What is Litecoin (LTC)


05. Mar 2021

We already know that more and more people are entering the cryptocurrency world. But also, many renowned organizations are investing as well as adding cryptocurrency as their legit payment method.

Bitcoin and Ethereum are undoubtedly two of the most popular and successful cryptocurrencies. Due to the fact that they’re also very expensive, people are trying to find better investment opportunities other than these two. Litecoin is definitely a good choice if you’re on the same path.

In this article, we will discuss everything you need to know about Litecoin (LTC). Moreover, we will also use plain English so that you can grasp and understand the concept comprehensively, even if you're a beginner. Let's take a deep look underneath the hood to figure out how everything functions with Litecoin.

 

Litecoin and its Origin!

Unlike Satoshi Nakamoto (the creator of Bitcoin with a mysterious identity), the creator of Litecoin, Charlie Lee is one of the most active cryptocurrency experts on social media. He also has his own blog where he stays connected with his following. He is a former Google Employee and had the vision to come up with his own cryptocurrency that works like bitcoin's lighter version. He launched Litecoin that is considered as silver if Bitcoin is gold.

The basic intention behind the creation of Litecoin is to allow people to use it for cheaper transactions for everyday purposes. It was launched back in October 2011 on GitHub through an open-source client. It’s basically a Bitcoin core client’s fork.

 

Litecoin Vs. Bitcoin: Which is Better?

Source: HedgeTrade

If you want to understand Litecoin properly, comparing it with Bitcoin is very important. That's because Litecoin is actually a clone of Bitcoin, and the following table will allow you to understand the basic differences clearly.

 

Litecoin Vs. Bitcoin: Comparison Table

Property

Litecoin

Bitcoin

Coin Limit

84 million

21 million

Algorithm

Scrypt

SHA-256

Average Block Time

2.5 minutes

10 minutes

Block Reward Details

Halved every 840,000 blocks

Halved every 210,000 blocks

Difficulty Retarget

2016 blocks

2016 blocks

Initial Reward

50 LTC

50 BTC

Current Block Reward

50 LTC

25 BTC

Created By

Charlie Lee

Satoshi Nakamoto

Market Capitalization

14.22 billion US dollars

1.7 trillion US dollars

 

Now let's move to even deeper concepts regarding Litecoin such as mining, token, transactions speed, etcetera.

 

Mining

Source: CryptoPro

One of the technical and most fundamental differences between Bitcoin and Litecoin is the procedure of mining. However, both of the systems use a proof of work mechanism, which is pretty simple, and understanding it is also straightforward.

For example, if you're a miner, then you'll use your computational power to solve complex cryptographic and mathematical puzzles. The mathematical problems need to be extremely complicated in order to make sure that not a single entity drains out the whole supply. On the other hand, it’s important to make sure that the miners can easily check if their solution is correct or not. So, in a nutshell, the following two points pretty much explain the proof of work.

  • The mathematical problems that miners solve must be extremely hard.
  • The procedure to check whether the solution for a certain puzzle is correct or not must be easy.

As mentioned, the mining process of both cryptocurrencies is different. That's because, in Bitcoin's mining process, the SHA-256 hashing algorithm is used. On the other hand, Litecoin uses Scrypt.

 

Bitcoin Mining Algorithm: SHA-256

Bitcoin uses SHA-256 because it requires too much processing power, and now only industrial-scale computing systems are able to solve such problems. Before long, people started mining Bitcoins by using parallel processing that divides the complex mathematical problem into subproblems and passes it to different processing threads. This way, the total time spent on solving the puzzles decreases greatly.

Here are some of the important points that you need to know about mining.

Mining was first introduced by Satoshi Nakamoto, but it was pretty simple as it stated that any person could grab his/her laptop and become a miner by contributing to the system. But because of the complexity of the problems, it’s not possible for everyone to mine with their personal computer. Mining consumes a lot of electricity, and the wastage of energy can be humongous.

On the other hand, Litecoin uses the Scrypt algorithm, which is explained as follows.

