Litecoin (LTC) is an open-source decentralized cryptocurrency that was created to be an alternate and stable coin in comparison with Bitcoin. It is the 14th largest crypto coin by market capitalization. The aim of Litecoin was to be a cheaper and faster alternative to Bitcoin that can be easily mined. In many ways, Litecoin was the first alternate coin. We will take an in-depth look at Litecoin, its unique features, and what sets it apart from Bitcoin.
Explaining Litecoin
Litecoin was created to be a Lite version of Bitcoin hence the name Litecoin. It was created by Charlie Lee back in 2011. Charlie Lee was a software engineer at Google at the time. It shares a lot of aspects similar to Bitcoin, like the Proof of Work scheme, but it is lighter and faster in creating blocks and verifying transactions. Litecoin was created, meant to be an alternative to Bitcoin. But due to market saturation and even more advanced crypto like Ethereum, it didn’t gain much traction.
It is cheaper and easier to mine. The transaction fee is comparatively low compared to Bitcoin or Ethereum. But unlike other coins, the supply of Litecoin is fixed at 84 million, and there will not be any more. This is done to retain the value of Litecoin in the market. Photon is the sub-coin of Litecoin, just like Paise is to Rupees. Let us take a look at some of the unique features of Litecoin which sets it apart.
Features of Litecoin
There are several different aspects and features of Litecoin that set it apart from other cryptocurrencies. These unique features are why Litecoin has grown into a massive community over the years. Let us take a look at some of those features.
Scrypt Hashing Algorithm
Litecoin uses a proof of work scheme where different computers compete to validate a transaction and earn rewards. This is called mining. People had to use really powerful computers in a race to see who validates the transaction first. This not only uses a lot of electricity but also meant that a lot of people cannot participate in this process. As powerful computers are not easily affordable.
So to solve this issue, a new algorithm was created called Scrypt Hashing Algorithm. This decentralized Litecoin even further to the point that people can mine it even with their less powerful personal computers. And earn Litecoin as a reward.
Lightning Network
Litecoin can carry out 54 transactions per second. 54 transactions is not a huge amount of transactions so to achieve more transactions, Litecoin adopted Lightning Network. It was the first cryptocurrency to adopt the Lightning network. Lightning Network is a Layer 2 protocol that helps process transactions faster. This allows thousands of transactions to take place within a second.
Merge Mining
Litecoin uses a Scrypt hashing algorithm to allow a wider audience to mine Litecoin and validate transactions, but this also allowed people to mine another coin at the same time without using any more resources or electricity. This gave miners even more incentive to mine Litecoin since they could mine 2 coins at the same time. This is called Merge Mining. Any other coin that uses the Scrypt algorithm can be merged and mined alongside Litecoin.
Popular meme coin Doge also uses the Scrypt algorithm, so miners often mine it alongside Litecoin to increase the rewards they earn.
Bitcoin vs. Litecoin
Litecoin was initially created to be the lighter and much faster version of Bitcoin following Bitcoin’s success. Bitcoin had its issues that Litecoin tried to overcome using the features we discussed above. One of the biggest hurdles with Bitcoin is the rate at which it can add a block to its blockchain and how quickly it can validate transactions.
Faster speed
Bitcoin can add a block every 10 mins. And carry out seven transactions per minute.
On the other hand, Litecoin was able to perform faster and reduced the speed of adding blocks by 4 times.
Litecoin can add a block every 2.5 mins. And carry out 54 transactions per minute.
Litecoin also utilized the Lightning network to allow for thousands of transactions to take place in a second. All this allowed users to carry out transactions faster without paying much transaction fee in comparison to Bitcoin. The transaction fee of Bitcoin can be anywhere between 2-10$ while for Litecoin it is around 0.1-0.2$.
Better accessibility and less resource-intensive
Bitcoin uses a Proof of Work PoS scheme, which lets users compete to validate transactions. only the winner can receive the rewards. The issue with this is that it ends up taking a lot of resources and electricity, and only the most powerful computers can win. Litecoin fixed this by using the Scrypt algorithm and even the playing field, so now, people with personal computers can participate in the PoS scheme.
It also allowed miners to mine two coins together to increase their rewards without using more resources or electricity.
Coin Supply and Market Capitalization
Litecoin also has four times more coin supply than Bitcoin. Bitcoin has a supply of 21 million coins, and there will never be more than that. Litecoin has a supply of 84 million coins which is four times more than Bitcoin. But this did affect the value of Litecoin in the market. Bitcoin currently has the biggest market capitalization and holds the number 1 spot, while Litecoin is in the 14th position.
Wrapping Up
Litecoin introduced many new possibilities for the later altcoin. Being the first altcoin, it achieved a lot of community support and still has a growing list of supporters. It managed to pave the way for a faster and seamless transaction experience which was not possible previously with Bitcoin. We hope we helped you explain Litecoin, how it works, and its features.
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