Coin Insights: What is Litecoin?

What-is-Litecoin

Litecoin was developed by a very early Bitcoin community member, an ex-Google employee, and one of the most influential early developers of the cryptocurrency space.

As one of the early projects to be founded, Litecoin has seen it’s fair share of market cycles and industry changes over the years, but has stood the test of time.

As one of the original cryptocurrencies in the market, and an initial copy of the Bitcoin codebase, Litecoin naturally shares a few similarities with Bitcoin. But while the two now share a common financial transfer network (the Lightning Network), Litecoin has evolved into something that is well, similar, yet different.

We’re going to cover the similarities and the differences, and explain why Litecoin just might be a cryptocurrency to pay attention to.

What Is Litecoin And Why Was It Created?

Litecoin shares similarity with Bitcoin in that it uses the same original source code. Just like Bitcoin, Litecoin has a set maximum number of coins available (84-million tokens) and uses a similar technology today (the Lightning Network) to transact across the globe.

Yet while the similarities are there, Litecoin has heavily modified the original source code and has evolved from Bitcoin in an interesting way.

In an effort to process transactions quickly (in what is called Transaction Per Second, or TPS) Litecoin made substantial upgrades to the original Bitcoin code base that it started with. Where Bitcoin’s maximum transaction speed is approximately 7-TPS, Litecoin was modified to process up to 56-TPS.

While Bitcoin is known as digital gold, some have called Litecoin the digital silver, and have equated it to a cryptocurrency that could actually be used as digital currency.

And although the two coins have been compared, Litecoin’s founder, Charlie Lee, shared that Litecoin was never intended to be a competitor to Bitcoin.

“The vision is always I wanted Litecoin to complement bitcoin—not compete. Litecoin can be used for things like moving millions of dollars between banks, buying houses, and buying cars. It’s really secure… Litecoin can be used for cheaper things (as well).”  

Who founded it?

Litecoin was founded by Charlie Lee, an early Bitcoin enthusiast, and contributor to the Bitcoin community. An MIT computer science graduate, and ex-Google employee, Charlie started mining Bitcoin in early 2011. As was true with many of the early Bitcoin community, Charlie found it fascinating, but noticed a number of challenges with the Bitcoin technology.

He loved the idea of a decentralized payment system, but he recognized that Bitcoin’s transactions were too slow to keep true to Satoshi Nakamoto’s vision of a “peer-to-peer digital cash” system. Like others at the time, Charlie aimed to create a new coin that could handle more transactions per second, and in doing so get closer to Satoshi’s original goal.

He founded Litecoin in 2011, making it one of the earliest cryptocurrencies in the market. Within a short span of eight-months Litecoin reached a $1-Billion market cap, making it one of the earliest coins to accomplish this feat.

Charlie now serves as the managing director of the Litecoin Foundation, and has gone on to be the Head Engineer at Coinbase (COIN), a publicly traded cryptocurrency platform on the NASDAQ.

The similarities between Litecoin and Bitcoin

As shared, Litecoin is a divergence from the original source code of Bitcoin.

Transactions are now processed on a network that Bitcoin uses (the Lightning Network), and Litecoin also shares a maximum supply of coins.

Where Bitcoin has a maximum supply of 21-million coins, Litecoin can accomoadate up to 84-million coins. At this point, once peak supply is reached no further coins will be produced.

The differences between Litecoin and Bitcoin

Litecoin (LTC) is commonly accepted among experts to be more decentralized than Bitcoin because of a proof-of-work algorithm known as Scrypt. As a quick aside, proof-of-work means that computers are doing the work of verifying the transactions on a blockchain. This, as you know, requires both lots of computers and lots of power.

Litecoin’s Scrypt algorithm is different from Bitcoins’. Bitcoin uses a proof-of-work system (yes, just like Litecoin) but with an algorithm known as SHA-256. And while the details of SHA-256 are not necessary to cover here, it’s important to point out because specialized computer equipment known as ASIC miners are required to process transactions when working with SHA-256. These miners (specialized computers really) are costly and hard to come by.

Because of this, and because of the very high profitability that can be made, large Bitcoin mining companies have emerged, spending millions of dollars on equipment and power. This naturally causes more centralization, and less decentralization.

Lee’s improvement using Scrypt mentioned above, allowed regular computers to process proof-of-work blockchain transactions. By allowing regular computers to contribute to processing transactions Lee’s Litecoin could be used on more computers, in more locations – making it more decentralized than Bitcoin.

The Litecoin Network Today

Litecoin is one of the top cryptocurrencies in the world by market cap, and is one of the longest standing cryptocurrencies in the market.

It fluctuates in the top 20 coins on Coinmarketcap and, at the time of writing this has a market cap of approximately $12B. Litecoins ticker symbol is LTC, and it’s coins are called Litecoin.

With constant work to the network, and a growing community of developers and enthusiasts, Litecoin remains one of the prominent coins in the crypto market.

Litecoin (LTC) Resources

If you’re interested in learning more Litecoin you can continue to read our educational series. We’ll be releasing more articles on this cryptocurrency, and covering various aspects of it over the coming months.

You can also take a look at some of the following links:

Litecoin.org

What is Litecoin?

Coinberry.com

Litecoin (LTC) Price (LTC to CAD)

Cointelegraph.com

What is Litecoin? A Beginners guide

References

The websites, articles, and content that was used to make this article:

Litecoin (LTC)

Investopedia.com

Fortune.com

What is Litecoin?