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What is Litecoin?
Litecoin is one of the original alt coins, a term used to describe crypto coins offered as alternatives to Bitcoin. While Bitcoin was seen as a store of value, there were issues with using it for everyday small transactions. Litecoin looked to solve those problems by decreasing transaction fees and increasing speed of transaction confirmation.
It was forked from the Bitcoin Protocol in 2011 by a team head up by former Google engineer Charlie Lee. A fork is when the open source code is updated to create a new version, or as in this case, create an entirely new blockchain. Lee developed a simpler algorithm for transactions called Scrypt pronounced S-Crypt. This improved the speed to create a block on blockchain from 10 minutes to 2.5 minutes. Litecoin can handle 54 transactions per second.
How Litecoin is mined?
Like other cryptos, mining LTC requires specialized hardware and requires large energy usage. The majority of mining is done by mining farms and pools of individuals with specialized hardware. These pools combine the power of multiple miners and distribute rewards based on hashing power.
Coin supply.
While the supply of Bitcoin is capped at just 21 million coins, Litecoin is capped at 84 million. In both instances, the supply of coins will only decrease as time passes by. Litecoin is halving in 2023, meaning the reward for miners will be decreasing by half. This decreased supply can often spur an increase in the coins value.
Litecoin Upgrades.
In what is called merge Mining, 2 block chains are mined simultaneously to increase rewards and security. Litecoin developers have reached out to Dogecoin with the proposal to merge mine their coins.
What is the MWEB update?
MWEB is a major upgrade to LTC that adds a parallel blockchain to the network. This parallel chain will enable private transactions and improve performance. Private transactions have numerous use cases, including many legitimate business scenarios.
In addition, the public side of LTC would still be able to interact with large exchanges who may be wary of privacy coins.
Should you invest?
Litecoin is currently experiencing a sharp rise in price due to its perceived safety and in anticipation of the halving of rewards in 2023. There has also been a move away from proof of stake coins due to the fact that they can be classified as a security by government regulators. Whether this is a long-term trend or a temporary pump remains to be seen.
As always, do your own research and only invest in markets and products you understand.
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