Litecoin is part of the first generation of altcoins to emerge after Bitcoin ignited the crypto revolution. This peer-to-peer cryptocurrency is a popular option when it comes to transacting in the real world and investors' portfolios, and has been a permanent feature in the top 15 biggest cryptocurrencies by market cap for years.
What Is Litecoin?
Litecoin was launched in 2011 as an alternative to Bitcoin, providing users with a faster means of transacting money over the internet. While it was never designed to replace Bitcoin, Litecoin was created to complement the original digital money. Litecoin is often referred to as "digital silver" compared to Bitcoin being referred to as "digital gold".
Litecoin is widely considered to be one of the most successful altcoins. Created as a hard fork off of Bitcoin's blockchain, Litecoin holds many similarities in the way it functions, however, the team behind the open-source cryptocurrency incorporated several features to ensure that the network operated in a faster manner.
These include changing the amount of time it takes to process transactions, the maximum total supply, the hashing algorithm, and charging very low transaction fees. Compared to Bitcoin's 21 million total supply and 10-minute transaction processing time, Litecoin has a maximum supply of 84 million LTC and can process transactions in 2.5 minutes. It also opted to use a Scrypt hashing algorithm over the SHA-256 one.
The network is known for pioneering advanced crypto features like the Lightning Network and Segregated Witness, both of which have since been implemented by the Bitcoin network.
How Does Litecoin Work?
As Litecoin is based on Bitcoin's software, they function in very similar ways. Through the Proof-of-Work consensus, all transactions are executed through mining. When a transaction enters the mempool (pool of pending transactions) it is soon picked up by a miner who will then ensure that all the details are accurate (including valid wallet addresses and available balances).
The first miner to solve a cryptographic puzzle is awarded the task of executing the transactions and in turn, earns a reward. At the time of writing the reward was 12.5 LTC, however, after every 840,000 blocks mined the reward halves in what is known as a halving reward. This mechanism is in place to manage the supply of new tokens entering circulation as each block mined releases minted new tokens.
As mentioned above, transactions are executed in 2.5 minutes, provided there is no congestion on the network, making it attractive to merchants and other service providers. The cost of making a transaction on the Litecoin network ranges from $0.03 or $.04 US cents.
Litecoin vs blockchain technology
Litecoin, like many other cryptocurrencies, is built on blockchain technology. It relies on the blockchain as the underlying technology to facilitate secure and decentralized transactions.
Litecoin transactions are facilitated by the blockchain through a decentralized ledger. When a transaction occurs, it is grouped with other transactions into a block. Miners then validate the transactions and add the block to the Litecoin blockchain. This process ensures the transparency and integrity of Litecoin transactions.
Blockchain plays a crucial role in securing Litecoin transactions by providing a decentralized and immutable record of all transactional activity. Each block is linked to the previous block, forming a chain, making it extremely difficult for malicious actors to alter past transactions. The distributed nature of the blockchain network ensures that no single entity has control over Litecoin transactions, enhancing security and trust in the system.
What gives Litecoin its value?
The value of Litecoin is determined by supply and demand, often determined by trade activity on exchanges. Due to its global liquidity and finite supply, Litecoin is a deflationary currency and has witnessed price gains over the years, making it an attractive option for investors in the global financial landscape over the years.
What is Litecoin used for?
Litecoin is a peer-to-peer payment system providing both a medium of exchange and a store of value. Due to its fast transaction times and secure network, Litecoin is often favored when making transactions that are time-sensitive, i.e. paying for a coffee or at a restaurant. LTC is widely used by merchants and service providers around the world and has experienced increased crypto adoption and investment over the last decade.
Who created Litecoin?
The Litecoin project is the creation of a former Google engineer and MIT graduate named Charlie Lee. Two years after creating Litecoin, Lee would go on to become the Director of Engineering at a large cryptocurrency exchange. In 2017, Lee rejoined the team as managing director of the Litecoin Foundation, a non-profit organization dedicated to the development of the blockchain platform and its technology.
Litecoin development and community
Litecoin's development process involves a dedicated team of developers who work on improving the Litecoin software and its functionalities. It follows a transparent and open-source approach, allowing anyone to contribute to its development and propose changes.
The Litecoin software undergoes regular updates and enhancements to ensure it remains secure, efficient, and compatible with emerging technologies. These updates often introduce new features, improve performance, and address any identified vulnerabilities.
Litecoin has a vibrant and active community that actively participates in its evolution. Community members provide feedback, report bugs, and contribute to discussions on Litecoin's future development. Their contributions range from code contributions from developers to community-driven initiatives, fostering a collaborative environment and shaping the direction of Litecoin's growth.
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