What is Litecoin?
Wondering what is this similar sounding currency to Bitcoin? Well, Litecoin was made as an improvement to Bitcoin and hence, this cryptocurrency is similar to Bitcoin but faster, smarter and easier to use.
It is a fully decentralized, open source payment system, founded by MIT graduate and ex-Google Engineer, Charlie Lee. It was made keeping in mind as an improvement to Bitcoin, so the transaction with Litecoin is much faster. Anyways that’s secondary, let us first understand its system and working.
How does Litecoin work?
It is used as a self-financed empowering system used for peer to peer currency exchange over the internet and hence known as a digital currency. They are generated, stored and transferred electronically using mathematical algorithms which takes a lot of computing power, but makes it a whole lot easier to transact with others due to cutting off the middleman (i.e. banks).
This means that it is generated by mining and as you solve the algorithms you earn Litecoins and thus you become a part (a “node”) on the protocol. They also have a fully recorded transaction and ownership log known as a public ledger.
It is open source thus making it immutable and hence, free from stealing and other forms of cybercrimes. Like, Bitcoin this is not governed by any central authority and hence, is fully dependent on “miners”.
Similarities and relationship with Bitcoin
Apart from its protocol and working principle, the price of Litecoin has risen and seen an increase in value more than 4000% in 2017. There has been a close relationship in terms of pricing as both Bitcoin and Litecoin follow each other.
However, recently Litecoin has been up for more than 17%, while Bitcoin has only risen for about 2%.
Differences between Litecoin and Bitcoin
The working time to generate a block or mine a coin is the key difference between them. With Litecoin being the winner, it takes about only 2.5 minutes as opposed to Bitcoin’s 10 minutes. Due to this, Litecoin also has a greater number of coins and bigger blocks in circulation. It can handle a large volume of transactions swiftly and handle a bigger amount of transactions.
There are about 84 million Litecoins which is four times the number of Bitcoin (21 million) currency units. Litecoin works on the Scrypt algorithm as opposed to Bitcoin’s SHA-256 algorithm, which involves serial calculation and requires a large amount of high-speed RAM. Hence termed as “memory-hard”.
This means that ASIC devices are needed to mine Litecoins. The ASIC devices are much more complicated to make and hence more expensive. There is also a lot of people making mining rigs that are specified only to mine Litecoin.
A cryptocurrency to look out for
With recent news of its founder Lee, selling his holdings of Litecoin saw a major decrease in its price to about $210, many people lost their trust in this currency. However, Lee explained that it was a necessary step to show LTC’s true value.
Litecoin has a promising technology and strong team behind it. Currently, Litecoin has the 6th largest market cap which shows its phenomenal growth in a short period of time. Only time will tell if Litecoin can sustain the development and stay relevant in the ever growing space of cryptocurrencies. It is for sure one of the most important alternative coins to look out for!