Litecoin, dubbed “the first successful altcoin,” was one of the earliest Bitcoin spinoffs, launched in 2011 as an attempt to make a cryptocurrency more suitable for usage as digital payment.
Developer Charlie Lee created Litecoin, which has some benefits over its cryptocurrency competitors. Litecoin, for example, has substantially cheaper transaction fees than Bitcoin. It has regularly ranked among the top five and ten cryptocurrencies, maintaining a stable market share of roughly 5% since its inception, even while other coins’ popularity rises and falls.
Despite the fact that Bitcoin opened up new possibilities in the world of finance and technology, its core had serious usability and scalability issues. Litecoin (LTC) aims to respond to these issues.
Charlie Lee, a well-known computer scientist, conceptualized and developed Litecoin as a fork of Bitcoin. The project’s main goal was to become the “silver to Bitcoin’s gold,” allowing more individuals involvement with cryptocurrencies. Lee worked at Google and Coinbase before founding the Litecoin Foundation in 2017, a non-profit that supports the Litecoin project.
How Does it Work?
Although the two networks support one other in various ways, Litecoin’s principal ‘competitor’ is Bitcoin. For one thing, Litecoin took Bitcoin’s code and improved it with a slew of new features. Litecoin, on the other hand, pioneered technology such as the Lightning Network and Segregated Witness (SegWit), both adopted by Bitcoin.
Litecoin is roughly four times faster than Bitcoin in terms of transaction settlement. Litecoin does this by using Scrypt, a modified version of Bitcoin’s Proof-of-Work (PoW) consensus method. The solution is in line with Litecoin’s goal of addressing ASIC-based mining concerns, which it has partially accomplished. Litecoin miners can use less expensive Graphics Processing Units instead of more expensive ASIC hardware (GPUs). Litecoin’s block verification time, or the time it takes to finalize new blocks, cuts to 2.5 minutes thanks to Scrypt, relative to Bitcoin’s 10 minutes. As a result, Litecoin completes around 56 transactions per second, whereas Bitcoin settles around 7 transactions per second.
Blockchain-based payments are secure cryptographically, which means they include the sender’s and receiver’s signatures to confirm the legitimacy and other factors. These signatures include in the transaction in the initial Bitcoin Core, effectively boosting the size of each transaction.
In 2017, Litecoin adopted Segregated Witness, or SegWit, a solution provided by Pieter Wuille, a co-founder of Blockstream. Simply put, SegWit isolates signatures from transactions and stores them in the associated input rather than the transaction itself.
As a result, the transaction’s size reduces, and more transactions can submit to each block. When used in conjunction with Scrypt, SegWit improves Litecoin’s scalability, making the network more suitable for large-scale use.
Litecoin is an open-source, peer-to-peer digital money, similar to Bitcoin, that is based on the network’s native cryptocurrency, the LTC token. It has a maximum supply of 84 million and can use for a variety of financial objectives.
The fully decentralized payment network of Litecoin allows for near-zero charge transactions in LTC. Furthermore, the token’s code architecture allows for maximum storage efficiency. It also offers improved protection against malware, viruses, and hacking.
One of LTC’s key internal tasks within the Litecoin network is to reward miners in order to incentivize favorable behavior. The block reward sets initially at 50 LTC. The algorithm, on the other hand, halves the money every four years (roughly, after every 840,000 blocks).
Miners receive 12.5 LTC tokens for each block at the time of writing, in early 2021. LTC’s market performance has progressively improved over time, backed by the network’s functions and inherent value.