Litecoin is not the little brother of Bitcoin. Bitcoin is undoubtedly a more familiar cryptocurrency, but you might be surprised to learn that Litecoin was introduced more than seven years ago. Litecoin is a peer-to-peer cryptocurrency. It is an open source software project that is released under the MIT / X11 license, which means that it only has very limited restrictions on reuse.
Litecoin VS Bitcoin
Although Litecoin and Bitcoin are comparable in many ways, there are also a number of big differences between the two cryptocurrencies. Some traders say: if Bitcoin is equivalent to gold, then Litecoin is the silver. In fact, this is exactly what Litecoin developers had in mind when creating Litecoin. Both coins share many similar features and Litecoin is similar to Bitcoin except by a few notable differences:
- Litecoin offers faster confirmation: the Litecoin Network strives to process a block every 2.5 minutes, instead of the 10 minutes for that of Bitcoin, which developers claim will ensure faster transaction confirmation.
- Litecoin uses a different algorithm: Litecoin uses the scrypt in its proof of work algorithm, a sequential memory-hard function that requires more memory than an algorithm that is not memory-hard.
- The Litecoin Network will generate more coin units: 84 million Litecoins will be produced, in other words, four times as many units issued by the Bitcoin Network.
All in all, Litecoin can process a larger number of transactions, reducing potential bottlenecks when it comes to scalability, as is sometimes the case with Bitcoin.
The abbreviation of Litecoin
The abbreviation of Litecoin is simply LTC. The same principle applies as with USD (US Dollar) and EUR (Euro). Litecoin can also be paired up with other currencies. In that case, the name of the currency pair is, for example, Litecoin vs US Dollar or LTC / USD.
How It works? (LTC)
Litecoin is an online network that people can use to send payments from one person to another. Litecoin is peer-to-peer and decentralized, meaning that it is not controlled by an entity or a government. The Litecoin payment system does not deal with physical currency, such as the Dollar or the Euro. Instead, it uses its own unit of account, also known as Litecoin (symbol: Ł or LTC). That is why you often see Litecoin categorized as a virtual or digital currency. Litecoins can be bought and sold for traditional money on a variety of online exchanges.
Litecoin Blockchain Technology
Litecoin is based on blockchain technology, the same as Bitcoin. According to Litecoin itself, the Litecoin blockchain is "capable of processing a higher transaction volume than its counterpart.” Litecoin has a higher frequency of block generation (4x higher when compared to bitcoin), which indicates that the network is able to handle more transactions and benefits from faster confirmation times.
New Litecoins are regularly created. The creation of new coins is completed through a special process called Litecoin mining. Instead of just producing blocks, Litecoin has to make a cryptographic hash of the block that meets certain criteria, and the only way to find one is to compute a great amount of them until you are lucky and find one that works. This process is called hashing. The Litecoin miner, which successfully creates a block, is rewarded with 25 Litecoins. Every couple of days the difficulty of the criteria for the hash is adjusted based on how often blocks appear, therefore more competition between miners means more work is involved to find a block.
Where does Litecoin come from?
The growth of the Litecoin offering is decentralized and guided by the Litecoin protocol, which allocates the creation of new coins to Litecoin participants. The maximum number of Litecoins is limited to 84 million in total, but not all coins have been created. At present there are approximately 51.7 million coins in circulation, which is approximately 61.6% of the total. As soon as 11.3 million new coins have been created, the value of block reward will be reduced from 25 to 12.5 coins, which is expected to happen somewhere around August 2019.
History of Litecoin and inventor of Litecoin
It is believed that Litecoin was released on GitHub via an open source client on 7 October 2011 by Charlie Lee, a former Google employee. It was a variation of the Bitcoin Core client, which differs mainly due to a reduced block generation time (2.5 minutes), an increased maximum number of coins, a different hashing algorithm and a slightly modified GUI.
Creation date of Litecoin
Although it was built in October 2011, the financial history of Litecoin comes out in November 2013. The Litecoin development team has released the first version of 0.8.5.1 and the total value of Litecoin has since experienced massive growth, including a 100% jumped forward in 24 hours. At the beginning of December 2013 we saw a new version of Litecoin. This new improved version provided 20x reduction in transaction costs along with other security enhancements and performance improvements in the network.
Buying Litecoins instead of mining
Our opinion is that buying Litecoin can be more profitable than Litecoin data mining. By using our most advanced trading platform, the costs are much lower than by setting up the so-called ASICs hardware that is expensive and far from a certain investment. There are many risks at Litecoin mines including:
- Exponential network difficulties: The level of difficulty will increase if more and faster miners join the network, reducing your profitability. For this reason, it is important to make a realistic prediction about how the level of difficulty will develop in the near future.
- Potentially low resale value: ASIC hardware can efficiently mine the Litecoins, but that is all that it can do. It cannot be adjusted for other purposes, so the resale value is very low.
- Delivery delays: you do not want the hardware to be delivered months later after you have bought it. There have been many bad reviews on the internet about pre-ordering mining hardware.
- Power consumption: You do not want to pay more for electricity than you earn from Litecoins.
Put simply, trading litecoin instead of mining should be in general much more interesting, profitable and less expensive.
Pay with Litecoins
Litecoin can be used for a long list of goods with different merchants. The first step is to download a Litecoin wallet / wallet to buy Litecoins from an exchange / exchange, which you can then use to purchase goods and services. Litecoin operates independently from any central bank, unlike other known currencies, for example the US Dollar and the Euro. The Litecoin network also has no other central point or single manager, which makes it a decentralized digital currency.
Litecoin risk, what risks entail in Litecoins:
- As with Bitcoin, there are few historical valuation data and comparative cryptocurrencies. In principle, it is difficult to determine the fair value of the currency
- Changes in international currency controls may reduce the demand for the cryptocurrency. Countries such as China have laws that protect capital outflows; Hence, money is invested in unregulated cryptocurrencies to prevent such currency checks. A change in capital outflow legislation may reduce demand. ( China has already started banning ICOs and cryptocurrency trading activity in China for instance)
- It is unregulated, so some consider it a high risk. However, this is actually quite subjective; at the end of the day it is simply a currency.
- It is subject to market fluctuations, supply and demand but this should be a positive risk for traders engaged in commodities.
How to buy Litecoin?
Should you be interested in purchasing litecoin, you can do it via the changelly widgets below via your credit or debit card as well as other major cryptocurrencies ( if you own any ).
Disclaimer: This is not a financial advice. Please do not invest more than you can afford to lose.