The cryptocurrency market has extended enormously after one decade of existence. Bitcoin’s total market capitalization had a staggering $1,3 Trillion at its peak. Bitcoin still dominates the industry because it is the oldest and the most decentralized cryptocurrency. But some of the older networks’ problems give developers and users a headache since they lack scalability and suffer from high confirmation times. Because of this, Charlie Lee, Litecoin’s creator, built this network to fight against limitations. The Litecoin Blockchain represents an open-source project similar to Bitcoin, using a different cryptographic algorithm. This offers LTC the capacity to process more transactions within smaller block periods and lower fees.
Why was Litecoin created?
The project was created to assemble more additional blocks than Bitcoin and maintain a more increased maximum supply. As a result, it would be speedier and more general than Bitcoin. Charlie Lee is an IT developer, ex-employee at Google, and MIT graduate, joining Coinbase in 2013 as chief engineer. He built this cryptographic network in 2011, working directly on Bitcoin’s code, the only dominant cryptocurrency at that time, modifying the protocol to reduce the congested mining pools.
What are Litecoin’s characteristics?
First of all, Litecoin is a decentralized network. There is no central server or database. Thus the information is stored separately on different servers, making the system as equal as possible for everyone. Furthermore, there are no third parties to verify transactions – the users exchange cryptocurrency payments directly between them.
Transaction transparency: Besides decentralization, Litecoin has a public and immutable Blockchain where transactions are stored on an open ledger and can be found in history.
The deflationary character of native LTC coin: A supply limit positively affects the cryptocurrency’s price. The maximum supply limitation prevents the price from dropping significantly.
What does Litcoin bring in addition to Bitcoin?
Speed: The transactions’ confirmation speed plays an essential role in a cryptocurrency’s adoption rate. Usually, Bitcoin confirmations take between 8 and 11 minutes. However, the Litecoin network can confirm transactions at a much higher pace. Besides this, the confirmation time for Litecoin’s blocks is exactly 2,5 minutes. For each Bitcoin block secured, 4 Litcoin blocks of equal dimension are confirmed.
Higher supply: Both Bitcoin and Litecoin have a total supply limit. When this limit is reached, new coins will not be issued anymore. However, even with all of this, the maximum supply of Litecoin is four times higher than Bitcoin’s. For Bitcoin, the maximum supply is capped at 21 million coins, while Litcoin has a maximum supply of 84 million coins. Therefore, until the maximum supply is hit, Litcoin will be able to satisfy a more significant number of users than BTC.
Faster confirmation: Since the mining algorithm built by Charlie Lee is more straightforward than the algorithm Satoshi created for Bitcoin, LTC has a quicker confirmation time. The Scrypt algorithms identify as the most accessible for users, unlike Bitcoin’s complex system. Furthermore, LTC uses encryption; thus, the mining process is lighter and easier for network nodes. This factor was the main reason for Litcoin’s popularity in earlier days.
Bitcoin’s algorithm system makes it harder for regular users to join a data-mining network. Usually, the system is complex when the user must modify his hardware equipment to take over new mining tasks. This might be overwhelming and discouraging for new users that want to join the network as validators.
Meanwhile, Litecoin’s Scrypt algorithm uses solutions that do not require users to modify their hardware systems to further participate in the mining and data extraction. Instead, Scrypt ensures that users can extract LTC using their graphic processing units (or GPUs) and central processing units (CPUs). These hardware components do not require a powerful computer. In conclusion, Litcoin mining uses less energy.
How does the mining work for LTC?
Litecoin uses a similar process to other cryptocurrencies and Blockchain projects when it comes to mining. The mining process should confirm every transaction block using the Proof of Work technology. After the data block is verified, the next block enters the chain for confirmation. Miners that have successfully finished the verification process receive 12,5 Litecoin as a reward.
Litecoin and other Proof of Work cryptocurrencies can be found on IXFI’s spot markets. However, even if Litcoin’s price might be attractive and could represent a financial opportunity, IXFI advises everyone to manage investments accordingly. Exposure to cryptocurrencies may imply risk and financial loss. So please calculate your risk tolerance before investing.
Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not consider your individual needs, investment objectives, and specific financial and fiscal circumstances.
Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty, or undertaking, stated or implied, is given as to the accuracy of the information contained herein. IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.
Investment involves risk; any ideas or strategies discussed herein should, therefore, not be undertaken by any individual without prior consultation with a financial professional to assess whether the ideas or techniques discussed are suitable to you based on your personal economic and fiscal objectives, needs, and risk tolerance. IXFI disclaims any liability or loss incurred by anyone who acts on the information, ideas, or strategies discussed herein.