 

Litecoin Mining Algorithm: Scrypt

Although Scrypt is now pronounced as a script, its original name was s-crypt. Moreover, it also uses the same SHA-256 algorithm that is also used in Bitcoin. But the main difference is that the calculations associated with Scrypt are way more serialized. In simple words, the parallel processing of the calculations as such is not possible.

 

What Does it Actually Mean?

In order to understand the Scrypt concept better, let's suppose a basic scenario. For instance, you currently have two different processes named X and Y, respectively. In Bitcoin mining, it'll be quite possible for the miners to calculate both of these processes simultaneously by using parallel processing. On the other hand, you'll need to perform X first and then X in Litecoin serially. But if you still try to solve them simultaneously by parallelizing them, then the memory requirement will increase dramatically to handle that. In simple words, with Litecoin, the main limiting factor is the memory instead of your available processing power. That’s why Scrypt is also known as a memory-hard problem. You’ll need five times more memory if you want to run five memory-hard processes by parallelizing.

At this point, you must be wondering that devices equipped with tons of memory can be built. Of course, it is possible, but there are a couple of factors that minimize that effect.

  • It’s way more expensive to manufacture memory chips as compared to SHA-256 hashing chips.
  • People with regular memory cards can mine Litecoin instead of buying a machine with industrial-scale computing power.

Fact: One of the best things about Litecoin is that to date, there are still 17 million or 23 percent coins that are yet to be mined.

 

The Transaction Speed of Litecoin

As mentioned in the comparison table above that, the average mining speed of Litecoin is 2.5 minutes. Here's a graph of Litecoin's creation time.

Source: DigitalToken

There are also some other factors that can affect the average time, such as slow block mining times, network congestion, etc. In fact, the average waiting time for each transaction that you make can even fluctuate up to half an hour as well.

This feature comes in handy, especially for those people who want to perform many small transactions each day. Considering the average mining time, you can actually receive a couple of confirmations using Litecoin within five minutes. On the other hand, Bitcoin usually takes at least ten minutes to get a single confirmation.

The variance in rewards that miners get in faster block creation is yet another important advantage. More and more people can start mining blocks to earn rewards because of a very short time between the blocks. In simple words, it means that the mining rewards in Litecoin are more decentralized and well distributed as well.

However, the faster transaction speed brings some disadvantages as well, such as it can lead to more orphan block formation.

 

Pros and Cons of Litecoin!

Source: Twitter

With impressive trading potential, better GUI (Graphical User Interface), and faster block generation time, there are many benefits of Litecoin. But the fact of the matter is that it also has some downsides that you must know before investing in Litecoin. Here are some of the most important pros and cons of Litecoin.

 

Pros

Litecoin is open-source

One of the biggest (if not the biggest) advantages of Litecoin is that it’s a completely open-source system. It means that if you want and have the capability to make changes in its protocol, then you can actually achieve it. You can find some tech innovations protocols that are made, such as Lightning Network that allows you to have more convenient and faster transactions.

 

Litecoin is faster

Just like all the other cryptocurrencies and crypto networks, Litecoin is also decentralized. But unlike some of the cryptocurrencies, it’s very fast as its average block time is only 2.5 minutes.

 

Litecoin is scalable

Comparatively, Litecoin is very scalable as it can process up to 56 transactions successfully within a single second. In order to give you a better understanding, Ethereum can only handle 15, and Bitcoin can process seven transactions every second.

 

Litecoin is Secure

All of your information is perfectly secure on the Litecoin platform. It’s the beauty of decentralized networks that no one can steal your personal information and withdraw your money. No matter how many transactions you make, your personal identity is never revealed.

 

Litecoin has Lower Transaction Fees

The transaction fee of Litecoin is also very low, especially if you compare it to the traditional payment systems or even many other cryptocurrencies. It's one of the major factors why more people are adopting Litecoin as it provides a more seamless and smoother process.

 

Litecoin is continuously Improving.

Since Litecoin has been launched, it’s continuously improving. With time it has brought countless improvements to the system and has also made the transaction process easier as well as faster.

