What is Litecoin? How does it work?

Charlie Lee, a computer scientist, created Litecoin in October 2011. He wanted to build something more scalable and speedier than Bitcoin. Litecoin is called “the silver to Bitcoin’s gold, a cryptocurrency alternative to Bitcoin.” It is the 14th biggest cryptocurrency in the world by market capitalization. The employment of different cryptographic methods is the most significant distinction between Litecoin and bitcoin. Lee liquidated all of his Litecoin shares in 2017, claiming a potential conflict of interest. This happened at the same time as Bitcoin, and several other currencies reached their all-time highs.

Litecoin and Security

Even though both Bitcoin and Litecoin use PoW consensus techniques, miners receive 12.5 bitcoins or Litecoins for every block they confirm. To become a validator, you must first deposit at least 32 ETH, which is a significant sum for the typical individual. After then, the payment is half according to a predefined formula.

Due to the expensive GPU power required to take over the network, Litecoin, Etherum, and Bitcoin are among the three cryptocurrencies most vulnerable to 51 percent attacks or double-spending. Due to its reliance on miners, Bitcoin is typically immune to this sort of assault, but Litecoin and Etherum must be vulnerable.

The DAO, a platform-based program, was hacked in 2016 by organizations that discovered and exploited a flaw in the DAO’s design. As a result, the community decided to fork the blockchain to exclude the hackers’ transactions, making their ownership less meaningful. The opponents of the change called themselves “Ethereum Classic,” whereas supporters called themselves “Ethereum.”

Scaling of Litecoin

Scaling is measurable since it refers to the number of transactions a blockchain can process. During the PoW consensus, Bitcoin can handle a maximum of 7 transactions per second (TPS), but Ethereum can validate a maximum of 15 TPS. However, in Phase 1 of the ETH 2.0 implementation, Ethereum’s odds of validating a block can grow to 100,000 TPS. Litecoin, on the other hand, has a validation rate of up to 56 TPS. This is eight times quicker than Bitcoin. In the end, acceptance of PoS will make Ethereum infinitely more scalable than its two siblings.

Circulation of Litecoin

As previously stated, the total supply of Litecoin is limited to 84 million units. Bitcoin has a limited quantity, which Satoshi Nakamoto, the enigmatic creator, set at 21 million. Approximately 18.6 million BTC are now circulating on the market. Ethereum, on the other hand, does not set a cap on its total supply, which currently stands at over 114 million ETH.

Bitcoin is the most valuable cryptocurrency, with a market capitalization of over $1 trillion as of March 30, 2021. With a market capitalization of $208 billion, Ethereum is the second most valuable cryptocurrency, followed by Litecoin with over $12 billion.

Traits

In terms of characteristics, Litecoin and Bitcoin are comparable in that they are both proof-of-work platforms, but Ethereum’s philosophy is quite different. The second-largest blockchain hosts smart contracts, which settle automatically based on predetermined parameters. Moreover, Smart contracts enable decentralized applications (dApps) and ERC-20 coins. Decentralized Finance (DeFi) carries the blockchain’s decentralized notion to the world of finance. Thousands of tokens, including DeFi, are now available on Ethereum. 

Mining of Litecoin

The mining process for Litecoin is similar to that of Bitcoin, although it uses a different algorithm. Litecoin miners, unlike Bitcoin miners, can mine a block every 2.5 minutes, four times quicker than Bitcoin miners. Moreover, If the correct equipment isn’t available, the benefits are cut in half. Though the profitability of mining Litecoin is debatable, the choice is yours.

Many traders favor Litecoin since it has been proven dependable over time. It is also less expensive and more stable than its competitors. However, it is subject to far higher volatility than traditional investments because it is a cryptocurrency. For intraday and swing traders, this makes it a fantastic speculative tool.

Even though Litecoin was designed to be a global money system capable of enabling low-cost cross-border transactions, it has been chastised for failing to perform a vital purpose. Stablecoins are now making use of this use case.

Another issue is that wealth concentration in Bitcoin and Bitcoin Cash is higher. Furthermore, despite its promise to be miner-friendly and eliminate the need for ASICs, Litecoin today has a hash rate comparable to Bitcoin and other PoW networks.

Some investors dislike Litecoin because of its anonymity capabilities, making it the second most popular cryptocurrency on the Dark Web.

Where can you buy Litecoin?

You may buy Litecoin on standard cryptocurrency exchanges like Coinbase, Binance, and Kraken, among others, if you don’t want to mine it. You can buy LTC with fiat currency on several exchanges, including Coinbase and Binance.

Bybit allows you to trade LTCUSDT Perpetual Contracts. Alternatively, you may make money by trading LTC or Litecoin derivatives. If you decide to trade LTC, adhere to tried-and-true trading tactics and think about risk management.

After learning all about Litecoin, you may be able to answer the question, “What is Litecoin?”. We have explored “how it works,” so now you may begin investing in and recommending Litecoin to other investors. Follow this site and our social media handles for further information.