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What Is Litecoin And How Does It Work?

What is Litecoin Explained Image

Key Takeaways

  • What is Litecoin?
  • Market Capital
  • Algorithm
  • Investing in Litecoin

Litecoin (LTC) is a peer-to-peer cryptocurrency that was developed by Charlie Lee (a former Google employee) in 2011, has many similarities to Bitcoin, and is based on the original source code of Bitcoin.

Cheaper transactions and more efficient for everyday use. In comparison, Bitcoin has been used more as a store of value for long-term purposes.

The market capitalization of the currencies is much higher with Litecoin than Bitcoin and the mining process is much faster. This means that transactions are faster and cheaper, although they are generally smaller.

Like Bitcoin, Litecoin is a form of digital money. Using blockchain technology, Litecoin can be used to transfer funds directly between individuals or companies. This ensures that a public ledger of all transactions is recorded,

and the currency can be operated in a decentralized payment system without government control or censorship.

LTC is a peer to peer cryptocurrency
Unsplash image by Executium

Litecoin is designed to enable instant and very affordable peer-to-peer payments. It is one of the top 5 cryptocurrencies in terms of market capitalization. The creation and transmission of Litecoin are based on an open-source cryptographic protocol and are not managed by any central authority.

Litecoin is not a hard fork (a significant change in the blockchain of a cryptocurrency) of Bitcoin, as it uses a different blockchain, but is considered a fork of the network on which Bitcoin is based – delayed by decreasing time generation of blocks,

a higher maximum provision of coins and slightly different function algorithms. Litecoin was designed as a complementary cryptocurrency and not as a competitor to Bitcoin.

It is sometimes referred to as Bitcoin’s silver to gold. being faster, cheaper, and handling a higher volume of transactions, and the relative loss of security due to a shorter block length is offset by the relatively lower value of the transactions it is responsible for.

Litecoin is better on Fast, Instant, and relatively low-value exchanges, while Bitcoin is better to have secure exchanges for high values ​​that do not need to be exchanged so quickly, which is why they are add-ons.

The mining of cryptocurrencies at a rate that is worthwhile for miners requires a lot of computing power thanks to special hardware. The central processing unit in most PCs is not fast enough to mine most cryptocurrencies.

Other cryptocurrencies, can be mined with PCs.3 The greater the mining capacity of a machine, the greater the chances that it will earn something valuable for a miner.

Bitcoin mining rigs on GPU
pixabay image by LauraTara

Litecoin is often compared to Bitcoin, which works in almost the same way, except for the transaction cost, which is about 1/50 that. For many cryptocurrency operators and users, Litecoin prices act more rationally than Bitcoin.

and more sustainable As we see some online stores start accepting cryptocurrencies, we will see that it is possible to buy jewelry, groceries, clothing, electronic products, etc.

As the value of Litecoin depends on the demand Websites is determined by forex trading B. Bitfinex, OKEx, GDAX, and Coinbase, one can imagine an online shopping platform where the price of products is constantly changing to reflect the value of the currencies accepted.

In addition to trading and buying Litecoin is able to mine it, although this is a very technical method. Activity and requires an adequate level of computer literacy.

A good computer is enough to mine coins very slowly, but a serious miner would use processing units that quickly solve the Attic equations that support the blockchain.

Crypto Exchanges Explained Image
pexels image by Tima Miroshnichenko

However, hundreds of other cryptocurrencies have hit the market since Bitcoin was founded in 2009. Although it is proving to be increasingly difficult for digital currencies due to the crowded field,

Litecoin (LTC) is different crypto than Bitcoin that has managed to face the competition. LTC is currently the sixth-largest digital currency by market capitalization behind Bitcoin.

Litecoin vs Bitcoin

Litecoin Vs Bitcoin Explained Image
pexels image by Alesia Kozik

The main difference between Litecoin and Bitcoin is the different cryptographic algorithms that they use. Bitcoin uses the SHA-256 algorithm, while Litecoin uses a newer algorithm called Litecoin, which has some inherent advantages compared to Bitcoin. The goal of prioritizing transaction speed and is one of the main reasons for its popularity. 

The Bitcoin network’s average transaction confirmation time is currently just under nine minutes per transaction, while that of Litecoin is around 2.5 minutes. Bitcoin has a significantly higher market capitalization than Litecoin.

April 2021, the total value of all bitcoins in circulation is around $ 1 trillion, while Litecoin’s market capitalization is around $ 18.3 billion. Bitcoin’s market capitalization still dwarfs all other digital currencies,

both Bitcoin and Litecoin have fixed supplies, however, the supply of Bitcoin is limited to only 21 million coins, while the total fixed supply of Litecoin is 84 million coins. 

Transaction Speed

While Litecoin requires a more sophisticated technology for mining than Bitcoin, blocks are actually generated up to four times faster. Litecoin also processes financial transactions much faster and can process a larger number of them in the same amount of time.

Crypto Transaction speed Explained Image
pexels image by Karol D

and Litecoin has a limited number of coins in circulation. Bitcoin has 21 million coins available, while Litecoin has 84 million available, four times more than Bitcoin.

