Litecoin (LTC) is an open-source decentralized cryptocurrency created as an alternative and stable coin compared to Bitcoin. It is the 14th largest cryptocurrency by market capitalization. Litecoin’s goal was to be a cheaper and faster alternative to Bitcoin that can be easily mined. In many ways, Litecoin was the first alternative currency. We will take a closer look at Litecoin, its unique features and what sets it apart from Bitcoin.
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Litecoin was created as a Lite version of Bitcoin, hence the name Litecoin. It was created by Charlie Lee in 2011. Charlie Lee was a software engineer at Goggle at the time. It shares many aspects that are similar to Bitcoin, such as the Proof of Work scheme, but it is lighter and faster at creating blocks and verifying transactions. Litecoin has been intended as an alternative to Bitcoin since its inception. But due to the saturation of the market and even more advanced crypto like Ethereum, it failed to gain much traction.
It is cheaper and easier to mine. The transaction costs are relatively low compared to Bitcoin or Ethereum. But unlike other coins, Litecoin’s supply is set at 84 million and will be no more. This is done to maintain Litecoin’s value in the market. Photon is the sub-coin of Litecoin, just like Paise is for Rupees. Let’s take a look at some of the unique features of Litecoin that set it apart.
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There are several aspects and features of Litecoin that set it apart from other cryptocurrencies. These unique features are the reason why Litecoin has developed a huge community over the years. Let’s take a look at some of those features.Scrypt hashing algorithm
Litecoin uses a proof-of-work scheme where several computers compete to validate a transaction and earn rewards. This is called mining. People had to run really powerful computers in a race to see who validates the transaction first. Not only did this consume a lot of electricity, but it also prevented many people from participating in this process. Because powerful computers are not easily affordable.
To solve this problem, a new algorithm called Scrypt Hashing Algorithm has been created. This decentralized Litecoin goes so far as to allow people to mine it even with their less powerful PCs. And earn Litecoin as a reward.Lightning Network
Litecoin can perform 54 transactions per second. 54 transactions is not a huge number of transactions, so in order to realize more transactions, Litecoin has adopted Lightning Network. It was the first cryptocurrency to adopt the Lightning network. Lightning Network is a Layer 2 protocol that allows faster transaction processing. 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 more resources or electricity. This gave miners even more incentive to mine Litecoin, as they can mine 2 coins at the same time. This is called Merge Mining. Any other coin that uses the Scrypt algorithm can be merged alongside Litecoin.
Popular meme coin Doge also uses the Scrypt algorithm, so miners often mine it alongside Litecoin to increase the rewards they earn.
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Litecoin was originally created to be the lighter and much faster version of Bitcoin after the success of Bitcoin. Bitcoin had its problems that Litecoin tried to solve using the features we discussed above. One of the biggest hurdles with Bitcoin is the speed at which it can add a block to its blockchain and how quickly it can validate transactions.Higher speed
Bitcoin can add a block every 10 minutes. And execute 7 trades per minute.
On the other hand, Litecoin was able to perform faster and reduce the speed of adding blocks by 4 times.
Litecoin can add a block every 2.5 minutes. And execute 54 trades per minute.
Litecoin also took advantage of the Lightning network to make thousands of transactions take place in a second. All this enabled users to transact faster without paying a lot of transaction fees compared to Bitcoin. The transaction costs of Bitcoin can be anywhere between 2-10$, while for Litecoin it is around 0.1-0.2$.Better accessibility and less labour-intensive
Bitcoin uses a Proof of Work PoS scheme that allows users to compete to validate transactions. only the winner can receive the rewards. The problem with this is that it ends up costing a lot of resources and electricity and only the most powerful computers can win. Litecoin has solved this by using the Scrypt algorithm and even the playing field so that now even people with personal computers can join the PoS scheme.
It also allowed miners to mine 2 coins together so they can increase their rewards without using more resources or electricity.Coin Supply and Market Cap
Litecoin also has 4 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 4 times more than Bitcoin. But this did affect the value of Litecoin in the market. Bitcoin currently has the largest market cap and is at number 1 while Litecoin is at 14th position.
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Litecoin introduced many new possibilities for the later altcoin. As the first altcoin, it gained 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 previously not possible with Bitcoin. We hope we helped you explain Litecoin, how it works and its features.
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