Top Cryptocurrencies

Litecoin: A short introduction including its differences with Bitcoin

Litecoin is both a digital currency and a blockchain project created by Charlie Lee in 2011. Originally, the digital currency was forked from Bitcoin but it currently has noticeable technical differences from Bitcoin.

Why Litecoin forked from Bitcoin

For Charlie Lee, the Bitcoin platform was not ideal for people seeking faster transactions. Although still not the fastest, the Litecoin platform reduced the time it takes to confirm transactions to just 2.5 minutes compared to approximately ten minutes on the Bitcoin platform.

To achieve the higher transaction speeds, the digital currency introduced SegWit (segregated witness) and lightning network.

The SegWit aspect functions by removing certain information (signature data) from a transaction so that the transaction can be processed faster and opens up the platform to handle more transactions per minute.

On the other hand, the Lightning Network is used to facilitate micropayments and only accessing the main network to store the information. This means that with a Lightning Network, transactions are handled off the main blockchain.

Instead of trying to overthrow Bitcoin, Lee seeks to provide a cryptocurrency that would enable its users to pay for goods and services. Lee observes that Bitcoin should be a store of value and used for larger purchases like when purchasing a car. Developed majorly for payment purposes, LTC is accepted in store as a payment option. Some of the stores include NordVPN, CheapAir, and Overstock.

Differences between Litecoin and Bitcoin

Litecoin

After Litecoin, Bitcoin also implemented SegWit and Lightning Network. However, Litecoin still has clear differences from Bitcoin. They include:

The number of coins: Litecoin has a set total coin supply to a maximum of 84 million without inflation while Bitcoin has a hard cap of 21 million.

Speed: This is the major distinguishing feature. Transaction validation on the LTC blockchain will take 2.5 minutes while on the BTC platform it will take 10 minutes.

Mining: The LTC platform implements a different way to reward users. (we shall discuss this later).

Litecoin Mining

Litecoin uses the Proof of Work consensus mechanism. This mechanism is energy intensive and requires specialized mining devices to solve complex cryptographic functions. Although this mechanism is similar to the one used by Bitcoin, it moves away from the hash algorithm used by Bitcoin. i.e the Litecoin platform uses Scrypt instead of Bitcoin’s SHA-256. Note that Litecoin mining is not as energy intensive as Bitcoin mining

Over time, the rewards given to miners are halved after every four years

Buying and storing LTC

Being among the top ten largest cryptocurrencies by market capitalization, LTC is available on both major cryptocurrency exchanges like Coinbase, Binance, Bittrex, Bithumb, and Kraken as well as other location-specific digital currency exchanges.

To purchase LTC on any of the exchanges, you will be required to first create an account. If it’s your first purchase and you need to purchase Litecoin (LTC) with fiat, head over to an exchange that supports buying of cryptocurrency with fiat e.g Coinbase and some Binance location like Binance Uganda.

As with any other virtual currency, LTC has to be stored in a secure and compatible wallet. Litecoin has its official wallet.

Other wallets that can be used to store LTC include Electrum LTC which provides basic functionalities and the LiteVault wallet which integrates with your web browser.

Litecoin

For cold storage or a hardware solution to store your LTC coins, consider industry leading wallets such Trezor, Ledger Nano S, Ledger Nano X, and KeepKey.

Note: LTC wallets should be downloaded from their official websites to avoid your coins from being stolen by using a fake wallet. For hardware wallets, purchase them from verified stores like eBay to avoid buying substandard products.

With the number of crypto exchange hacks increasing, it is advisable to keep your LTC coins off exchange provide wallets to places you have full control.

Litecoin Foundation

Litecoin Foundation is a not-for-profit organization that facilitates the promotion of LTC and the LTC platform and is registered in Singapore. The foundation is made up of Board of Directors, a managing director, operations director, part-time developers and full-time (sponsored) developers.

Conclusion

Instead of competing with Bitcoin, Litecoin seeks to complement it. Since its launch, Charlie Lee has been pushing the adoption of LTC as the preferred payment option. However, his push has been met with resistance from other altcoins that are providing faster transaction speeds and lower fees.

Even when not paying for goods and services, trading LTC on exchanges can be profitable. Remember LTC is a virtual coin with fluctuating prices.

coinmag

Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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