What is Litecoin?
Litecoin (LTC) is one of the oldest altcoins on the market. When it was first introduced in 2011, it was described as “to Bitcoin as silver to gold” because its blockchain relied heavily on the Bitcoin code. While some cryptocurrency investors see bitcoin as a good store of value, Litecoin is usually seen as a better option for P2P payments due to its short transaction confirmation time and lower fees.
Litecoin (LTC) is an alternative digital currency that was founded in 2011 by former Google engineer, Charlie Lee. It was intended to be the lite (lite) version of Bitcoin that helps make low-cost, near-instant payments. Litecoin in its blockchain used the Bitcoin code and some of its features but prioritized the speed of transaction confirmation in order to facilitate higher TPS and shorter block generation time.
Due to the similarity of the Litecoin blockchain to Bitcoin, the developers have used it as a testbed to test the technologies they want to apply to Bitcoin. For example, the Segregated Witness (SegWit) protocol and the Lightning Network ran on the Litecoin blockchain before Bitcoin.
The total stock of Litecoin is 84 million. This currency, like Bitcoin, is deflationary and halves every 840,000 blocks (roughly every 4 years). In August 2023, the next halving is predicted. Litecoin can be bought on several cryptocurrency exchanges such as Binance.
How does Litecoin work?
As a modified version of Bitcoin, Litecoin is designed to facilitate cheaper and more efficient transactions from the Bitcoin network. Like Bitcoin, Litecoin follows a Proof of Work mechanism to enable miners to earn new coins by adding new blocks to its blockchain. But Litecoin does not use Bitcoin's own SHA-256 algorithm. Rather, it uses Scrypt, a hashing algorithm that can generate new blocks approximately every 2.5 minutes, while Bitcoin blocks take an average of 10 minutes to be confirmed.
The script was originally developed by the Litecoin Development team to create its own decentralized mining ecosystem away from Bitcoin and make attacks on LTC, which is 51%, more difficult. Initially, Scrypt allowed easier access to mining for those using traditional GPU and CPU cards. The aim used to be to stop ASIC miners from dominating LTC mining But ASIC miners later evolved to mine LTC efficiently, which made GPU and CPU mining obsolete.
Since Bitcoin and Litecoin are somewhat similar, Litecoin is often used as a testing ground for developers to experiment with the blockchain technologies that they will apply to Bitcoin. For example, the Segregated Witness (SegWit) protocol was implemented on Litecoin prior to Bitcoin in 2017. SegWit, proposed for Bitcoin in 2015, aims to scale the blockchain by isolating the digital signature from each transaction to optimize the use of limited space on the block. This has allowed blockchains to process more transactions per second (TPS).
The Lightning Network, another scaling solution, was also implemented in Litecoin before Bitcoin. The Lightning Network is one of the key components that make Litecoin transactions more efficient. It is a Layer 2 protocol, created on top of the Litecoin blockchain. It consists of small user-created payment channels, allowing for lower transaction fees.
Furthermore, Litecoin aims to address the transaction privacy issue by implementing a privacy-focused protocol called the MimbleWimble Extension Block (MWEB).
The name of this protocol is inspired by the name of the tongue-keeping spell from the Harry Potter series, which prevents those affected from revealing any information. Like this spell, MimbleWimble allows transaction information, including the sender and recipient addresses, and the amount sent, to be kept confidential. At the same time, MWEB erases unnecessary transaction information and has smaller block sizes and greater scalability. In December 2021, the MWEB protocol for Litecoin was still under development.
What is the difference between Litecoin and Bitcoin?
Although Litecoin and Bitcoin are similar in many aspects, the two cryptocurrencies have some significant distinctions.
Some merchants say that if Bitcoin is equal to gold, then Litecoin can be in contrast to silver. In fact, this is precisely what Litecoin builders had in the idea when developing it. Both cryptocurrencies have a lot in common, and Litecoin is quite similar to Bitcoin with a few exceptions:
Litecoin offers faster transaction confirmation
The Litecoin network aims to process a block every 2.5 minutes, rather than the 10-minute average Bitcoin, which its developers require to confirm transactions faster. The increased likelihood of orphan blocks is a distinct drawback.
Litecoin uses a different hashtag algorithm
Litecoin uses cryptography in a Proof of Work algorithm - a solid in-memory sequential function that requires more memory than a non-memory-controlled algorithm.
The Litecoin network will generate more cryptocurrencies
Litecoin will produce 84 million Litecoins or four times as many units of the currency as the Bitcoin network.
In all, Litecoin can process and handle a larger amount of transactions, reducing potential bottlenecks, as we have sometimes seen with Bitcoin.
Benefits may also include greater resistance to double-payment attacks in the same time frame as Bitcoin.
Where did Litecoin come from?
The growth of the Litecoin supply is decentralized and guided by the Litecoin Protocol to it, which designates the creation of new cryptocurrencies for Litecoin participants. The maximum number of Litecoins is limited to 84 million in total, but not all Litecoins have been created yet. As of May 2020, there are approximately 61.9 million Litecoins in circulation, which is about 74% of the total. Once 11.3 million new LTC blocks are created, the block mining reward will drop from 25 to 12.5 LTC blocks, which is expected to happen sometime in August 2020.
Who invented Litecoin?
It is believed that Litecoin was released via an open-source client on GitHub on October 7, 2020, by Charlie Lee, a former Google employee. It was a fork of a major Bitcoin client, differing primarily by reduced block generation time (2.5 minutes), the increased maximum number of cryptocurrencies, a different hashing algorithm, and a slightly modified GUI.
What is Blockchain Technology?
Litecoin is based on blockchain technology, like Bitcoin. The Litecoin blockchain, according to Litecoin, "can accommodate more transactions than its Bitcoin equivalent."
Litecoin has the advantage of supporting more transactions and reducing verification time due to the high frequency of block generation.
In conclusion, Litecoin has seen a continuous effort to evolve into “to Bitcoin as silver to gold” since its inception in 2011. Although Litecoin is not as popular as Bitcoin or Ethereum (ETH) in terms of market capitalization, its community expects further development that would provide enhanced features and use cases.
Comments
Post a Comment