Litecoin is a cryptocurrency that allows practically instantaneous transactions, with almost zero commission costs anywhere in the world. It is very similar to Bitcoin. It is obviously based on the same open-source base code, but with some technological differences. Litecoin was not created to replace Bitcoin, but to complement it. The best-known metaphor is where Bitcoin is said to be like gold, and Litecoin is like silver.
Bitcoin started initially as an open-source software project. Therefore, the main advantage is that anyone can access the base code to improve it or add the features desired.
What value is assigned to each cryptocurrency? The users determine it. The people who decide to adopt the currency save it and use it for transactions. Bitcoin is the largest currency by market capitalization, but that does not mean there is no room for other digital currencies. Alternative currencies can co-exist and may have specific features that each user or community wants or needs to use. That is precisely how the concept of open-source works: it is not about monopolizing.
Litecoin’s founder, Charlie Lee, wanted to change Bitcoin’s rules a little bit in the way he thought to improve the system. Specifically, Charlie wanted to cut the amount of time taken to confirm a new transaction and change Bitcoin’s mining algorithm to ensure that anyone could participate in the network. In Bitcoin, it takes 10 minutes to confirm a transaction, while in Litecoin, it only takes 2.5 minutes. This allows Litecoin to process a much larger volume of transactions.
This is precisely what makes the cryptocurrency system more robust and efficient: open-source, created by the users and for the users, where the small shortages of the mother currency (BTC) are modified, improved, and supported by other currencies. They do not precisely seek to compete but to make the network of cryptocurrencies as solid and as reliable as possible.
Bitcoin’s mining system uses the SHA-256 algorithm which uses CPU power while the algorithm of Litecoin is written in a language that focuses more on memory. At first, conventional computers could mine Bitcoin. Then, it was necessary to have robust gaming computers. Eventually, the number of users increased on the network, and therefore the level of difficulty to mine bitcoins increased significantly.
Thus, it would only be beneficial to use special computers specifically for mining, demanding absurd capacity and requiring ASICs (Application Specific Integrated Circuits). They are expensive machines built specifically for mining and nothing else. Not everyone has the resources to buy and operate ASICs, and the creator of Litecoin did not want mining to be dominated by these machines. Thus, he designed a memory-oriented system rather than a processor-oriented one to make Litecoin more accessible to everyone.
Litecoin’s block mining reward halves every 840,000 blocks or roughly four years, the first halving having occurred on August 25, 2017. The coin reward went down to 25 coins from the initial award of 50 coins. The total Litecoins mined when the first block reward halving occurred were 42 million, and for the next four years before the next halving occurs, there will be 21 million more LTC mined.
It should be noted that the detractors of Litecoin explain that this currency should not be in operation since it complicates the concept of digital money and makes it less attractive. Also, if there exists an issue with Bitcoin, it should be solved by itself and not by creating another alternative currency.
Their point of view is valid, however, as mentioned above, Litecoin was not conceived as an alternate currency to compete with Bitcoin, but as another cryptocurrency that slightly improves the points where Bitcoin can flake and at the same time strengthens the network and the crypto-forex community.
How a Litecoin transaction is made
A Litecoin transaction relies on two groups of people to be successfully added to the blockchain: miners and users. Both of these teams use reference clients, such as Litecoin Core because it works as a wallet and a full node as soon as it is synced with the blockchain. User nodes serve as relay stations, sending information to one another, such as LTC transactions that are trying to get processed. That way all the nodes compose the Litecoin network.
Miners do everything users do but also performs the vital task of mining: creating, solving, and adding blocks to the Litecoin blockchain. To achieve this, they use a full node like Litecoin Core just like users. However, they use a mining computer that uses a separate mining software which “points” to Litecoin Core. It permits them to get the necessary information, such as the Litecoin number of transactions of block difficulty as well as to share their block to the Litecoin grid. For this reason, miners are rewarded with Litecoins for their work every time they successfully add a block to the blockchain.
To begin the synthesization process, users must first send an LTC transaction from their wallet node. The operation is then broadcasted to the network and is labeled as “unconfirmed” because, at this point, it is not validated by the full nodes. Miners then choose one transaction to create a block and fill it with other transactions that have been broadcasted. Finally, miners solve the lock equation to earn the right to add their block to the blockchain. When they are successful, the transaction is officially recorded. Once more blocks are added to the chain and are validated by all the nodes, it is labeled as “confirmed.”
