It was launched in 2011, just a few years after Satoshi Nakamoto’s essay changed banking and technology with Bitcoin.
Early that year, I became intrigued with Bitcoin and realized that speed was one of its major drawbacks. Every ten minutes, a block joined the Bitcoin network, and I instantly saw that transaction throughput would become a serious scalability challenge for the embryonic cryptocurrency.
I started working on a system to complement Bitcoin right afterward, and Litecoin formed about a week later.
I presented Litecoin as the “light version of Bitcoin” that might very well become “the silver to Bitcoin’s gold” to assist people immediately in understanding what it was.
Litecoin versus Bitcoin
Litecoin creates from a copy of the Bitcoin source code, rather than forking from the Bitcoin network. Hence it has no shared genesis block. Technologically, Litecoin is quite similar to Bitcoin. Because of the faster block generation time and larger currency supply, Litecoin prefers over Bitcoin.
Both Litecoin and Bitcoin use the Proof of Work consensus algorithm. Bitcoin and Ethereum miners compete to add blocks of relevant transactional data to their blockchains and collect block rewards by solving extremely difficult arithmetic problems using a hash algorithm.
The SHA-256 hashing mechanism powered PoW on the Bitcoin network. Miners employ computers to solve these incredibly difficult math problems. The build and arrangement of these computers vary substantially. Originally, the Bitcoin mining fundamental machinery was based on a central processing unit (CPU), which is roughly equivalent to the backbone of a standard computer.
A GPU relieves the primary CPU of much of the processing load and boosts the device’s total processing capacity.
Additionally, as is customary in most contests, new technology invents solely for the purpose of Bitcoin mining. ASICs advance technologically devices that thrive at mining and almost consistently surpass their CPU and GPU rivals. They are also excessively expensive, difficult to maintain, and need specialist knowledge, which deters people from using them.
In recent years, fewer people have the skills, time, and finances to invest in and maintain ASICs. Endangering the network’s security and resilience.
Scrypt Hashing Method
Litecoin creates using the Scrypt hashing method, which is a memory-intensive algorithm means to prevent GPUs and ASICs from mining. The intent was to make the Litecoin network readily available to the coin’s strongest supporters: people. As a result, it was critical for people to be able to mine litecoin using their CPUs at first. Scrypt-capable ASICs develop over time, and presently this gear uses for almost all Litecoin mining.
Litecoin generates new blocks four times faster than Bitcoin, which mines blocks every ten minutes. Thus, Litecoin’s transaction throughput is approximately four times that of Bitcoin. Each block on the Litecoin network rewards miners with a certain amount of LTC. The block reward halves gradually over time.
The duration between halvings lengthens to accommodate for Litecoin’s quicker block time. Litecoin’s block reward halving occurs every 840,000 blocks, whereas Bitcoin’s occurs every 210,000 blocks. Litecoin currently produces four blocks per halving cycle, compared to one for Bitcoin.
This compensation mechanism should keep Litecoin and Bitcoin on a similar path, with a halving every four years. The math also shows that there will be 84 million LTC against 21 million BTC at the end.
Litecoin Is Not a Bitcoin Competitor
But with speedier block times and higher transaction volume, Bitcoin has grown into a measure of wealth. Litecoin’s early adoption of the SegWit soft fork and subsequent adoption of Bitcoin proves that it is a good testnet for the Bitcoin system.
People increasingly see Litecoin as a complement to Bitcoin rather than a competitor: Litecoin is the silver to Bitcoin’s gold.