Market Capital

Litecoin has a much smaller market capitalization than Bitcoin but is still one of the most traded Cryptocurrencies.


miners must successfully solve hash functions in order to add new blocks of a cryptocurrency to the blockchain. Litecoin and Bitcoin use different mining algorithms, with Scrypt being the hash function used for Litecoin and SHA-256 is the hash function used for Bitcoin.

Crypt was originally chosen by the Litecoin Development team to keep mining from being dominated by ASIC-based miners. it would allow CPU and GPU-based miners to compete.

The Scrypt mining algorithm is more memory-intensive and was initially less suitable for ASIC miners, which gives other miners more options. However, over time, Scrypt-enabled ASIC-based miners have been developed. This means that CPU- and GPU-based miners no longer have valid mining tools due to lower processing power and ASICs can generate many more hashes per second.

Bitcoin mining rig image
pixabay image by rebcenter-moscow

On the surface, Bitcoin and Litecoin have a lot in common: At the most basic level, they are both decentralized cryptocurrencies, while fiat currencies such as the US dollar or the Japanese yen rely on the support of the central bank for value and circulation control.

And legitimacy, cryptocurrencies are not subject to any centralized authority: they are only based on the cryptographic integrity of the network itself.

Litecoin was launched in 2011 by former Google engineer Charlie Lee, who debuted the “Lite version of Bitcoin” through a message in a popular Bitcoin Forum.3 Since its inception, Litecoin has been seen in response to Bitcoin.

In fact, Litecoin’s own developers have long stated that their intent is to create the “silver” for “Bitcoin’s gold”. Because of this, Litecoin takes over many of the features of Bitcoin that Lee and other developers have found good for the aforementioned cryptocurrency, and it changes some other aspects that the development team believes could be improved.

Proof-of-Work An important similarity between Bitcoin and Litecoin is that they are both proof-of-work ecosystems, which means that the underlying process by which both cryptocurrencies are mined is called them are generated, authenticated, and then added to e.g. a ledger, a public or a blockchain, it is basically similar (though not exactly the same as we will see below)

Blockchain Technology Image
Source: mmi9 on pixabay

 storage and transactions 

For an investor, many of the basic elements of transactions are also very similar to Bitcoin and Litecoin. Both require a refrigerator or digital “wallet” to be kept safe between transactions.

Additionally, the prices of both cryptocurrencies have shown dramatic volatility over time, depending on factors ranging from investor interests to government regulations. 

Investing in Litecoin

When you buy Litecoin on an exchange, the price of a Litecoin is usually trading against the US dollar (USD). In other words, you are selling USD to buy Litecoin.

When Litecoin’s price goes up, it’s ready to sell. Make a profit because it is now worth more USD than it was when you bought it. If the price goes down, and you decide to sell, you are at a loss.

Make a profit On Litecoin
pexels image by Karolina Grabowska

Charlie Lee, a former Google employee, launched Litecoin in October 2011, which was designed as a faster, cheaper cryptocurrency for transactions of relatively low value.

In November 2013, the value of Litecoin saw an increase. Including a 100% increase in value over 24 hours. At the end of this month, Litecoin reached a market capitalization of $1 billion.

In December 2017, Lee announced that he had sold almost all of his Litecoin holdings due to a perceived conflict of interest. He has been criticized for tweeting while holding Litecoin and accused of trying to make a personal gain as it had a possible price effect on Litecoin.

Litecoin Price Chart Explained
Source : CoinMarketCap

On April 17, 2021, the value of Litecoin was $310.73. Previously, the coins high was $237.57, which had been reached in December 2017.

Litecoin’s volatility is likely driven by similar factors as Bitcoin, for example, Regulation — Cryptocurrencies are not currently regulated by governments and central banks.

There are questions about how this could change in the years to come and what effect this could have on value. Offer: A limited number of Litecoins are available for mining (84 million).

Availability can also fluctuate depending on the speed at which the coins hit the market. Press: Litecoin prices can be influenced by public perception, security, and longevity.

And the prices of other cryptocurrencies like Bitcoin. Adoption: Businesses or consumers have not yet adopted Litecoin as a payment method, but some see potential in blockchain technology and think it could become more widespread in the future

Can Litecoin Overtake Bitcoin?

Whether Litecoin could ever surpass Bitcoin as the number one cryptocurrency is speculation. Bitcoin is still the original digital money, and for many, its name is synonymous with cryptocurrency in general, practically an umbrella term, as Kleenex stands for facial tissues. Any other crypto that would take Bitcoin off the throne, Ethereum (the current number two), or any of the other higher ranking currencies could be more likely candidates.

Bitcoin Valuable Explained Image
pexels image by Karolina Grabowska

However, some analysts like Litecoin’s fundamentals. “Litecoin can process transactions faster than Bitcoin, and its faster lockout time suggests it can process more capacity than Bitcoin,” wrote stock picker, Sean Williams, in a 2018 article for The Motley Fool, adding that “It definitely has the tools to place bitcoin ”.

Aside and become the preferred medium of exchange for digital currency users. “12 While Bitcoin and Litecoin may be relatively the gold and silver of the cryptocurrency space today, history has shown that the status quo is changing in this fast-paced and evolving sector can even change in a few months. It remains to be seen whether the cryptocurrencies we are familiar with will retain their status in the months and years to come.

End of the Story

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