What is Litecoin?
As the Bitcoin network started to grow, it was evident that transaction times can get very long. An ex Microsoft employee, Charlie Lee, saw this issue and decided to create his own coin, called Litecoin. He used the Bitcoin code as a base and improved many aspects of it, making the new blockchain much faster than its predecessor. Litecoin was created to handle frequent small transactions and be easily tradeable. The maximum supply is 84 million LTC and the smallest possible unit in the blockchain is 1/100 millionth. Recently, it is used also as a testing platform for future Bitcoin updates such as SegWit, Lightning Network, and Atomic Swaps, due to the similarities in architecture.
Advantages
As mentioned earlier, Litecoin offers fast transaction with a capability of roughly 56 of them per second. Here are some of the other benefits you can expect:
- A smaller blockchain transaction history of roughly 20GB compared to its bigger brother, Bitcoin’s over 180GB
- Litecoin gets updates faster because it is used to test new technology before applying it to Bitcoin
- Small initial investment into Litecoin mining
Disadvantages
The Litecoin cryptocurrency offers many benefits and ease of use to its users, but it has its faults too. One of the main cons is its vulnerability for double spending. It is not an easy task, but for a malicious party with enough resources, it could be done. Fortunately, updates are being added constantly to prevent these issues. Here are some other disadvantages that should be mentioned:
- Prone to a 51% attack
- In the case when the network is overloaded, the chain could bloat and make future confirmations near impossible
History and Evolution
The Litecoin network was created on the 7th October 2011 by Charlie Lee with the intent to create a cryptocurrency that offers its users fast small transactions that can be used on a daily basis. As mentioned in the beginning Litecoin’s blockchain network was copied from Bitcoin and then heavily modified. It is currently the #4 mineable crypto coin in the world and it seems that it will not stop gaining popularity.
Litecoin Blockchain
It is a decentralized peer-to-peer cash system which removes the need for a 3rd party to carry out a transaction. Just like Bitcoin, Litecoin has a Proof of Work consensus protocol and its hashing algorithm is called Scrypt. As you can probably tell already, the way new coins are issued in the network is by miners discovering new blocks in the chain. It has a block size of 2MB and the time necessary before finding a new one is roughly 150 seconds. Currently, the reward for each successful block is 25 LTC coins and it gets halved every 840 000 blocks. It has a rather fast difficulty adjustment time window of 1155 blocks, which is roughly every 2 days.
Litecoin Nodes
Just like your body needing its brain to operate, blockchain networks need nodes. All nodes need to have either a part or a full copy of the blockchain transaction history of the network. All users that connect and operate in the blockchain can be considered a node. There are two types:
- Light Nodes – They need just a partial download of the transaction history. They cannot have the role of a validation node
- Full Nodes – The most important ones for the network. To host a full node, you will need to download the whole blockchain history which is currently around 20GB. Also known as Full Validation Nodes, they make the final decision when it comes to validating blocks of information
Additional Features
Litecoin has a lot of amazing features, one of which is the Lightning network. It introduces an off-chain approach for small transactions which gives a solution to potential scalability issues. How it works is users open a payment channel between themselves and can transfer funds freely without miners. Transactions are recorded on a balance sheet which is signed by both parties after every movement of funds. When they are done, they can close the payment channel and feed the info to the blockchain. It will be counted as a single transaction, removing a lot of stress from the network.
LTC is Atomic Swap compatible, which means that it can be exchanged for other currencies peer-to-peer without the need for a middleman like an exchange platform.
One of the other notable features is that the Litecoin cryptocurrency has SegWit implemented in the network. This means that signatures necessary for transactions can be stored in a different block on the chain, in order to improve the scalability of the network.
Forks or Tokens Based on LTC
As mentioned earlier, Litecoin is a copy of the Bitcoin blockchain, making it a code fork. The main reason was to increase the transaction speed and scalability that the BTC network struggled with. Additionally, the number of coins available increased to 84 million, block time was reduced to 150 seconds and the hashing algorithm changed to Scrypt.
Because of its popularity, many code forks came from LTC. Here is a short list of some of them:
- Monacoin
- Feathercoin
- Dogecoin
- Litecoin Cash
- Lucky Coin
- Litecoin Plus
How to Get Litecoin
Fast transactions, frequent updates and one of the largest market caps in the world make this coin very desirable. There are two ways to obtain Litecoin – mining and buying it from exchanges.
Where to Buy LTC
Because of the high demand, you can find Litecoin in almost every exchange platform that offers trading with fiat currency. Below you can find my top 3 recommendations.
| Exchange | Cryptocurrencies | Fiat Money | |
|---|---|---|---|
|
Bitfinex
|
Litecoin, Bitcoin, Ripple, IOTA + 50 more | USD, EUR, GBP | Trade now |
|
Coinbase Pro
|
Litecoin, Bitcoin, Ethereum, 0X + 2 more | USD, EUR, GBP | Trade now |
|
Kraken
|
Litecoin, Stellar, Dash, EOS + 13 more | USD, EUR, GBP, JPY | Trade now |
Mining Litecoin
The best way to mine Litecoin is via Application Specific Integrated Circuit (ASIC). The device of choice for LTC right now is the Antminer L3++, but you can find a few alternatives below.
Wallets for Litecoin
If you would like to become a user of the Litecoin network or any other crypto for that matter, you will need to set up a wallet. Their function is to manage your private and public key which grant access to your coins.
The official wallet is LitecoinQT and it supports Windows, Linux, OS X and Android. You can find it at the link – https://litecoin.org/#download
After you download it, you would need to install it and set it up. You can check out this beginner-friendly guide – https://www.youtube.com/watch?v=RtDEK_p4Iyo
Alternative Wallets
Of course, there are alternatives to the official wallet, as they might fit users better. They can offer faster synchronization with the blockchain, support multiple coins, have extra features, better security or even offer cold storage for your keys. Here is a short list with the most notable alternatives for Litecoin:
Online Wallets
Mobile Wallets
Hardware Wallets
Network Security
Although it was covered earlier, I would like to note again what to look out for. The Litecoin cryptocurrency is prone to a double spending and 51% attack, even if they are very hard and impractical to do. The network can also be affected by bloating if transactions overload it too much. Of course, it offers a lot of security features from the Bitcoin network as well as a few of its own unique.