What is Litecoin?
Litecoin is a decentralized peer-to-peer network for payments using its native coin LTC. In Bitcoin and Litecoin, this central power is transferred to users all around the world, called miners. The transactions are validated by the miners and added to the blockchain. Their reward is in the form of a newly minted LTC. The transaction fees involved in payments also go to the miners as a reward. Since there is no role of a central authority and cryptography is used as proof of ownership of funds, Litecoin transfers the ownership to each holder.
Litecoin, however, brings faster and cheaper transactions and a more decentralized system to the world of cryptocurrency. He is very much included in the development and promotion of Litecoin, unlike the mysterious creator of Bitcoin. Litecoin actually started as a fork of the bitcoin blockchain. A fork is basically when the miners do not agree about an update in the blockchain and a new currency can spin out of bitcoin if enough people follow the fork that it is not accepted. Charlie Lee initiated an update to the blockchain in bitcoin. It was created with the intention of being a faster, fairer, and cheaper alternative to bitcoin.
The Open Source Public Project
Litecoin is a public project that is open source. It is free to use and collaborative, thus ensuring security. The codes are openly accessible and can be reviewed by anyone. Reviewers can also propose the necessary improvements. With Litecoin, new transactions are added to the blockchain every two and a half minutes, which is a reasonable time to wait while paying for daily needs. Litecoin’s transaction fee is about one or two cents.
Litecoin is the first cryptocurrency to adopt the Lightning Network, thus substantially improving the transaction speed and costs. The first-ever transaction on Lightning Network took place in May 2017, using Litecoin sending 0.00000001 LTC or 1 photon, which is the smallest fraction of LTC, from Zurich to San Francisco in under a second.
Being a two-layer network above the blockchain, it results in nearly instant and costless transactions between the parties involved.
Litecoin Value Source
Litecoin derives its value from the following:
- The cost to mine LTC – This includes the cost of mining equipment and the electricity that the equipment consumes.
- Scarcity – There is a capped supply of LTC, specifically, 84 million that will ever be created.
- Supply and Demand – The price of LTC is driven up or down depending on people’s beliefs of its value. If demand keeps steady as the crypto industry, in general, gets more inflows of capital, it should feed through to a solid base of support for the value of the cryptocurrency.
How to buy Litecoin LTC?
The largest exchanges that support litecoin are some of the top trading venues in the world so its trading support is very good. They have the largest trading volumes. Litecoin has a market cap of 15 billion dollars, ranked at number eight amongst all cryptocurrencies, with a supply cap of 84 million and a circulation of 66.5 million. The current price of litecoin is 196 USD per LTC.
Buying Litecoin is one of the easiest among most other cryptocurrencies. The first step to carrying out any transaction involving Litecoin would be to make an account of an exchange that supports Litecoin. After the account is made, you should link our bank account to your digital currency account. Money can be taken from your bank and deposited into your online wallet. This money deposited can be used to buy other cryptocurrencies like Litecoin. With it, you can buy any kind of cryptocurrency that the trading platform offers.
The trading platform will have a wallet for each cryptocurrency, which means you can create a Litecoin Wallet linked to your account. Buying and selling involve a transaction fee. You can then enter the amount of dollars worth of Litecoin you want to buy or sell and it instantly converts the amount to the corresponding value of LTC. You can also sell from your Litecoin wallet and convert it into US dollars or straight to your bank account.
Litecoin vs Bitcoin
- After the introduction of bitcoin over a decade ago, Charlie Lee, an MIT graduate, and former Google employee is the creator of Litecoin.
- Litecoin trails behind Bitcoin as the seventh-largest cryptocurrency coin in the world.
- In terms of the transaction fee, Litecoin wins the race. A bitcoin block takes about 10 minutes to confirm, whereas a Litecoin confirmation comes in 4 times faster, confirming at 2.5 minutes.
- Litecoins median transaction fee is much less than a cent, specifically $0.0024 cents per transaction. The median transaction fee for bitcoin is much higher at 68 cents.
- While the prices of both Litecoin and Bitcoin in terms of USD may shift constantly, Bitcoin is much cheaper to send than Bitcoin.
- An essential modification that Charlie Lee wished to introduce with Litecoin was to reduce the importance of expensive mining centralization. Large mining costs lead to big players taking in a much larger share. Litecoin was created to reduce mining centralization and is more centralized than bitcoin mining.
- Network hash rate is the total mining power allocated to the network by miners. Hashrate determines the security of a network. A network with a higher hash rate has more resistance to attacks. An attacker would need enough computing power to control more than 50% of the hash rate to stand a chance. Bitcoins hash rate is orders of magnitude higher than that of Litecoin thus making the network much more secure. Although both networks continue to grow in strength, Litecoins hash rate does not register when compared to BTC.
Bitcoin vs Litecoin vs Ethereum
- While Bitcoin was created as a decentralized currency and an alternative to governmental currency, ethereum was created as a do-it-yourself platform for decentralized applications (Dapps). So instead of replacing traditional currencies, ethereum aims at using the concept of decentralization to allow people to create contracts and software applications in a decentralized fashion. The code is not hashable and is stored on servers in the same way that bitcoin transactions are storing monetary exchanges.
- Using the system of decentralized blockchains, ethereum as an organization, instead of just maintaining a decentralized currency, aimed to create a network for storing computer code to create systems used for financial contracts that are unhackable. It is the largest decentralized software platform.
- Ether is Ethereum digital currency, as BTC and LTC are for Bitcoin and Litecoin respectively.
- Ether has the second-largest market cap in total monetary valuation after Bitcoin.
- They are all traded via online exchanges and stored in cryptocurrency wallets.
- Ether, similar to Bitcoin and Litecoin has also ended up being a decentralized currency.
- Ether is used as a financial currency and on the ethereum network to run ethereum applications. Bitcoin is mainly used for investment and trading and Litecoin is used for transactions involving smaller amounts.
- The algorithms used to crack each set of the blockchain on each of these platforms are different.
Therefore, the future for Litecoin is bright. It uses the Scrypt protocol which means that miners in the bitcoin network cannot shift to Litecoin, adding to the decentralized experience. It is easier to adopt because of the swifter processing. It allows lightning networks enabling users to make transactions at zero cost. It is less volatile, making it more trustworthy for traders. The price changes are not too drastic. Thus it is an affordable and more user-friendly cryptocurrency alternative.