments.



A guide to crypto
A guide to crypto

A blog to help you understand crypto terms, some different crypto's etc.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.