February 15, 2021 | AtoZ Markets – After the release of Bitcoin in 2008, thousands of alternative coins (altcoins) were created and joined the rankings on popular exchanges. While some created their own blockchain, others were built from the smart-contract platform, Ethereum. One of these was Litecoin (LTC), which has continued to face steady growth since its release. Following in Bitcoin’s path, many wonder if this altcoin will go anywhere anytime soon.
A brief overview of the coin and how it has grown throughout history will provide a good basis for understanding.
On the surface, it would appear Litecoin has a lot in common with the majority of the other cryptocurrencies available on exchanges today. But, what is Litecoin?
Litecoin is a peer-to-peer internet currency designed to enable users to have near-zero cost payments to anyone in the world. In fact, the fees to use Litecoin are known to be significantly lower than that of a credit card or bank transfer. This isn’t the only similarity to Bitcoin. The currency is also fully decentralized on the blockchain and is secured by complex mathematical algorithms known as cryptography.
The mining process for Litecoin involves the securing of each block to the existing blockchain using special software. After each block is secured, Litecoins are released as a reward to the miners. These miners can then decide if they want to “hodl” coins in their wallet or trade them on the market.
The main differences in design from Bitcoin include:
- Proof of work mechanism that uses the hashing function Scrypt, not SHA-256
- A block time that is four times faster than Bitcoin (through a faster confirmation rate and a higher capacity per block)
- A supply of coins in circulation that is four times larger than Bitcoin
- Changes in difficulty are assessed every 3.5 days instead of every two weeks
The hashing function, Scrypt, was chosen by the Litecoin team to allow CPU and GPU-based miners to compete against those who were ASIC-based. That said, ASICs have since become far more powerful in terms of hashes per second and can greatly outperform both CPU and GPU miners. At current rates, approximately 25 coins are being generated with every block, resulting in 14,400 coins being mined each day.
The Beginning of Litecoin
In 2011, Charlie Lee launched Litecoin. He was a software engineer at Google who was later recruited to Coinbase in 2013. Although this move was not related to Litecoin, it ended up being a powerful move that skyrocketed the price of LTC later that year. The cryptocurrency itself was targeted to be the “lite version of Bitcoin.” Litecoin was created as a direct reaction to Bitcoin, the “silver” to Bitcoin’s “gold,” using this slogan to help gain traction in the cryptocurrency marketplace. As a result, the application leverages many Bitcoin features with minor adjustments where they believed improvements could be made. Some of these features include faster transaction confirmation times and improved storage efficiency.
Litecoin uses most of Bitcoin’s codebase but operates as a separate side chain, which has continued to gain popularity as one of the most popular Litecoins. However, it was not all uphill for the founding of this coin, as many bugs were common on this network, greatly affecting the team’s ability to grow their network and permanently damaging the trust of some of the members of their community.
For the most part, we can say the coin recovered by offering easier mining opportunities than Bitcoin since only a simple computer is needed compared to a complex hardware setup. Additionally, the team has continued to take into account the suggestions from their community and adjust their code frequently to make improvements on their solution.
What’s next for Litecoin?
Although the currency is gaining traction, the currency is still not as widely accepted as Bitcoin. That said, with Litecoin, you can buy clothing, apparel, food, beverages, and even travel vouchers. The currency is also the most correlated to the price of Bitcoin and has benefited from much of the hype around its predecessor. New investors would be wise to take into account the relationship between these two assets when making their investments.
Many investors continue to look to Litecoin as a more rationally priced asset than Bitcoin with a promising future.