What is Litecoin and how does it work?

What is Litcoin (LTC)?

Litecoin is a cryptocurrency that was created by the fork of the Bitcoin network in 2011. year. It was created to improve some of the shortcomings that a group of developers noticed in Bitcoin, among which the most important are too small number of transactions per second, which will inevitably lead to expensive transactions, and the possibility of centralization of mining operations, which is already evident in Bitcoin today, given that most of the mining takes place on highly specialized plants (which leads to a certain degree of centralization). Litecoin has successfully solved the problem of too few transactions, given that the number of transactions on Litecoin is approximately 54 transactions per second (tps), which is eleven times more than Bitcoin’s 5 transactions per second. However, Litecoin has not successfully solved the problem of centralization of mining operations, and with Litecoin most of them takes place in centralized plants. One of the commonly used comparisons for Litecoin and Bitcoin is that of silver and gold. Bitcoin developed as a repository of value (gold in the traditional world), while Litecoin took the position of silver that was more often used in everyday transactions.

Source: cointelegraph

Charlie Lee (creator of Litecoin)

Charlie Lee, a former google engineer, is one of the first creators. the so-called altcoins (a term used for all coins except Bitcoin). Charlie Lee has created a new hashing algorithm. used in Litecoin mining (today and for some others) cryptocurrencies such as Dogecoin – the most famous cryptocurrency meme), It’s called Scrypt. All proof of work cryptocurrencies that use this the algorithm can be mined together with Litecoin. This allows the miners earn more money than those who only mine one cryptocurrency. Another convenience that the Scrypt algorithm allows Litecoin is to achieve significantly faster and cheaper transactions compared to on Bitcoin. In this way, Charlie wanted to get the attention of the owner trades that considered the introduction of Bitcoin as a means of payment, But this was impossible due to excessive transaction fees and generally slow transactions. Over the previous decade Bitcoin Developers have successfully solved this problem by applying layer 2 Lightning Network that enables an unprecedented number of transactions per second (the exact number is not known, but it is estimated at about one million transaction per second) with a virtually non-existent fee for conducting transactions.

Source: cointelegraph

Litecoin Halving

Similar to Bitcoin, Litecoin has retained one of the most important the characteristics of inflation on the network. It is, of course, about The adjective is a common theme of all speculators, given that after the reward for the found block is halved, inflation is it also halves, and this leads to an increase in price (lower supply, and the same demand). One of the reasons why Litecoin is in the last the time current in crypto communities is just upcoming halving which should take place in the first days of August of this year. This will reduce the reward for the found block from the current 12.5 Litecoin at 6.25.

Litecoin offer

As we have previously stated Litecoin shares a number of characteristics with Bitcoin. Both use proof of work to verify transactions on the network, but in addition to the difference in the amount of transactions that the network can process in the given period, there is also a difference in the offer or supply of Litecoin in relation to Bitcoin. Litecoin has a limited supply of 84 million coins, while this is with Bitcoin a well-known 21 million coins. Simple mathematics here tells us that the supply of Litecoin is four times higher than Bitcoin’s, the cause of this is that Litecoin adds a new block every two and a half minutes in relation to Bitcoin’s ten minutes, which is exactly four times more common. Another unforgettable difference is that every Bitcoin had to be mined to date (this means that creator Satoshi Nakamoto also had to mine Bitcoins in order to get them) while with Litecoin there were so-called premined coins (150) for which it was not necessary to invest processing power, and therefore electricity, in order for the creator to earn them, but simply appropriated them. When it comes to the current offer, Bitcoin has already successfully unlocked almost 92% of its offer, while with Litecoin this number is 86% of the total supply.

Litecoin problem

One of the problems that has been following Litecoin since 2017. is the fact that Litecoin creator Charlie Lee sold most of his stake in Litecoin, which caused panic among investors. However, a much bigger problem related to Litecoin was the emergence of layer 2 solutions, such as the Lightning Network, on Bitcoin. Layer 2 solutions allowed to increase the number of transactions on the Bitcoin network with negligible transaction fees. There are also newer cryptocurrencies that offer other options besides the value store, and as a bonus they also have a much higher number of transactions per second compared to Litecoin, in addition to cheaper transaction fees.

The Future of Litecoin

We have previously seen that Litecoin has successfully solved some problems that were detected early on the Bitcoin network, but on the other hand, a greater number of problems have appeared than expected. Furthermore, with the advent of layer 2 solutions on Bitcoin, users are allowed to exchange coins in short periods of time with non-existent transaction allocations, all while using the most decentralized network with inflation (Bitcoin). The emergence of other cryptocurrencies that offer other opportunities such as building decentralized applications, smart contracts and other things has further contributed to the decline in popularity of Litecoin. What Litecoin certainly has on its side is the fact that it is one of the first cryptocurrencies, and if some novelties appeared on the network itself any time soon that would expand the use of Litecoin, it would certainly allow greater acceptance of this almost forgotten cryptocurrency. If reading has interested you in buying Litecoin, one of the options provided by Kriptomat is to buy and sell this cryptocurrency. With the lowest commissions and the smallest cost of your time, in the simplest way you will buy Litecoin with cash right on our Kriptomats.