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Litecoin (LTC) Information For Beginners

What Is Litecoin (LTC)?

Litecoin (LTC) is an alternative cryptocurrency created in October 2011 by Charles “Charlie” Lee, a former Google engineer. LTC differs from Bitcoins in aspects like faster block generation rate and Scrypt as a proof of work scheme. LTC was adapted from Bitcoin’s open-source code but with several modifications. Like Bitcoin, Litecoin is based on an open-source global payment network controlled by any central authority. 

It is considered among the first altcoins derived from Bitcoin’s original open-source code.

Initially, it was a solid competitor for Bitcoin. However, as the cryptocurrency market has become much more saturated and competitive in recent years with new offerings, Litecoin’s popularity has waned somewhat.

Litecoin has always been viewed as a reaction to Bitcoin. When Lee announced the debut of LTC on a popular Bitcoin forum, he called it the “lite version of Bitcoin.”1 For this reason, LTC has many of the same features as Bitcoin while also adapting and changing some other aspects that the development team felt could be improved.

As of November 2021, 1 LTC is worth around $215, making it the 14th-largest crypto with a market cap of just under $15 billion.

Understanding Litecoin (LTC)

Like other decentralized cryptocurrencies, Litecoin is not issued by a government, historically the only entity that society trusts to issue money. Instead of being regulated by a central bank and coming off the press at the Bureau of Engraving and Printing, LTC are created by an elaborate cryptocurrency procedure called mining, which processes a list of LTC transactions.

Litecoin was developed by Charlie Lee, a graduate of the Massachusetts Institute of Technology (MIT) and a former Google engineer who became interested in Bitcoin in 2011. According to Lee, “In October of 2011, I was playing around with the Bitcoin codebase, and I guess the short of it was that I was trying to create … a fork of Bitcoin. It was mainly a fun side project.”

Like Bitcoin, the maximum number of LTC is fixed. There will never be more than 84 million Litecoins in circulation. Every 2.5 minutes, the LTC network generates a new block–a ledger entry of recent LTC transactions worldwide.34 The block is verified by mining software and made visible to any system participant (called a miner) who wants to see it. Once a miner verifies it, the next block enters the chain, which is a record of every Litecoin transaction ever made.4

There are incentives for mining Litecoin: the first miner to successfully verify a block is rewarded with 12.5 LTC. 2 As with Bitcoin, the number of LTC awarded for such a task reduces with time. In August 2019, it was halved, and the halving will continue at regular intervals until the 84,000,000th LTC is mined.5 The LTC Foundation estimates that it will be around 2142 when the maximum of 84 million Litecoins are reached.

Scrypt Proof-of-Work Algorithm

Bitcoin, Litecoin, and many other cryptocurrencies use the proof-of-work (PoW) algorithm to secure their networks. PoW requires that one party proves to all the other participating parties in the network that a required amount of computational effort has been expended. Unlike Bitcoin, which uses the SHA-256 PoW hashing algorithm, Litecoin uses the less resource-intensive Scrypt PoW algorithm.

Scrypt is a password-based essential derivation function. According to Tarsnip, “the scrypt key derivation function was originally developed for use in the Tarsnap online backup system and is designed to be far more secure against hardware brute-force attacks than alternative functions such as PBKDF2 or bcrypt.”

Lee developed Scrypt specifically to make more difficult large-scale, custom-built hardware attacks on the currency. Bitcoin’s SHA-256 algorithm does not require a lot of random access memory (RAM) as an impediment to parallel processing, whereas Scrypt does.

At the beginning of the 2010s, as mining operations developed specialized hardware, like the application-specific circuit (ASIC) to solve SHA-256 hashing, it appeared that Bitcoin was vulnerable to such an attack. By making Litecoin’s consensus algorithm memory intensive, Lee sought to thwart the hardware arms race, though, in practice, that didn’t happen as the rise of GPUs answered the need for greater RAM.

How Is Bitcoin (BTC) Different From Litecoin (LTC)?

Litecoin was launched to be the “silver” to Bitcoin’s “gold.” Like Bitcoin, LTC is a peer-to-peer internet currency. It is a fully decentralized, open-source, global payment network. Lee developed Litecoin intending to improve on Bitcoin’s shortcomings. The broader differences between the two cryptocurrencies are listed in the table below.

Also Read: Is TRON a good investment?

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