Litecoin’s Performance
Litecoin’s sustained upward trajectory is just one of the positive developments in the digital forex market. Recently, alternative currencies like Bitcoin and Ethereum demonstrated a record increase in prices. Monero and Dash, which also set historic price peaks during the negotiation, followed.
The continuous solid performance of the other digital tokens in the midst of Bitcoin’s phenomenal rise is considered a sign that the cryptocurrency market will experience remarkable growth shortly. In the past, when Bitcoin performed well, alternative currencies such as Litecoin were negatively affected and fell sharply. This new trend shows that alternative currencies are increasingly accepted in the market.
The growth of Litecoin, as a percentage, has surpassed that of Bitcoin. Analyzing the performance of both currencies from December 2016 through December 2017, Bitcoin has had gains of approximately 1,406%. In comparison, Litecoin has had earnings of 2,541%.
So many forks, dramas, and announcements within the Bitcoin community may have overshadowed Litecoin, but Litecoin also shines by its characteristics and potential benefits, which are attractive to much of the crypto community.
Future Overview of Litecoin
An important aspect of Litecoin is that its creator, Charlie Lee, is publicly known and has active participation in the community and the performance of the coin. Bitcoin’s anonymous creator, Satoshi Nakamoto, on the other hand, is unavailable and does not appear to provide direction and leadership regarding Bitcoin’s technical issues. The fact that the founder is available is essential because it helps to understand the vision of the currency.
For example, Charlie is currently one of the people who supports and encourages the community to support the creation of an aggregate of cryptocurrencies, including Litecoin, the so-called Segregated Witness (SegWit). He and many others believe that it will generate solid foundations for the coming future of cryptocurrencies. They will be greatly useful in implementing future innovations and changes in the currency. SegWit, in short, is a change to the format of transaction data, which requires less storage space. This improvement will allow us to add innovations in the field of scalability, such as the previously mentioned Lightning Networks, where transactions can be quickly installed in the blockchain without having to go through the public ledger.
Through the Lightning Network, you can perform a so-called atomic swap with Bitcoin. Bitcoin’s first atomic swap to Litecoin was made at the beginning of December 2017, causing huge upheavals. The event demonstrates a promising future for both cryptocurrencies as it can solve many of the problems they face, such as speed and cost per transaction. As Charlie Lee said: “Today, Bitcoin is congested with a lot of cars and Litecoin is empty. Even with congested Bitcoin, cars do not move to the Litecoin motorway because it is not connected and is inconvenient (due to the centralized markets and low transfer speed) to switch to it. The Lightning Network will build bridges to link the two highways.”
Bitcoin requires 95% of miners to give a signal that they support these types of applications, like SegWit or Lightning Network, while Litecoin only needs 75%. This lower requirement for consensus in addition to having an active founder dictates that the path to the future of Litecoin will be more comfortable than that of Bitcoin.
The fact that Charlie had to write a letter to the Litecoin community to convince them to support SegWit further demonstrates and reinforces the objective and importance of decentralized coins. The founder cannot merely implement things at will or handle them at pleasure, which is not the case with centralized coins. This is a great benefit since the founder works as a leader and technological guide who progresses with the community, especially when it is necessary to implement a change, improvement, or there is a general disagreement. The exciting thing is that Litecoin can serve Bitcoin as a way to see how these changes develop.
How to Buy Litecoin
There are several pages where you can buy Litecoins. Coinbase, Bitstamp, Kraken, GDAX and many others stand out. You’ll first need a wallet: Exodus is the best one for LTC out there. You must download the latest version from their website, in the “Release” tab. Once it’s installed, you have to make the first transaction to receive blockchain assets. The most used and famous page to do these transactions is Coinbase.
To purchase Litecoins with US dollars (and other currencies, such as euros and rupees) by credit card or bank account, the following steps must be carried out:
- Create an account with Coinbase (or any of the other sites mentioned). Click on the “Register” button and fill in your details. Identity document, password, email, and location. Your identity card must be verifiable and accurate.
- To verify your account, the next step is to provide a phone number, upload a photo of your identity document and verify a credit/debit card or bank account to be able to purchase.
- Once your account has been verified, you can start buying and selling Litecoin.
Another way to buy bitcoins is through an exchanger, i. e. a platform that allows us to exchange between cryptocurrencies. If you already have bitcoins, then it is very simple to convert some of your BTCs into LTCs.
The most famous site of its kind is Changelly, probably the fastest way to convert BTC into LTC. And then just enter the amount of LTC you want to buy. On Exodus, choose “Wallet” > “Litecoin” > “Receive.” That will show you your address and QR code so you can deposit the funds there.
