Litecoin (LTC) 101 - Everything You Need To Know
Litecoin is the very first alternative cryptocurrency (altcoin) that modified Bitcoin’s code. The digital currency does not differ much from Bitcoin, where Litecoin only does better in terms of transaction confirmation speed. Litecoin implements most of everything that happens on the Bitcoin blockchain platform, including decentralised governance and peer-to-peer transactions.
Bitcoin, and by extension Litecoin, is an innovative concept that is the future of money. The digital money is poised to play a central role in future economies if they shift completely to digital platforms. In this article, we inform you about LTC so that you become future-proof.
What Is Litecoin and Why Was (LTC) Created?
Litecoin is an internet-based currency that enables peer-to-peer transactions. Since no intermediary is necessary to enforce trust, the transactions between peers are settled almost instantly, and at near-zero cost. The Litecoin token is native to the Litecoin network, which is an open-source blockchain technology forked from Bitcoin’s source code.
Charlie Lee, who formerly worked for Google, wrote the original Litecoin whitepaper based on the Bitcoin code. The first instance of the Litecoin project released to the public was on the 7th of October 2011. Litecoin differs from Bitcoin in that it uses a different hashing algorithm, implements a different hard cap and that block transaction times on Litecoin are more than on the Bitcoin network.
According to Litecoin’s developers, the project is silver to Bitcoin’s gold. In other words, Litecoin is a less cumbersome version of Bitcoin. Due to the implementation of a different hashing algorithm, the transaction confirmation speed on Litecoin is around 2.5 minutes. In comparison, Bitcoin users have to wait for up to an hour for their transactions to be processed.
Therefore, Litecoin was created with a goal pretty much similar to that of Bitcoin but with a better experience. Also, the Litecoin network is private, meaning users do not have to worry about the privacy of their details.
Compared to fiat currency, LTC is more robust in terms of transaction speeds and costs. This is because of the decentralised nature of the Litecoin network. Legacy financial institutions rely on a central authority to enforce trust when consumers transact. This stretches transaction confirmation time and increases the cost incurred.
The decentralised nature of the Litecoin network means that no entity or individual can control or censor users. Since it is open to all, Litecoin further deepens financial inclusion in a way fiat currency can never imagine.
How Does Litecoin Work?
Litecoin comprises nodes (computers) that run the network by performing tasks like confirming transactions and mining LTC tokens. Block generation on the Litecoin network is much like it happens on the Bitcoin network through what is known as the Proof of Work (PoW) system. However, Litecoin’s system is slightly different in that it enables users to mine coins using consumer-grade hardware such as a regular Windows PC or a Mac. This system is called Scrypt Proof of Work or Scrypt algorithm.
In the initial phases of Litecoin’s existence, miners earned 50 LTC for generating a block. As of 2015, this reward was cut down to 25 LTC. Going forward, the reward will keep halving until the Litecoin hard cap of 84 million LTC tokens is hit. At the time of writing, the total supply of LTC was slightly under 66 million.
As stated earlier, the Litecoin network enables peer-to-peer transactions. Besides, Litecoin developers created the Lightning protocol, which is an algorithm that enables the global settlement of transactions in an instant. Another technology that Litecoin pioneered is Atomic Swaps. This facilitates trading activities in a trustless environment.
Key 3 Selling Points of Litecoin (LTC)
Fast settlement of transactions
Although Litecoin is a fork of Bitcoin, the network handles more transactions per second, mainly because its block generation time is shorter. Litecoin’s consensus system is incredible in that it emulates Bitcoin’s PoW but operates faster than Bitcoin’s. The reason for this is the incorporation of the Scrypt algorithm.
The reason why Charlie Lee thought of Litecoin as Bitcoin lite was because it would offer the same services as bitcoin but charge lower fees and have expedited transaction speeds. Regardless of the size of a transaction, users incur just 1/1000 LTC in costs. This is an incredible discount considering that Bitcoin charges in the region of $40 but this could go up depending on the transaction size.
Litecoin is the largest blockchain network based on the Scrypt algorithm. This algorithm not only speeds up block generation time but also makes the Litecoin blockchain more secure. Unlike networks like Bitcoin whose ledgers are public, Litecoin maintains private ledgers to give users the opportunity of making private payments.
Is Litecoin Worth the Investment?
Litecoin is one of the few coins that fared well while the entire cryptoverse came down crashing. By the end of the crypto-winter, major coins like Bitcoin had lost close to 80% of their value. Although Litecoin was also affected, the price of the digital currency bottomed out at a higher level.
From 2019 onwards, there was a lot of activity as more investors wanted to have a piece of LTC, though this did not return the price of LTC to the peak in early 2018. LTC is up 45% year to date, and much of the growth was registered after the coronavirus pandemic threatened a severe recession. This implies that people are seeing cryptocurrencies like Litecoin not only as just currency but also consider them as safe assets.
However, the most important development that could seal the deal for Litecoin and other cryptocurrencies is the growth of the digital economy. Already, Litecoin has shown its potential to facilitate online transactions. A further shift towards the digital economy is likely to increase the appeal of LTC.
LTC’s resilience and a possible increase in its appeal could potentially send its value skyrocketing. One might argue that LTC is undervalued, especially noting that it is backed by a robust payments project that could turn the global financial sector on its head in the years ahead. Following this logic, one can conclude that investing in Litecoin today is a smart move.
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Frequently Asked Questions
Litecoin is a cryptographic currency created to enable fast and secure transactions at near-zero costs. The cryptocurrency is built on the Litecoin network, which is a fork of Bitcoin.
Yes. Litecoin is a widely accepted mode of settlement for transactions across the globe. Recently, PayPal began to accept Litecoin as a means of payment. Also, Litecoin ranks at position 8 out of 7,616 coins in terms of market cap, according to CoinMarketCap.
Litecoin offers freedom, security, privacy and above all, affordability. Since Litecoin is decentralised, there is no central authority to impose restrictions on how to use LTC. Also, transacting via LTC requires minimal personal details, which protects your privacy.
Litecoin’s transaction settlement period is shorter compared to other cryptocurrencies and fiat currencies. Besides, users pay near-zero transaction fees as they transact in a private and secure environment.
Information provided in this guide explains the value of Litecoin and makes the case for investing in the cryptocurrency. Still, you need to research deeper to get a clearer view of the digital currency before deciding to invest.
You can buy Litecoin on a cryptocurrency exchange and store it to sell at a future date when its price is higher. Alternatively, some exchanges offer Litecoin CFDs for trading.
The best way to find the best time to buy Litecoin is through thorough research and analysis. This guide has started you off by providing key information you should know about the token. From this point, you can expand your knowledge through news sources and blogs to help you in deciding when to buy.