What is Litecoin?
Litecoin is a fork of Bitcoin with some key feature changes. A fork is a cryptocurrency that is essentially identical to its parent coin, with modifications made.
Litecoin uses many identical protocols to Bitcoin, such as its decentralized nature as a payment option and its proof-of-work consensus protocol.
Like Bitcoin, Litecoin runs on a permissionless peer-to-peer network where users can transact funds to each other without needing to rely on any central authority.
Who is the founder of Litecoin?
Litecoin was developed as a spinoff of Bitcoin by Charlie Lee and is considered to be one of the early alternative cryptocurrencies (altcoins).
Litecoin strives to be the “Silver to Bitcoin’s Gold” by taking on Bitcoin’s greatest inventions for a lighter solution to pursuing the noble objectives of Bitcoin.
He launched Litecoin on Bitcointalk in October 2011. The first block of the Litecoin network, or the Genesis Block, was mined in October 2011. Lee wrote the Bitcoin-based blockchain technology in his spare time while working at Google.
After mining just 150 coins, he released Litecoin to the public. Lee claimed that he did not plan to contend with Bitcoin, but wanted to use Litecoin for smaller transactions.
How does Litecoin differentiate from Bitcoin?
Their numerous cryptographic proof-of-work algorithms are one of the key distinctions between Litecoin and Bitcoin.
A conventional SHA-256 algorithm is used for Bitcoin, while Litecoin uses an algorithm known as Scrypt. The reason these two algorithms impact the disparity between Litecoin and Bitcoin is focused on the speed at which the respective coins can be mined.
The algorithm of Litecoin is programmed to create around four times as many coins as Bitcoin does – generating one coin every 2.5 minutes (whereas every 10 minutes Bitcoin generates one). So the acquisition pace is really the biggest difference.
Both Litecoin and Bitcoin, though, utilize algorithms that use computational power to process transactions, done by “miners” checking transactions using their computing power in their networks and obtaining coins in response.
But with the respective Litecoin and Bitcoin formulas, the pace at which these transfers happen is somewhat different.
The SHA-256 algorithm of Bitcoin, famed for being very complicated, has been updated by miners over the years and usually utilizes what are considered Application-Specific Integrated Circuits (ASICs) – hardware devices that can be tailored for Bitcoin mining.
Bitcoin’s algorithm emphasizes computing capacity for this reason. One criticism of the Bitcoin algorithm, though has been that because of its sophistication, it is gradually getting more challenging for everyday users to mine Bitcoin.
Scrypt, on the other side, which is used by Litecoin, is usually a more effective cryptocurrency mining algorithm because of how it is built to resist so much customization for hardware solutions such as ASICs.
Scrypt favours high-speed random access memory, unlike SHA-256. Litecoin’s algorithm allows it easy for daily users of cryptocurrencies to indulge in mining without too much difficulty for this purpose.
Since Scrypt also enables standard miners to use CPUs (central processing units) or GPUs (graphics processing units), Litecoin is normally a more open way to mine coins than Bitcoin.
Validation of Transactions
Transactions on blockchain network members require a long time to be authenticated – on both Bitcoin and Litecoin.
Bitcoin transactions can be validated approximately once every 10 to 11 minutes as of latest Blockchain.info estimates – fluctuating at high-volume periods. Thus, approximately every 10 minutes, one block is mined.
However the execution of Litecoin transactions is even smoother than that of Bitcoin – processing a transaction receipt roughly once every 2.5 minutes.
It is because of this drastic pace gap that Litecoin has rendered an enticing choice for corporations utilizing altcoins because they don’t have to wait as long to process their transactions.
The Tokens Themselves
In comparison, their complete coins are another integral differentiation between Bitcoin and Litecoin. Bitcoin and Litecoin may basically only generate a certain number of coins. Inside its network, Bitcoin will generate a limit of 21 million coins.
However, Litecoin is able to generate up to 84 million coins. But although it might appear like Litecoin has the upper hand for potential, it is possible to break and move Bitcoin (and Litecoin) at tiny amounts-the minimum for Bitcoin being one hundred millionth, or 0.00000001 Bitcoins (in the crypto world named ‘satoshi’).
The expense of one complete coin of each is less consequential than it might sound, since both cryptocurrencies can be split down too far.
Still in the past, those like IBM Executive Richard Brown have argued that consumers may potentially choose to exchange whole coins, which would give it the advantage given Litecoin’s higher overall number of coins and lower price.
But provided that the fraction of a Bitcoin or Litecoin compared to the USD value is shown by such wallets like Coinbase, the question around exchanging fractions seems to be somewhat diminished.
When a miner mines a block, a certain amount of Bitcoins or Litecoins are awarded.
25 BTC and 50 LTC respectively (2014) are the new block incentives of Bitcoin and Litecoin. However every 210,000 blocks, Bitcoin rewards are halved, and every 840,000 blocks, Litecoin rewards are halved.
Even it takes years for the valuation of the coin to be halved because of how long it takes for Bitcoins (especially) and Litecoins to be mined (10 minutes for a Bitcoin and 2.5 for a Litecoin).
Creation of Litecoin
Litecoin has strongly tracked Bitcoin ever since its conception. The core protocol updates for Litecoin are largely focused on core protocol updates for Bitcoin.
Litecoin was the first of the top 5 proof-of-work cryptocurrencies to implement Segwit in May 2017, during the height of the scaling controversy in 2017, with Bitcoin trailing a few months later in August 2017.
In 2019, the founder of Litecoin, Charlie Lee, revealed that Litecoin would use the Mimblewimble protocol (popularized by Grin and Beam) to plan private transactions. Progress is currently ongoing and it has been announced that testing networks are scheduled to be usable in September 2020.
How do I hold Litecoin?
Similar to Bitcoin, users may hold Litecoin on a variety of cryptocurrency wallets. Users should use hardware wallets such as Trezor and Ledger along with software-only wallets is another additional move that will help shield the cryptocurrencies.
Such mechanisms essentially isolate the private keys on an external device so even without passphrases that only you use as a recipient, hackers will not have access to it.
It is crucial to note that protecting cryptocurrencies correctly is very much like being your own bank, and rather clearly – if you lose access to your private keys without a backup, there is certainly no way to reclaim your money. In secure and secret locations, make sure you already have copies (or duplicate copies).