What is Litecoin?
Litecoin (LTC) is a peer-to-peer, open source cryptocurrency which is not governed by any central authority. It is widely regarded as the first “altcoin,” forked from bitcoin in 2011. Litecoin is very similar to bitcoin and shares many of its architectural features. It has some advantages over bitcoin like a faster block generation time (2.5 minutes) and the usage of the scrypt hashing algorithm, which gives it a degree of ASIC-resistance (it is harder to mine Litecoin using mining-specific hardware).
History of LTC
Litecoin was released in October 2011 by Charlie Lee, a former Google employee. In November 2013, Litecoin saw its first substantial increase in value.
In 2014, Litecoin version 0.8.7.1 was released. The upgrade removed some minor bugs and also countered the Heartbleed bug which made it possible to read data from a vulnerable client’s memory.
In May 2017, Litecoin adopted Segregated Witness, a new type of consensus layer, and also introduced Lightning Network, a superfast transfer protocol which allows for the transfer of Litecoins within one second.
How Litecoin Works
Litecoin works very similarly to bitcoin. Thus, to send a payment through the Litecoin network, the sender initiates a command to send the money specifying the address to which LTC is sent as well as the amount to be sent. This information is included in a block which is added to the Litecoin blockchain by miners.
Like with bitcoin, Litecoin miners are basically online ledger keepers who approve transactions, updating the Litecoin blockchain and being rewarded in the form of newly-minted LTC.
Once the transaction is approved by the miners, the amount is deducted from the sender’s wallet and is added to the receiver’s wallet. Litecoin charges a small fee for every transaction.
Litecoin is basically a fork of Bitcoin. Thus, while many of the bitcoin features are inherent for Litecoin, some advantages of Litecoins are:
- Faster Payment Processing: Litecoin blocks are generated after every 2 1/2 minutes, compared to 10 minutes for Bitcoin. Thus, the payments are processed 4 times faster and there is much less congestion in the network. It also leads to fewer failed transactions.
- More Secure: Due to the lower block generation time, the risk of a “double spend” attack is much less in the Litecoin network. Moreover, Litecoin uses scrypt in its proof-of-work algorithm which makes it more secure than the SHA-256 protocol of Bitcoin.
- Greater Total Amount of Coins: Litecoin network is slated to produce a total of 84 million coins, compared to 21 million of Bitcoin. Thus, Litecoin should be more stable as the supply doesn’t become scarce. This keeps inflation of coins at bay.
- Lightning Network: Using an approach developed by Vertcoin, Litecoin has implemented the Lightning Network on a greater scale than bitcoin. The Lightning Network is arguably the fastest coin transfer protocol that exists. Using the Lightning Network, transfers can be completed within 1 second.
- Segregated Witness: Using Segregated Witness, or SegWit, Litecoin removes some of the problems originating from block size limitation. Thus, there is less clogging of transactions in the Litecoin blockchain and transactions are faster, without compromising security.