Litecoin is one of the alternative virtual bitcoin-based cryptocurrencies. Litecoin is the first to have used a different algorithm for mining called Scrypt. What was the reason for creating litecoin? Is it worth investing in litecoin or is litecoin nothing more than bitcoin’s clone?
You will learn more in this article, so carry on!
Creation of Litecoin
Litecoin was created by a Google employee, Charles Lee, supported by the members of the Bitcoin community on 7 October 2011. The founder’s goal was to come up with a progressive coin offering plenty of advantages to its users and a totally different mining algorithm than other major cryptocurrencies.
Litecoin is the peer-to-peer internet currency with a number of enhancements. The main feature of scrypt is its proof-of-work algorithm. Scrypt was developed by Colin Percival (of Tarsnap Inc.) in 2009 and unlike bitcoin its sequential memory-hard function requires more memory than an algorithm which is not memory-hard.
Mining of litecoin is possible with less powerful devices than BTC mining.
A very important feature, compared to bitcoin, are: faster transaction confirmation. The processing of a transaction takes 2.5 minutes, which is 4x faster than with bitcoin. Hence, each litecoin end user can access his or her money much sooner than a bitcoin user. Litecoin’s production is also 4x higher, capped at 84 mil. coins.
In 2014, plenty of miners abandoned litecoin in the wake of Charles Lee’s claim of litecoin not being in need of any development (December 2014). In the following weeks, litecoin fell by more than by 60% to its historical minimum of 1.30 USD. Over the next three years, the price experienced repeated ups and downs. In late 2016, it seemed that litecoin would forever remain a minor currency with trading price ranging between 3 and 4 dollars. In January 2017, litecoin was resurrected.
Charles Lee published on Twitter his visions of SegWit and Lightning Networks for bitcoin and litecoin. He showed that SegWit was not just a tool to increase transaction capacity but primarily a means to fix what was known as transaction malleability.
Litecoin’s ambition with SegWit was to come back into the frontline cryptocurencies. In early May 2017, SegWit was activated in the litecoin network and thanks to this achievement, the value grew to 38 dollars. Mining of litecoins can be done economically using graphical cards.
Litecoin is a handy currency for trading. You can make profit on both growth or fall of its exchange rate. With the help of leverage, you can make money also on minor price changes.
How to make money with litecoin
- Similarly to other cryptocurrencies, the easiest way to make money on litecoin is holding. This means that you buy one, two or more litecoins and do nothing. You can leave them on your account at an exchange (e.g. CoinBase) or send them to another wallet or trezor.
Ideally, the price of litecoin will grow at the same pace as so far. Therefore it is likely that the price at some point in the future might be higher than today. Given the current value of bitcoin (100x bigger than the one of litecoin), I believe that you will not do wrong if you buy 1, 2, 5 or 10 litecoins.
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Brief recap: Litecoin vs. Bitcoin
Litecoin was created using a very similar core to bitcoin. Nevertheless, the two currencies differ in numerous features. One of the major ones is the total amount of coins each cryptocurrency enables to mine. With bitcoin you must not exceed the level of 21 million, while Litecoin enables a quadruple i.e. 84 million coins. Bitcoin is facing a problem with quantity of transactions in its network seeing more and more people migrate to other currencies, one of which is Litecoin.
Litecoin, the same as Bitecoin, is a transaction system. Litecoin allows making transactions via a wallet. Bitcoin uses SHA-256 as an algorithm, unlike litecoin that uses the abovementioned Scrypt. Bitecoin was founded in 2009. As mentioned above, transactions with litecoin are much faster than those with bitcoin. Bitcoin generates blocks in 10-minute intervals while litecoin does the job in 2.5 minute. Litecoin’s improved algorithm allows producing coins on more powerful PCs much faster than Bitcoin.
Litecoin motivates miners to join with its loyalty program. The motivation is based on a quick reaction of the first miner validating a block who receives a reward worth 50 litecoins. Transaction charges paid for litecoin are, compared with bitcoin, a mere fraction. Litecoin is currently used for more transactions than bitcoin. If you want to buy a cup of coffee you can do so with litcoins in all major cities as well as various other purchases including in smaller towns.