Litecoin (LTC) like Bitcoin, is based on an open-source global payment network that is independent of any central authority. It varies from Bitcoin in several ways, including the use of Scrypt as a proof-of-work (PoW) algorithm and a quicker block generation rate.Litecoin has long been as a counter-measure to Bitcoin.
In fact, Lee dubbed Litecoin the “lite version of Bitcoin” when he first unveiled it on a popular Bitcoin forum.
As a result, Litecoin shares many of Bitcoin’s features while also modifying and tweaking those parts that the development team felt should be improved.
1 LTC (one Litecoin) is worth roughly $215 as of November 2021, making it the 14th-largest cryptocurrency with a market capitalization of little under $15 billion.
- It can pay people all over the world without the need for a third party to handle the transaction.
- It is the 14th largest cryptocurrency by market capitalization.
- The total number of Litecoins (LTCs) in circulation will never exceed 84 million.
Understanding Litecoin
It has traditionally been the only organization society has trusted to issue money.
Litecoins are created by an elaborate cryptocurrency procedure called mining, which involves processing a list of Litecoin transactions. It involves processing a list of Litecoin transactions.
Unlike other currencies, Litecoin’s supply has limits.
The total number of Litecoins in circulation will never exceed 84 million.
The Litecoin network generates a new block—a ledger record of recent Litecoin transactions from around the world—every 2.5 minutes.
Mining software verifies the block and makes it visible to any system participant (called a miner) who wants to see it.
The next block enters the chain.
Mining has incentives: the first miner to correctly validate a block receives 12.5 Litecoins.
The number of Litecoins granted for such a task decreases with time, similar to Bitcoin.
It halved in August 2019, and it will continue to be halved at regular intervals until the 84 millionth Litecoin is mined.
Halving dates for LTC:
- Aug. 25, 2015 (50 -> 25 LTCs)
- Aug. 5, 2019 (25 -> 12.5 LTCs)
- Aug. 23, 2023 (expected) (12.5 -> 6.25 LTCs)
Special Considerations
Mining bitcoin at a profitable rate necessitates a massive amount of computing power, which is provided by specialized hardware.
Most personal computers’ central processing units (CPUs) aren’t fast enough to mine most cryptocurrencies.
Litecoin, on the other hand, differs from the bulk of other cryptocurrencies in that it can be mined on a personal computer.
The bigger a machine’s mining capacity, though, the more likely it is to yield something useful for a miner.
Even the US dollar and gold bullion are only as valuable as society perceives them to be. The dollar’s value would collapse quickly if the Federal Reserve (Fed) began printing too many banknotes.
This phenomena is not limited to money. Any good or service loses its value as it becomes more widely and inexpensively available.
From the beginning, the designers of Litecoin recognized that establishing a reputation in the marketplace would be challenging.
The founders may at least ease people’s anxieties about overproduction by limiting the quantity of Litecoins in circulation.
How Is Litecoin Different from Bitcoin?
Bitcoin employs the SHA-256 algorithm, but Litecoin uses the Scrypt algorithm, which is a newer algorithm.
When compared to Bitcoin, this has several intrinsic advantages. Its popularity stems from the fact that it was founded with the objective of maximizing transaction speed.
The average transaction confirmation time on the Bitcoin network is currently little under nine minutes, whereas Litecoin’s is around 2.5 minutes. Because of its faster block generation time, the Litecoin network can process more transactions.
The market capitalisation of Bitcoin is substantially higher than that of Litecoin. The total value of all bitcoins in circulation is about $1 trillion as of August 31, 2021, whereas Litecoin’s market capitalization is around $11.9 billion.
The market valuation of Bitcoin continues to surpass that of all other digital currencies.
Bitcoin and Litecoin both have limited supply. Bitcoin, on the other hand, has a fixed supply of only 21 million coins, whilst Litecoin has a total fixed supply of 84 million coins.
Goals of Litecoin
Like all virtual currencies, Litecoin is a type of digital money. Litecoin can buy products and transfer money between accounts by both individuals and institutions.
Participants can use Litecoin to conduct transactions without the assistance of a bank, credit card provider, or payment processing firm.
Rather than focusing on its functionality, many investors have interest in Litecoin as a potential long-term holding. Similar to investments in any type of currency, investors are speculating that Litecoin will build relative wealth over time.
What is it, and how does it work?
It is a peer-to-peer (P2P) virtual currency, meaning it has no central authority. Individuals and institutions all throughout the world can use the Litecoin network to make quick, near-zero-cost payments.
The proof-of-work (PoW) algorithm secures the networks of Bitcoin, Litecoin, and many other cryptocurrencies.
Essentially, PoW requires one party to demonstrate to all other network participants that a certain amount of computing effort has been done.
Unlike Bitcoin, which employs the SHA-256 PoW hashing method, Litecoin uses the Scrypt PoW technique, which is less resource-intensive.
Once a currency has reached a critical mass of users who believe it reflects what it claims and is unlikely to lose value, it can continue to be as a means of payment.
Litecoin has a long way to go before it is widely adopted. However, when cryptocurrencies gain acceptance and their values settle, one or two of them—possibly including Litecoin—will emerge as the digital realm’s standard currencies.
Investing in cryptocurrencies and other initial coin offerings (ICOs) is extremely dangerous and speculative, and this article is not an endorsement of cryptocurrencies or other ICOs by Investopedia or the author.
Because each person’s circumstance is different, you should always get advice from a knowledgeable specialist before making any financial decisions.
Investopedia makes no guarantees or representations about the accuracy or timeliness of the information provided.
The author does not possess any Litecoins as of the date this post was created.
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