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Litecoin is a digital asset that uses a decentralized peer-to-peer network and operates on blockchain technology. As a result, no central authority such as a government or bank controls it. This allows users to engage in direct transactions without intermediaries.
Key Takeaways
Litecoin is a digital currency that was created by Charlie Lee in 2011 as a Bitcoin Core client fork which later developed to a full fledged crypto coin with its blockchain.
Unlike Bitcoin, which processes a transaction block every 10 minutes, Litecoin processes one every 2.5 minutes, making it four times faster. This faster processing time enables quicker transactions, and Litecoin has gained widespread adoption as a result.
LTC has established itself as one of the most widely-used cryptos globally with a strong community of developers and supporters.
Also known as the “silver to Bitcoin’s gold,” Litecoin was introduced in 2011 as a fork of the Bitcoin Core client by Charlie Lee, a former Google engineer. Since its launch, LTC has gained widespread adoption and is now one of the most widely-used cryptos in the world.
It has a large community of supporters and users and an increasing number of merchants and businesses are accepting it due to its ability to process quick and near-zero-cost payments.
How does Litecoin work?
Litecoin operates on a decentralized blockchain protocol, which is based on open-source software. The blockchain serves as a decentralized ledger to record all transactions on the LTC network. Unlike traditional currencies, LTC does not require the need of a central authority, such as a central bank or government. Transactions conduct directly between users.
To validate transactions and add them to the blockchain, the Litecoin network uses a consensus mechanism called proof-of-work (PoW). In this system, miners use specialized computer hardware to compete and solve complex mathematical equations. Once a miner successfully solves a block, they receive a reward in the form of new Litecoins. This incentivizes miners to participate in the network and ensure the security and validity of transactions.
PoW – Proof of Work
In the proof-of-work system used by Litecoin, miners compete to solve complex mathematical equations using specialized computer hardware. When a miner successfully verifies a transaction block by solving an equation, they get rewarded with a certain amount of LTC. This process helps to secure the network and create new Litecoin, which adds to the existing supply of coins in circulation.
Similar to other cryptos like Bitcoin, sending and receiving LTC requires a digital wallet that stores the user’s private and public keys. A private key is a secret code that allows the user to access and spend their LTC. Meanwhile, the public key is a code that other Litecoin users can use to send LTC to the corresponding wallet. This process enables people to send and receive Litecoin without intermediaries such as banks or payment processors, hence the name: a peer-to-peer digital currency.
In order to send LTC from one user to another, a transaction is initiated on the network by providing the recipient’s public key and the amount of coins to be sent. This transaction broadcasts across the network and miners verify it.
These miners use specialized hardware to solve math equations that validate the transaction and ensure the network’s integrity. As a result, Litecoin transactions are secure and tamper-proof.
Once miners verify and add a transaction to the blockchain, it is complete and irreversible. The recipient can then access the LTC sent to them by using their private key.
Litecoin vs. Bitcoin
Litecoin and Bitcoin are among the most popular cryptocurrencies globally, but they have notable differences. One significant distinction is their processing speed, with LTC taking only 2.5 minutes to confirm transactions, four times faster than Bitcoin’s ten minutes. This feature enables LTC to manage more transactions and process them quicker.
Additionally, the two cryptocurrencies employ different algorithms for transaction processing. Bitcoin uses SHA-256, while Litecoin utilizes Scrypt, which is more memory-intensive, making it less susceptible to specialized mining hardware like ASICs. As a result, LTC can be mined using regular computer hardware, allowing more individuals to participate in mining.
Litecoin has a larger maximum supply than Bitcoin, with 84 million coins compared to Bitcoin’s 21 million. As we can see there’s a four times difference of total coins on LTC.
Both are widely accepted by merchants and businesses as forms of payment. However, Bitcoin is more well-known and has a larger and more established community of supporters and users than the latter.
Despite this, the Litecoin blockchain offers faster transaction processing times and greater accessibility than Bitcoin, making it a viable alternative. As both continue to gain adoption and usage, it remains to be seen which will ultimately emerge as the dominant digital currency of the crypto market.
FAQ
Frequently asked questions about LTC.
Who created LTC?
Charlie Lee, an ex-Google engineer, created the currency in 2011 as a faster alternative to Bitcoin. Inspired by Bitcoin’s success, Lee forked the Bitcoin Core client and made several changes to create Litecoin. He implemented a different mining algorithm and reduced the block confirmation time.
Lee remains an active participant in Litecoin’s development and serves as a director of the Litecoin Foundation, a non-profit organization that promotes LTC adoption and furthers its development. As a vocal advocate for LTC, Lee has spoken at numerous conferences and events to promote the cryptocurrency along with other Litecoin developers.
Is Litecoin better than Bitcoin?
It’s challenging to make a clear comparison between Litecoin and Bitcoin. Each cryptocurrency has its own set of strengths and weaknesses that may appeal to different users based on their individual priorities and preferences.
One of the most significant advantages of LTC is its faster transaction processing times. The network processes a block of transactions every 2.5 minutes, which is four times faster than Bitcoin’s processing time of 10 minutes. This allows LTC to handle a higher volume of transactions and confirm transactions faster than Bitcoin. LTC enables instant payments to anyone, and what comes to mind as we mention this is micropayments. They make it viable for businesses and merchants as much as the everyday user.
What makes LTC unique?
As of January 2021, LTC has gained widespread acceptance with more than 2,000 merchants and stores accepting it worldwide. Its popularity stems largely from its speed and low fees.
In 2020, the MimbleWimble (MW) testnet launched for Litecoin. This testnet explores the usage of Mimblewimble-based confidential transactions. After this feature is available on the mainnet, network users will have an extra layer of privacy and security.
Where do I buy Litecoin (LTC)?
Buying LTC is a piece of cake since all the major exchanges support it: Binance, Kraken, and Coinbase. The market cap (short for market capitalization, mister) and circulating supply of the coin determines the Litecoin price.