An introduction to Litecoin

An introduction to Litecoin

What’s Litecoin (LTC)?

After the creation of Bitcoin and the respectful success it earned, what was decided fairly is alternative coins to be created. One of these alternative cryptocurrencies (altcoins) is Litecoin (LTC). In October 2011, Litecoin created as a fork of Bitcoin by former Google engineer Charles “Charlie” Lee. Litecoin is not as different as Bitcoin. Both are available to be used globally and none is controlled by a specific government or any other authority.

Charlie Lee (computer scientist)

Litecoin was decided to be built while Charles Lee was having his fun in search of a project around Bitcoin base code. When the idea pumped into his head, Charles Lee decided to dedicate all his life to Litecoin. He left his job at Google and partnered with Xinxi Wang and Franklyn Richards to improve his idea.

Litecoin is called the silver to Bitcoin’s gold. Because their design is nearly the same. Litecoin’s value has taken the 3rd place among all other cryptocurrencies with Bitcoin settling as the 1st.

Differences between Litecoin and Bitcoin

Differences between Litecoin and Bitcoin

In spite of all the similarities with Bitcoin, Litecoin has a use of Scrypt. Also, Litecoin generates blocks faster than Bitcoin, due to its lesser price, it has become the testing ground for any improvements of Bitcoin though.

Scrypt proof-of-work algorithm was designed by Lee himself. Scrypt is meant to prevent malicious hardware threats to hurt the cryptocurrency’s value.

This algorithm as said by Tarsnip “the scrypt key derivation function was originally developed for use in the Tarsnap online backup system and is designed to be far more secure against hardware brute-force attacks than alternative functions such as PBKDF2 or bcrypt.”

A specialized hardware, like the application-specific circuit (ASIC) was developed to solve hashing of Bitcoin’s algorithm, SHA-256. It was proved that Bitcoin is vulnerable to such hardware. Meanwhile Litecoin’s algorithm, proved to be strong in front of the most of the threats. On the other hand, unless Bitcoin’s SHA-256 algorithm, Scrypt consumes a lot of Random-Access Memory (RAM) which cause a severe problem preventing it from doing parallel processing.

$13.1 billion dollar is Litecoin’s market value in March 10, 2021. Having more than 66 million coins in circulation names Litecoin as one of the largest cryptocurrencies. Yet, Litecoin is far away beneath Bitcoin’s value.

Litecoin’s purpose is to be an efficient altcoin for fast payments. In order to show its quality, it is focused on the eCommerce segment.

According to Charlie Lee “We want to create a Bitcoin-like coin, a coin that is the silver of Bitcoin’s gold. Several alternative currencies came and have already left, some brought innovation but all had problems. That is why we want the best features that Bitcoin and these other currencies offer and create a currency with all the benefits of them but with hardly any of its problems.”

Litecoin’s feature

To improve Litecoin’s transactions and hide its flaws like requiring a great processing power, features are added.

Segregated Witness (SegWit)

To fix Bitcoin scalability, SegWit was proposed. SegWit is designed to house in the blockchain to segregate the digital signal data known as “the witness”.

Due to the high risks SegWit cause for Bitcoin, in 2017 Litecoin adopted SegWit and became the testing ground of Bitcoin. As it was mentioned before Litecoin foundations are similar to Bitcoin, so, once the SegWit was a success to Litecoin, it was decided to be used in Bitcoin’s blockchain, too. Furthermore, Bitcoin Cash was designed thanks to Litecoin’s risk-taking.

Lightning Network

The lightning network is another technology that first applied to Litecoin to be tested. Unlike SegWit, the lightning network is a layer of micropayment channels to ease the scalability of Bitcoin. According to Charles Lee “the Bitcoin blockchain is congested and the fees are high, it’s easy to use Litecoin to onboard onto the Lightning Network.” So, after proving its success in Litecoin, the lightning network is allowed to be used in Bitcoin.

MimbleWimble

MimbleWimble is a recent upgrade which is under development. It claims that it is capable of increasing the scalability while decreasing the block sizes. It claims that doing so is able by encrypting or obscuring information like transaction amounts.

Litecoin’s strengths

Fast transaction

Litecoin is able to create blocks as four times fast as Bitcoin (4 blocks of Litecoin is produced in 10 minutes while Bitcoin just produces 1 block). As a result of blocks produced fast, Litecoin sets its coin limit four times greater than Bitcoin’s. Despite of Litecoin’s rapid producing, the proof-of-work algorithm forces Litecoin to require more processing power, and that’s one of the reasons why Bitcoin is more popular than Litecoin.

Scalability

One of the most important problems of Bitcoin is processing of a maximum of 7 transactions per second. Although it’s tried to be fixed by many different solutions, it’s still one of the most hateful problems.

On the other side, Litecoin cured scalability’s problem. It is capable to support a maximum of 56 transactions per second. This amount is the highest between all the other cryptocurrencies. Ethereum which stands above the average can only support till 15 transactions per second.

Scalability is an obstacle not letting cryptocurrencies beat government’s currencies like VISA. VISA supports about 56 transactions per second and that is too far to be reached. The way cryptocurrencies improve, make it predictable that one day, cryptocurrencies will be able to surpass VISA’s scalability. Right now, the only way to trick this problem, is using features like Lightning Network mentioned above.

Mining

Bitcoin was possible to be mined from any personal computer all around the world. The deeper it was mined, the further must be went to reach more. It’s predicted that years later, mining Bitcoin won’t be anymore profitable and the only way to earn it, will be transactions.

The price of Bitcoin raised high and now to solve mathematical problems (to mine Bitcoin) an advanced technology is required. Moreover, custom hardware was invented like ASIC, just for one purpose, mining Bitcoin.

Right now, mining Litecoin is not as complicated as mining Bitcoin. Even though ASICs were invented for this specific cryptocurrency, having a processor and a graphic card would be enough to mine Litecoin and an amount of Litecoin earned could be enough to make you satisfied.

Higher coin limit

Bitcoin has a maximum of 21 million tokens available, when Litecoin has 84 million. As it was said before it is due to its block generation.

210 blocks are required for a halving in Bitcoin. And in Litecoin it is four times higher. With the generation speed in mind, it is simple to figure out there is no such difference between Litecoin and Bitcoin in halving.

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