Home Crypto News What is Litecoin?

What is Litecoin?

175
0
What is Litecoin?

Litecoin is one of the older altcoins (launched in 2011), and therefore a well-known name in the crypto world. The software code design is directly based on the Bitcoin blockchain. However, the inventor did make a few adjustments to the code, so that, among other things, the transaction time became a lot more efficient.

Since its development, Litecoin has consistently been one of the largest crypto currencies in terms of total market value and brand awareness. Yet the project is often overshadowed by new eye-catchers (and of course invariably by Bitcoin ). That is why you can read here the ins and outs of Litecoin, a crypto project that was conceived as a glorified hobby project by a Google employee.

The technique

Like the Bitcoin blockchain, the Litecoin network is also based on a proof-of-work. It is quite striking that Lee adopted Bitcoin’s proof-of-work model almost one-to-one. It’s not very efficient, and Lee wasn’t afraid to tweak other imperfections in the Bitcoin code for his Litecoin network. He was probably smart enough to come up with an alternative consensus model, but his Litecoin design was ultimately just an experiment (more on that later). Anyway, Lee took the Bitcoin protocol as a starting point, divided the block time by 4 to make it 2.5 minutes, and increased the maximum supply by 4 to 84 million coins. Why make it difficult when you can do it easily?

More than three quarters of Litecoin’s supply is now in circulation and the block difficulty is comparable to Bitcoin. The mining rigs that can mine LTC are also more expensive to manufacture than, say, ASIC miners for Bitcoin, because the Litecoin network uses a more complex form of block encryption. Litecoin uses an algorithm based on scrypt, while Bitcoin works with SHA 256 encryptions.

Important side note: Currently, more than two-thirds of the mining capacity on the Litecoin network is managed by just five mining pools. That’s pretty much the opposite of decentralized, which was once Satoshi’s vision anyway. This is an issue that is more common in proof-of-work networks, and yet appears to be an obstacle for Litecoin in the long run.

Who is the creator of Litecoin?

Not long after Charlie Lee discovered the Bitcoin white paper, he found some potential pain points in blockchain design. He realized that, among other things, the ‘block time’ of 10 minutes could become a problem at higher volumes. So Lee, like a lot of other ambitious developers in the same period, set out to create his own blockchain and associated cryptocurrency. After some more studying, he wrote the code for the Litecoin network in the evenings (because he was still working at Google). A smart dude, as said. It should be noted that a first attempt at its own blockchain (called ‘Fairbix’) had failed.

As mentioned, Lee stuck to the proof-of-work protocol of his inspirer, Bitcoin. So he mined the first Litecoins himself, but already made the network public when he had only mined 150 coins. Even Lee probably didn’t think Litecoin would ever be worth billions of dollars in value when he started out. Hopefully, in the years that followed, he gathered some more – he deserved the win. Charlie Lee has claimed since late 2017 that he has sold all his LTC, in order to eventually make the network more decentralized and independent of himself. Fine!


The ‘Napster’ of payment networks

The dot on the horizon that Charlie Lee envisioned – introducing Litecoin as a means of payment in the ‘real’ economy – has never really materialized so far. He was actually quite realistic, because already in 2011, he saw Litecoin not so much as a rival to Bitcoin, but more as an addition. Where BTC is top for large transactions, Litecoin should become the medium for small amounts, Charlie Lee thought. This also explains the way in which he designed his blockchain: the same principles as Bitcoin, but adapted for more and smaller transaction traffic.

It’s somehow ironic for Lee that, thanks in part to him, blockchain technology advances by leaps and bounds every year. As a result, a lot of networks have surpassed the Litecoin stronghold in terms of performance and scalability. If there is a time in the future when we pay with a crypto currency, Litecoin will probably be well out of date. The tragedy of technology, shall we say…


How do I get Litecoin?

There are a few ways to acquire Litecoin, some being easier than others. You can of course join one of the mining titans we mentioned earlier if that’s your thing. That way you can get a good return, but it does require a serious investment. On some exchanges you can also stake Litecoin, although it is not a proof-of-stake network. This often involves negligible percentages, but it is nevertheless a nice bonus if you already own LTC.

Long story short: if you want to build a capital in Litecoin, you will probably have to pull out the wallet. Since Litecoin has been around for quite some time, you can buy LTC on almost any reputable exchange or brokerage. If you are looking for a place to purchase Litecoin and other cryptocurrencies with iDeal, you can do that on Bitvavo, for example. By clicking the button below you will trade the first €1000 with no transaction fees!

Previous articleWhat is IOTA?
Next articleWhat İs Bitcoin Cash?

LEAVE A REPLY

Please enter your comment!
Please enter your name here