What is Litecoin?

What is the cryptocurrency Litecoin LTC?

The History of Litecoin

Litecoin is a peer-to-peer cryptocurrency that uses a Proof of Work consensus algorithm to verify transactions. If you’re not familiar with the term, the Proof of Work system is a blockchain algorithm used to prevent service abuse by confirming transactions and adding new blocks to the chain. Proof of work describes a system that requires a not insignificant but feasible amount of effort in order to deter frivolous or malicious uses of computing power, such as sending spam emails or launching denial of service attacks. Proof of work makes it extremely difficult to alter any aspect of the blockchain since such an alteration would require re-mining all subsequent blocks. It also makes it difficult for a user or pool of users to monopolize the network's computing power, since the machinery and power required to complete the hash functions are expensive. Thanks to the Proof of Work function, Litecoin’s transactions are secured and protected.

The Segregated Witness Protocol

By May of 2017, Litecoin adopted the Segregated Witness protocol. Segregated Witness, in short SegWit, is a technology that was originally designed for Bitcoin but failed to get the initial support required to activate it. After SegWit was successfully launched on the Litecoin network in 2017, Bitcoin developers rolled out SegWit for Bitcoin later that year.

Litecoin's Block Size

Improvements brought by SegWit help to alter the block size limit on a blockchain by removing signature data from the transaction. The term “segregated” explains how the technology works, as it basically “separates” and then “witnesses the transaction” to ensure that it’s safe and secure. The 1 MB block size limit was increased to a 4 MB block weight due to SegWit. This last step helps avoid the harmful effects of increasing the block size.

Specifications of Litecoin

Ticker Symbol LTC
Founder(s) Charlie Lee
Date of Release 13 October 2011
Consensus mechanism Proof of Work
Hashing Algorithm Scrypt
Maximum supply 84.000.000
Average Block Time 2.5 minutes
Mining reward 12.5 LTC
Average blocksize 20 kb
Next Block Halving 2023
Smart Contracts No

The Price of Litecoin

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Unique Aspects of Litecoin

When we look at the technical aspects of Litecoin, the developers have never been scared to give new ideas an opportunity or to implement innovative changes. As a result of having this open mindset, Litecoin already implemented SegWit in the year 2017, a few months before Bitcoin. During that same year, they had tested their lightning network by successfully sending 1 Litoshi (the smallest unit of LTC) from one wallet to another. In this sense, Litecoin was ahead of bitcoin in terms of technological innovation.

The Philosophy of LTC

The philosophy of Litecoin has never been clear cut, aside from the aspirations to become the silver to Bitcoin’s gold. Charlie Lee looked at Bitcoin and wanted to create a light-weight variant of it, with shorter confirmation times and a larger maximum amount of coins that can be in circulation. The philosophy behind Litecoin is that the developers envision this asset as a payment method usable by anyone.

Litecoin the digital silver

The philosophy of Litecoin has never been clear cut, aside from the aspirations to become the silver to Bitcoin’s gold. Charlie Lee looked at Bitcoin and wanted to create a light-weight variant of it, with shorter confirmation times and a larger maximum amount of coins that can be in circulation. The philosophy behind Litecoin is that the developers envision this asset as a payment method usable by anyone.

Litecoin compared to Bitcoin

What differentiates Litecoin from Bitcoin is that it utilizes much less processing power than Bitcoin’s hashing algorithm. Compared to Bitcoin’s block time, Litecoin generates network blocks four times faster. It takes an average of 2.5 minutes for this process to be completed. The maximum amount of 84 million Litecoins is also four times larger than the maximum number of Bitcoins.

Why Use Litecoin?

One of the main reasons to use Litecoin is the improved transaction speed it provides. With the average of two-and-a-half minutes between the mining of each block, the transaction times are in most cases quicker compared to Bitcoin transactions.

Bitcoin’s testnet

Also, a lot of testing is being done on the Litecoin network which results in a faster deployment rate of upgrades and changes to the network compared to Bitcoin. For example, the upgrade Segregated Witness was first implemented on the Litecoin network before it was on Bitcoin. This also has to do with the fact that the community behind Litecoin is more a unity than the community of Bitcoin, which is partly due to a strong leader at the top.

Starting point

Because of its lower value, Litecoin can be considered as a good starting point to explore the world of cryptocurrency. It also seems to be more accessible from a psychological perspective, which makes it a great option for anyone that wants to become familiar with cryptocurrencies. Litecoin’s developers had one goal in mind, and that was to create a lighter version of Bitcoin. They managed to achieve their goal and even surpass Bitcoin in some respects, such as the speed of transaction and the maximum supply. Still, Litecoin can also be a scarce digital asset with its max supply of 84 million coins to ever be created.

Litecoin has proven itself as a strong and secure cryptocurrency with a large community and a long history without a lot of drama. There seems to be a strong focus within the team and community, and it performs well as a digital currency while it does not pretend to be anything else.

Resources of Litecoin