Litecoin is one of the earliest successful Bitcoin alternatives. The altcoin is not a Bitcoin-fork, though it does share a significant number of similarities. The main aim of Litecoin was to provide a cheaper, faster alternative to Bitcoin that could function as a daily currency, rather than store of wealth.
Although Litecoin remains the “silver” to Bitcoin’s “gold,” it is a well-respected and long-standing cryptocurrency.
What is Litecoin?
You might read some articles that claim Litecoin is a Bitcoin fork. It isn’t (technically). A fork is a split in the Bitcoin blockchain, whereas Litecoin broke from the Bitcoin codebase. The two blockchains do not have a shared history, and Litecoin is definitively a different cryptocurrency to Bitcoin.
Nonetheless, because of the shared codebase, Litecoin does share some similarities as well as significant differences to Bitcoin. More on these in a moment.
Litecoin is the brainchild of Charlie Lee, a former Google employee, and current Coinbase employee. Lee worked for Coinbase long before the popular exchange adopted Litecoin as a native currency. Furthermore, in December 2017, Lee announced that he had sold all of his Litecoin holdings to stop any perceived conflict of interest.
How Does Litecoin Work?
Litecoin is similar to Bitcoin in many ways but has key differences in how the cryptocurrency works. For instance:
- The total number of Bitcoin available is capped at 21 million coins, whereas there are 84 million Litecoin.
- Litecoin uses the memory-focused Scrypt proof of work algorithm, whereas Bitcoin uses processor-power-hungry SHA-256.
- Litecoin aims for an average block production time of around 2.5 minutes, while Bitcoin aims for 10 minutes.
- Block halving (the process whereby the block reward decreases) takes places every 840,000 Litecoin blocks; it is 210,000 for Bitcoin.
One of the biggest differences is in how Litecoin handles the mining process. The Bitcoin blockchain has well-documented issues with wasteful power consumption. That’s due primarily to the SHA-256 algorithm. Miners realized that by teaming together to create enormous mining pools, their parallel processing power would stand a larger chance of securing the Bitcoin block reward and transaction fees.
Instead, Litecoin uses the Scrypt mining algorithm. Scrypt is still an SHA-256 algorithm, but with a difference. Instead of allowing miners to pool their computing power, Scrypt is more serialized.
Think of it like this. In Bitcoin mining, a pool of miners can work on problem A and B simultaneously, then A and C, C and D, and so on. In Litecoin mining, you must solve problem A before progressing to problem B, and so on.
That’s not to say you cannot pool together to mine Litecoin. There are numerous successful mining Litecoin mining pools. But the difference in the algorithm stops the concentration of power into a few large entities while giving regular people a chance to mine the cryptocurrency at home. Instead of requiring expensive ASIC mining hardware, Litecoin miners can use their existing GPUs.
Another key difference is the block production time. A new Litecoin block hits miners every 2.5 minutes, compared to 10 minutes for Bitcoin. It doesn’t seem like much of a difference, but for a merchant, it means waiting at least four times longer for a Bitcoin transaction confirmation in comparison to Litecoin.
There is no Litecoin whitepaper. Litecoin arrived at a time when there were very few other cryptocurrencies, and the only real crypto whitepaper belonged to a certain Satoshi Nakamoto. However, you can head to the Litecoin Foundation to read more about Litecoin, its foundation, its development, and how you can contribute to the project.
How Do You Buy Litecoin?
At the time of writing, one Litecoin costs $46.01. Like all cryptocurrencies, it is a long way short of its all-time high of $366.15, achieved during December 2017. It has a total market capitalization of $2,788,323,928, ranking it the 5th largest cryptocurrency by market cap.
Litecoin is available at all major cryptocurrency exchanges. Coinmarketcap lists over 100 exchanges with 400 coin pairings.
If you’re considering buying some Litecoin, why not use our Coinbase link to create your account? If you purchase $100 or more of any cryptocurrency on Coinbase, they’ll give you an extra $10, and it helps keep the lights on at Blocks Decoded.
What’s Litecoin’s Future Potential?
Litecoin is a venerable, battle-worn cryptocurrency. It isn’t just a second-rate Bitcoin, though.
For instance, Litecoin was one of the first major cryptocurrencies to adopt Segregated Witness (SegWit) transactions. Litecoin also took part in the first atomic swap, made between Decred and Litecoin back in 2017, and was also the host of the first Lightning Network transaction.
In early 2019, Charlie Lee announced that Litecoin was focusing on adding Confidential Transactions to increase the privacy of Litecoin users. Confidential Transactions essentially sever the link between a cryptocurrency owner their token’s transaction history, making it difficult to associate tokens with a single user or address.
Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy.
I am now focused on making Litecoin more fungible by adding Confidential Transactions. 🚀
— Charlie Lee [LTC⚡] (@SatoshiLite) January 28, 2019
In that, you can see that Litecoin is an attractive cryptocurrency for innovative blockchain technology.
Join the Litecoin Community
If you would like to follow or join in with the Litecoin community, there are plenty of ways to do so:
- Official Litecoin Foundation site
- Official Litecoin Project site
- Litecoin GitHub repository
- Litecoin on Twitter
- Charlie Lee’s Twitter
- Litecoin on Facebook
- Litecoin on Instagram
- The Litecoin Foundation YouTube channel
- Litecoin on LinkedIn
- Litecoin Subreddit
Go ahead, and start exploring Litecoin.
If you would like to keep reading about Bitcoin and Ethereum alternatives, why not check out our EOS Coin Study!