Litecoin is an open-sourced digital currency and is the silver to Bitcoin’s gold. It is a blockchain based cryptocurrency, which allows nearly zero-cost payments across the world and is fully decentralized.
Litecoin ensures that all its transactions are not confined to one single server, and is made available to everyone. Each and every information of the transaction is stored in the ledgers and they cannot be deleted or modified.
Litecoin was created by, Charlie Lee who is a Google employee. After a few failed attempts to create the cryptocurrencies, Lee came up with Litecoin and designed it to be a better version of the Bitcoin.
Litecoin is called as the silver cryptocurrency, when compared to the Bitcoin as it is termed as gold, due to its lower prices and availability.
When the identity of Bitcoin creator named Satoshi Nakamoto is a shrouded mystery, but the Litecoin’s creator Charlie Lee is a very active person on the social media with his blog. Charlie Lee who is an ex-Google employee had the vision to create a lighter version of the Bitcoin.
As said earlier Bitcoin was seen as “gold” and as a store of value for the long-term purpose, and Litecoin was seen as the “silver” and also as the means of a transaction for the cheaper and everyday purposes.
Finally, on October 7 2011, litecoin was released through an open-source client on the Git Hub. Later the Litecoin Network went live on October 13 2011 and it is basically a fork of Bitcoin core client.
Benefits of Litecoin
Litecoin was actually created very similar to the Bitcoin and its underlying technology is based on proof-of-work model. Litecoin mining is nothing but a process by which the miners can obtain the Litecoins, using their computers so as to secure the Litecoin network.
The mining of Litecoin involves the use of adding the blocks to the blockchain. The miner who first verifies the block can earn a certain number of these Litecoins, and it is then reduced as the mining continues.
Litecoin uses the Scrypt algorithm in the Proof-of-Work model which ensures a quick and safe transaction. The transaction fee is also reduced a lot so as to make the transactions cheaper than that of the Bitcoin.
Transaction Process of Litecoin
Litecoin which works by the peer-to-peer connections helps to removes the need of a middleman and also eliminates its transactional costs.When compared to Bitcoin, the transactions take a much lesser time, and are also safe that is because the transaction fee is a much reduced one and they are also cheap.
As the whole system is based on the decentralized blockchain technology, litecoin ensures and sees to that the information is distributed to all the databases, and not confined to a singular done. It also records each and every transaction and stores it permanently.
The most fundamental and technical differences between the Bitcoin and Litecoin mining is their procedure. Both of them use the Proof-of-work consensus mechanism. The Proof-of-work is a pretty straightforward one to understand.
The miners use the computational power to solve the extremely hard cryptographic puzzles. The puzzle solving actually needs to be extremely hard because if it is simple then the miners will keep mining the blocks and can drain out the entire supply of bitcoins or litecoins.
Apart, from the puzzle solving part being difficult, then checking to whether the solution of puzzle is correct or not should be a simple one.
And this in a nutshell, is the proof of work where solving the puzzles and getting a solution to it should be a tough one. But, checking to see whether the solution provided is a correct one or not should be difficult too. But both bitcoin and litecoin go about this in a little different way.
Bitcoin uses the hashing algorithm SHA-256 for its mining purposes. Long before, the miners discovered that they can exponentially increase the mining power by joining together and then forming the mining pools through the parallel processing.
In the parallel processing, the programming instructions are divided amongst the multiple processors. By doing such, the running time of that program gradually decreases and this is what basically the mining pools are doing at present.
The SHA 256 algorithm requires a lot of processing power to solve the puzzles, and this gave rise to a specialized application of specific integrated circuits called ASICs.
The only purpose of these ASICs to serve is bitcoin mining. The mining pools will basically have an entire power plant of the ASICs which are designed specifically for the bitcoin mining.
Mining, which was originally envisioned by the Satoshi, is supposed to be a democratic process. The idea is that any average person can sit on his laptop and contribute to the process by becoming a miner. Also, with the rise of these ASIC plants, the average people have no much chance to compete with big companies.
Mining is an extremely wasteful process because the amount of power wastage which happens through mining is very humongous. A look at how much power the litecoin consumes is
Scrypt which was originally named as “s-crypt” is now pronounced as “script”. And this algorithm, in fact utilizes the SHA 256 algorithm and its calculations are way more serialized than that of the SHA-256 in the bitcoin. As such, then these parallelizing calculations are not possible, which means If there are two processes A and B.
In the bitcoin, there is a possibility for the ASICs to do the processes A and B together at the same time by parallelizing.
But in Litecoin, they will need to do A and then B serially or one after the other. If they try to parallelize them, then the memory required becomes a way too much too handle it.
Scrypt is called as the “memory hard problem” as the main limiting factor is not the raw processing power but its memory. This is the specific reason why parallelization has become an issue.
To run 5 memory hard processes in parallel actually requires 5 times as much as memory. But, of course there can be devices that can be manufactured with tons of memory in it, but the two factors can mitigate this effect.
Normally people can compete by buying the simple day-to-day memory cards instead of super-the specialized ASICs. Because pound-for-pound the memory is way more expensive to produce than the SHA-256 hashing chips.
Scrypt was deliberately designed to make sure that the mining is accessible and democratized as much as possible. However, in the recent companies like the Zeus and Flower technology they have managed to create a Scrypt ASIC. This means the demise of the dream of democratized mining.