 

Litecoin offers more coins

As mentioned, the upper limit of total coins that Litecoin offers is 84 million, and about 77 percent of them are circulating in the market. It means that 23 percent or 17 million coins are still remaining, and you can have your share in them as well by mining them. The bigger number of total coins allows people to invest more without worrying about the risk of inflation.

 

Litecoin offers an easy mining process

The mining process of Litecoin is pretty straightforward and easy as it uses proof of work with Scrypt. Moreover, mining is also more energy-efficient, and you can perform it on a regular machine as well.

 

Litecoin’s Developer Team is Trustworthy

As we have already discussed, the creator of Litecoin, Charlie Lee, is very active on his blog and social media. He is an ex-Google employee and knows what he does brings more reliability. The developer team of the company creates LTC and upgrades the system regularly, such as partnerships, confidential transactions, and wallet improvements.

 

It’s Very Easy to Trade Litecoin

You can easily trade LTC as many exchanges accept Litecoin. Moreover, all the hardware wallets offer Litecoin support as well, and the best thing about Litecoin trading is that the volatility is very low with almost no transaction fee.

These advantages make Litecoin a very great option to invest in, especially for beginners.

 

Cons

If you are planning to invest in Litecoin that we recommend you read and understand the following drawbacks. It will allow you to make sure whether Litecoin is the right option for you or not.

 

There are some branding problems with Litecoin

As Litecoin is basically a fork of Bitcoin, it's a common misunderstanding in many people that it's the same as Bitcoin. Moreover, the additional features that Litecoin offers, such as the SegWit protocol, are now not unique because Bitcoin has also embraced it.

 

Litecoin is losing its credibility

Over the period of time, Litecoin is losing its credibility. One of the major reasons is that Charlie Lee (creator of Litecoin) sold his holding in 2017 when Litecoin experienced an all-time boost in its value.

 

Litecoin is used too much on the dark web

We all know that the dark web is all about negativity, and Litecoin is one of the most popular cryptocurrencies there. According to the Investopedia report, which was published back in 2018, Litecoin is the second-most used payment method on the dark web. The study also showed that about 30 percent of the vendors on the dark web accept Litecoin. It’s undoubtedly one of the biggest drawbacks that keep the big investors investing in Litecoin.

 

How to Get Litecoin?

Source: Ramitano

There are two primary methods that you can acquire to get Litecoin which are as followed:

  • Mining Litecoin
  • Buying Litecoin

 

How to Mine Litecoin?

Back in 2011, when Litecoin was launched, people used their personal computers to mine LTC. With time, as Litecoin grows in both popularity and age, it becomes very difficult to mine it by using a low-cost computer. According to crypto experts and critics, gone are the days of easy mining, but you can still mine LTC by getting a more powerful computer. The more power, the higher the chances of getting LTC. You also have to keep in mind that you'll need to pay high electricity bills if you keep running your high-power machines 24/7. You can use the following three methods to mine Litecoin:

  • Cloud mining
  • Mining pool
  • Solo mining

 

Cloud Mining

For all the people who don’t want to buy specialized hardware themselves, cloud mining is the way to go. It allows you to outsource hardware by working with a cloud mining organization. These companies offer different mining packages that you can select to start the process with a mining pool.

 

Mining Pool

The function of the mining pool is pretty much the same as solo mining. The only difference is that you’ll need to add (pool) your computing resource with many other miners. It brings a better chance to earn payout only if you have specialized mining hardware.

 

Solo Mining

Solo mining is the best option if you want to keep the rewards to yourself. But in this method, you’ll also have to bear the entire cost of the mining yourself as well. Moreover, you might have to run your high-power computer for extended periods as well in order to win a single LTC.

 

Where to Buy Litecoin?

The best place to buy Litecoin is undoubtedly Coinbase. In fact, the induction of Litecoin on Coinbase is one of the biggest reasons why its value increased dramatically. If you can use Litecoin in your country that you purchase from Coinbase, then it’s your best choice. Other than that, you can also use the following exchanges as well to buy LTC.

 

Where to Store Your Litecoin?

Source: CoinBureau

There is a wide range of wallet options that you can utilize when it comes to storing your Litecoin.

