- Litecoin was designed to a faster version Bitcoin, to work alongside it as an alternative
- Litecoin addresses a number of perceived issues with Bitcoin
- How did Litecoin get started and how relevant is it today?
Litecoin (LTC) is often referred to as the silver to Bitcoin’s gold, which is not surprising as it’s essentially a Bitcoin fork with a couple of key differences. Many newcomers to the crypto space may not be aware of Litecoin and its place in crypto history because it has fallen down the rankings in recent years, but it can be regarded as one of the crypto old guard that paved the way for others to follow. So let’s find out a bit more about this crypto classic and whether it is still as relevant today.
What is Litecoin?
Litecoin is a digital currency that is similar to Bitcoin in some ways, but is based on a different operating protocol. It was designed to act like a digital currency, rather than with an underlying technology platform like some of the other coins available. Litecoin is open source, decentralized, and is backed by complicated math equations to ensure it runs smoothly. It was created by Charlie Lee in 2011, who admired the ethos of Bitcoin but felt that it wasn’t agile enough to be considered a regular currency. He therefore created Litecoin off the back of Bitcoin’s core code but implemented some key differences.
Firstly, the block processing time was set to two and a half minutes, which is four times faster than Bitcoin. This meant that Litecoin could be more secure, with twelve confirmations possible in half the time compared to Bitcoin. This made a huge splash in 2011, but unsurprisingly as time and technology has moved on, it has slipped down the pecking order when it comes to transaction speeds among other Proof-of-Work (PoW) currencies:
Zcash: 15 minutes
Dash 15 minutes
Monero: 30 minutes
Litecoin: 30 Minutes
BCH: 60 minutes
Bitcoin: 78 minutes
How is Litecoin Mined?
Another difference between Bitcoin and Litecoin is how they are mined. Both are proof-of-work (PoW), but whereas Bitcoin uses a SHA256 hashing algorithm Litecoin uses something called ‘scrypt’. This has a number of advantages, primarily that high-end ASIC miners cannot mine Litecoin and therefore hog the hashrate. It also means that GPU miners can have a crack at mining Litecoin, something that is very unusual for a top tier PoW cryptocurrency.
In a world that is slowly moving away from PoW systems, Litecoin’s intransigence in staying with the format might be problematic as time passes and technology improves.
What is Litecoin Used For?
Litecoin was intended to be used as a currency, and when it first came out this is how it was seen. However, adoption never really took off among the same retailers that accepted Bitcoin, and its brand name was certainly never as strong.
Litecoin’s primary use case is still payments, but it has never really built on its initial popularity and there are more suitable payment coins on the market.
How Many Litecoin Will There Be?
Lee recognized that Bitcoin’s limited supply of 21 million coins could become problematic, and would eventually drive the price of one bitcoin so high that it would be virtually unusable as a currency. For example, if one bitcoin was worth $1 million, $1 would be 0.000001 Bitcoin – hardly an easy currency format to work with.
To combat this – and to cement Litecoin as a market player – Lee set the supply limit to 84 million coins. Every 2.5 minutes 12.5 coins are generated as a mining reward. This equates to 7,200 new litecoins in circulation every day. The last litecoin will be mined in 2142.
How Can I Store Litecoin?
There are multiple ways to store your litecoin safely. Its popularity is such that almost all online and offline multi-coin wallets will support Litecoin, giving you a huge choice when it comes to balancing practicality with security. Our crypto wallet reviews will help you make this decision.
Is Litecoin Still Relevant?
Many see Litecoin as a relic of crypto 1.0, which in many ways it is. When it came out in 2011 it was revolutionary, but this was only in relation to Bitcoin. Now, in relation to faster, more agile currencies, it is something of a dinosaur. Lightning Network integration has long been heralded by founder Charlie Lee as something that will propel Litecoin back into the realms of everyday use, but the number of Litecoin nodes, despite rising recently, still lags behind Bitcoin’s node count by a factor of over ten.
Charlie Lee himself was criticized for selling all this Litecoin and leaving the project at the height of the 2017, which precipitated months’ worth of rumors about price suppression by cabals and questions over the long term viability of the project, claims Lee addressed in a series of tweets in mid-2018. Some say that Lightning Network integration is the only way Litecoin will be able to stay relevant in the new world of high-speed, partially centralized algorithms.
Litecoin faces a challenge to keep up with these newcomers, but it is still accepted by many retailers and is still a top 10 cryptocurrency, which says a lot.