Litecoin Transaction Speed
The Average block mining speed of Litecoin is 2.5 mins when compared to the bitcoin’s which is 10 mins. Because of the network congestion and the slow block mining times, the median time or waiting time for the transactions can fluctuate nearby to 29 mins.
This feature can be extremely useful for the merchants who need to do a lot of mini-transactions every day. Using the litecoin, they can get two confirmations in 5 mins but just one confirmation with Bitcoin and it will take at least of 10 mins.
Another major advantage of faster block creation time is that the variance in the miner rewards. As the time between the blocks is too small, more and more of the miners get the opportunity to mine the blocks and earn their mining rewards.
This means that the mining rewards should be theoretically well-distributed in Litecoin and, by extension; it should also be more decentralized.
However, there come some disadvantages along with the faster transaction speed.
Firstly, as the block creation time is low, it leads to formation of more number of orphaned blocks. Mining, in every aspect, is a competition between the miners.
If they have a bunch of miners and pools who are desperately trying to mine then the next block will be added to the chain. There are instances when more than one miner came up with a blockchain and which was added to the chain.
In such situations, the network decides which block needs to be added next. The other block proceeds to become an orphan then which is a perfectly legitimate block and does not have any transactions in it.
In litecoin, as the downtime between the blocks is very low, the chances of the miners mining the orphaned blocks also increase exponentially. Orphaned blocks are nothing but a drain on the system. Secondly, there is also an immense strain on the blockchain.
Litecoin Value Proposition
Litecoin, when compared to Bitcoin offers a fast and safe method for its transactions, which is also as quick as sending the text message. Since the transaction fees is very less when compared to the other major cryptocurrencies, transactions using the Litecoin are very cheaper too.
Litecoin Buying and Storing
Other than mining the Litecoin they can also be bought using the fiat currency through the exchanges like Binance. Litecoin is the most and often exchanged one with the other cryptocurrencies like Bitcoin, Ethereum, and many other on the exchanges such as the Bittrex, Cryptopia, OKEx, and much more.
CoinSwitch, is one of the best cryptocurrency trading platform and is the ideal portal to exchange cryptocurrencies, it allows the users to view many exchange rates, and then select the best amongst them.
It also allows them to store the cryptocurrencies in the user’s own Litecoin wallet, so that if any exchange go down, the coins are still be available for the user.
Litecoin, which is similar to Bitcoin, can be stored in all the major wallets, which are supported across the board. There are plenty of these Litecoin wallets, such as the desktop LTC wallet, Electrum LTC and other hardware wallets, which are available in the USB Style such as the Trezor and even the paper wallets.
Android and iPhone wallets like the Jaxx and Loafwallet are also used for storing the Litecoins. But, it is advised to not store a large amount of the cryptocurrency on these mobile wallets.
Litecoin and other cryptocurrencies
Litecoin is actually built based on the Bitcoin by Charlie Lee, but he used the Scrypt algorithm in the Proof-of-Work Model, to make it a faster and safer cryptocurrency, and also a more accessible one to the LTC miner who may actually not own a high-performance machine.
When compared to the other major cryptocurrencies, Litecoin offers a low transaction fees, and making it a more economical choice for the transactions.As it is quite a similar one to Bitcoin, all the major wallets can also be used to store the Litecoin.
Litecoin is the older and amongst the more stable cryptocurrencies at present in the market.
Investors who are looking to enter Litecoin typically can see the returns from their investments in both the immediate and long-term storage.
Litecoin has become the choice of cryptocurrency for those who perform a lot of transactions and would like to save on the transaction costs. This means that both the new users will adopt it and the long term future of it also looks bright.
The Litecoin technology is also very likely to be incorporated in the new features in the near future, while keeping the original benefits and it can soon be used by the large corporations for its transactions.
Having been fallen from a high of $320 in the early 2018, this cryptocurrency is looking to be a tempting buy for many of the investors.
Having said this, there is a section of the market who argues that the other coins like Ethereum also serve the same purpose, and it offers more and better features.
Future of Litecoin
Though Litecoin has been in the market for a while now, its importance has not yet diminished. Its value still remains high in the favour of the cryptomarkets, and due to this simplicity, it has a quite enough potential for the changes like the introduction of the Smart Contracts, which can make it even more useful.
According to the Bitdegree, Litecoin is the fifth largest cryptocurrency, with a market cap of more than $12 billion dollars. The investors and the users need not worry about Litecoins flooding the market nor its value decreasing, because a total number of only 84 million coins can be mined.
Though the Litecoin cryptocurrency has faced some lows in the market and has grown in the past years, , it still continues to be one of the major cryptocurrency in the list.
Litecoin has taken the world by storm over the past couple of months due to a writing and the reason for that is manifold, Cryptocurrency is becoming more and more a mainstream and trusted one. Coinbase has begun selling the litecoin and activated Segwit.
However, more than this dramatic rise what the litecoin represents actually is far more valuable. It is of course true that the litecoin is envisioned as the bitcoin’s younger brother but the purpose of it has grown far more than that.
During the last year or so, the litecoin has time and again taken the risks needed to show the people its true scope and potential of the cryptocurrencies and they were one of the first to implement the Segwit and also successfully tested out the atomic swaps.
Apart from this, they are also actively looking to incorporate the lightning network into the system. Observing this, the rise in its value is certainly a well-earned and to all those who are eagerly looking to get the slice of the litecoin pie can enjoy it in the near future.