 

Hardware Wallet

The first and the most obvious option to store your Litecoin is using hardware wallets. They are physical devices specially designed to store your cryptocurrency. There are many forms of hardware wallets, but the most commonly used one is the USB stick. One important factor to consider about hardware wallets is that they are prone to compromise.

Pro Tip: NEVER EVER uses a pre-owned or second-hand hardware wallet to store your cryptocurrency.

You can use the following hardware wallets to store your LTCs.

 

Desktop Wallet

It’s a type of hot wallet which you can download and install a desktop wallet on your personal computer. The companies that offer desktop wallets make sure that they can only be accessed from a single computer where they’re installed. It’s a little inconvenient method to store your cryptocurrency as you won’t be able to use it unless you’re using your device. On the other hand, it’s a safer and better alternative as compared to an online wallet. You can use Exodus to store your Litecoin and many other cryptocurrencies.

 

Mobile Wallet

The functionality of mobile wallets is just the same as desktop wallets. The only difference is that you’ll need to install it on your smartphone instead of a computer. It’s a more convenient way because you can access your cryptocurrency anytime you want as we keep our smartphones with us all the time.

 

Paper Wallet

Unlike the methods mentioned above paper, wallets are a cold offline storage method that allows you to store your cryptocurrency. You can print your private and public keys on paper that you store in a secure place. Both of your private and public keys are stored in QR codes that you can scan whenever you want. There is no other person who can get the control; that's why it's one of the safest ways to secure your cryptocurrencies.

You can use liteaddress to create your own paper wallet.

 

What Can You Buy with Litecoin?

As cryptocurrency is becoming more and more popular, the new doors of spending it are also opening. There are many popular online stores where you can spend your LTCs, such as Coinsbee. Here you can buy Giftcards with Litecoin, mobile phone top-up with Litecoins, payment cards, and much more.

The best thing about Coinsbee is that it's accessible in more than 165 countries, and other than Litecoin, it also supports 50 different cryptocurrencies, including Bitcoin, Ethereum, etcetera. You can also find here eCommerce vouchers as well for eBay, Netflix, iTunes, Spotify, and Amazon. If you're a gamer, then you can also shop for game Giftcards for Litecoin. All the major game distributors are also available such as League of Legends, Xbox Live, Steam, PlayStation, etcetera.

All of it makes Coinsbee a great platform for purchasing top-ups, game cards, eCommerce vouchers, virtual payment cards, gift cards via LTC.

 

Final Word

Over the course of last year, Litecoin has taken the cryptocurrency landscape by storm. The experts predict that cryptocurrency is the currency of the future, and that's why it's becoming more and more trusted and mainstream. The induction of Litecoin on Coinbase and the activation of SegWit are two of the most important factors why Litecoin will remain one of the best cryptocurrencies in the future.

It’s important to note has grown so much more than its initial intent, which was to become a younger brother of bitcoin. The platform has taken the necessary risks to show the people the true potential and scope of not only itself but also the whole landscape of cryptocurrencies.

 

 

References:

https://www.coinsbee.com/en/What+is+Bitcoin

https://blog.coinbase.com/a-beginners-guide-to-litecoin-d9b455d44cd3

https://wirexapp.com/blog/post/a-beginners-guide-to-litecoin-0045

https://blockgeeks.com/guides/litecoin/

https://medium.com/@BitcoinDunny/a-beginners-guide-to-litecoin-8b61333c06e

https://cryptopro.app/how-to-mine-litecoin/

https://hedgetrade.com/how-to-mine-litecoin/

https://trading-education.com/pros-and-cons-of-investing-in-litecoin-will-it-be-a-millionaire-maker#:~:text=Litecoin%20has%20numerous%20pros%20over,use%20on%20the%20Dark%20Web.

https://digitaltokens.io/what-is-litecoin/

https://www.investopedia.com/terms/o/orphan-block-cryptocurrency.asp#:~:text=Orphan%20blocks%2C%20often%20referred%20to,been%20rejected%20by%20the%20chain.

https://www.investopedia.com/terms/s/segwit-segregated-witness.asp