Litecoin was released to the public back in 2011 by Charlie Lee, a former Google engineer. It was created in a fork of the Bitcoin blockchain in 2011 and referred to as a “lite version of Bitcoin” – “the coin that’s meant to be the silver to Bitcoin’s gold” and its open source peer-to-peer cryptocurrency not controlled by a central authority – decentralized currency. Litecoin can be mined using ASIC miners pretty much the same as Bitcoin. Originally, Litecoin’s plan was to discourage enterprise-sized miners from gaining total control over the mining process by switching to a different encryption method but miners have quickly adopted their specialized machines and continued to grow their mining capacity.
Preserving the coin’s value
As Litecoin has been released with 150 pre-mined coins and a total supply of 84 million coins, with the ability to generate a new block every 2.5 minutes, its supply is designed to reduce over time to preserve its value. Same as Bitcoin, Litecoin has a “halving” – reduction of the rewards given to a miner once the block’s hash and the transaction information within the block are validated and new blocks have been created. Halving itself basically helps to slow down the creation of new coins by reducing the number of Litecoins awarded for successful mining process by half. Previous halvings took place on Aug. 25, 2015 when the reward went down to 25 LTCs from 50, and on Aug. 5, 2019 when it went from 25 to 12.5 LTCs. The next halving date is scheduled and expected on Aug. 23, 2023 when the reward will go down to 6.25 LTCs from a current 12.5 LTCs per successful block mined.
Unlike Bitcoin which uses the SHA-256 encryption algorithm, Litecoin uses an algorithm called Scrypt. Scrypt is slower than SHA-256 and more memory intensive. Still, it found greater acceptance in the cryptocurrency community after the 2011 Tenebrix project that modified Scrypt to work even with regular CPUs for mining processes. Considering significantly larger memory requirements for Scrypt it was difficult to develop ASIC miners for it but that problem was quickly solved and the first Litecoin ASIC miner was released in 2016. Market Capacity Litecoin has a much smaller market capacity than bitcoin, but it's still one of the most traded cryptocurrencies.
Even tho Litecoin requires more complex technology to mine than bitcoin, Ltc blocks are generated up to four times faster making financial transactions processing a lot quicker, and also can process a higher number of them over the same time period
An interesting fact that makes Litecoin very reliable is that its blockchain has operated so far without any major problems whatsoever and has therefore proved itself in terms of security. Usage case’s – why is Litecoin convenient to have and use The main reason why Litecoin might be attractive is it's very low fees so maintaining privacy by moving funds around is quite easier than with most other major cryptocurrencies. As it has limited supply, Litecoin is now also pretty popular among investors and traders so it for sure shares some % in many portfolios, and the fact that Ltc is highly liquid and available on most major exchanges makes it ideal for trading purposes especially when moving funds from one exchange to other avoiding networks as Bitcoin or Ethereum and spending significantly less on fees. Overall Litecoin network consistently processes over 100,000 transactions per day and usually has around 300,000 active addresses so it might be less popular than for example Bitcoin but usage is definitely here. Confidently we can say that almost all if not really all cryptocurrency wallets today support LTC – both hot and cold ones so saving shouldn’t be much of a problem.
Key points to remember
- Litecoin is an open source peer-to-peer cryptocurrency not controlled by a central authority
- Limited supply preserves Litecoins value
- Litecoin is much like Bitcoin but with some differences explained in this text – the main is hashing algorithm
- Provides fast and cheap transactions on a secure network
- Accepted by most exchanges and wallets with its high liquidity