Litecoin: The Bitcoin Killer?
Updated: Apr 1, 2020
Consensus Algorithm: Proof-of-Work
Native Blockchain: Litecoin Blockchain
Release Date: 7 October 2011
Supply: 62,424,175 (as of 26 June 2019)
Official Website: https://litecoin.org/
What is Litecoin?
Litecoin is a peer-to-peer cryptocurrency, much like Bitcoin. When first released, it aimed to build on the early successes of Bitcoin, but address some of its downsides by delivering almost zero-cost payments to anybody, anywhere on the planet. A very noble and worthwhile objective.
There are some similarities to Bitcoin, mainly in the way that LTC is encrypted. Transactions are protected by the same encryption as Bitcoin, allowing people to move and create money.
There are no central authorities involved in the massive payment network created by Litecoin. This is entirely decentralized and completely open-source. Thanks to the way this network has been set up, people that use it have a higher degree of control over their finances. In essence, you can do what you want without anyone looking over you and preventing you from doing something.
How does Litecoin differ from Bitcoin?
Litecoin vs Bitcoin in transactions
On the face of it, both cryptocurrencies are similar in their purpose. Both are seen as a way of storing and moving value. Naturally, Bitcoin gets all the headlines because it was the first of its kind and grabbed mainstream media headlines in 2017/18 when it shot up to $20,000. By comparison, Litecoin peaked at around $350 at the same time.
However, the key difference between the two comes in the transaction department. LTC is proven to have much faster transaction confirmation times than Bitcoin. If this surprises you, then it shouldn't! Remember, the whole purpose of this cryptocurrency was to evolve Bitcoin and create a cryptocurrency that could be used as a means of transferring value.
As a comparison, Bitcoin's block confirmation time sits at around 10 minutes. Litecoins is just over 2 minutes. What does this mean? Well, LTC can process transactions in a fraction of the time, meaning more can be completed. In theory, you could process close to 5 transactions for every 1 from Bitcoin. As a result, Bitcoin tends to have a huge backlog of transactions because it can't keep up. To fix this, they charge higher transaction fees to try and speed everything up. With Litecoin, fees are much smaller because of its quicker transaction speeds.
To further drive this point home, the most recent average reports for Litecoin show that transactions are completed at a rate of just 30 cents per transaction. Bitcoin is sitting at $8.50 per transaction. So, you can clearly see a massive difference in how the two hold up as a medium for processing transactions.
Litecoin can create more coins
The other significant difference is in how many coins can be created. Litecoin has a maximum supply limit of 84 million.
Those of you that know a thing or two about Bitcoin will be stunned by this number. Why? Because the maximum supply limit of Bitcoin is 4 times less than this. How is this possible? It's all down to Litecoin mining.
For those that don't know, mining is a term that describes the creation of new coins. This is done by confirming transactions of Litecoin. Here, we go back to the fast transaction confirmation rate that this cryptocurrency boasts. Because it's faster than Bitcoin, it essentially means more coins can be created. As per the official Litecoin website, miners are rewarded with 25 new coins per block. This encourages more mining, which helps produce so many Litecoins. As of right now, there are well over 60 million coins in circulation.
The birth of Litecoin
As we mentioned earlier, Litecoin was produced as a means of transferring wealth with very low transaction fees. This idea was birthed by a former Google employee called Charlie Lee. He's the man who's credited with creating and coding Litecoin. As well as working for the biggest tech giant in the world, he also had cryptocurrency experience as an engineering director at Coinbase.
On 7 October 2011, Litecoin was first released into the online world. He did this on GitHub through an open-source client. Just under a week later (13 October), we saw the birth of the Litecoin network. This network was something of a pathway from the original Bitcoin Core. If you imagine Bitcoin Core as a straight road, this was an avenue that forked off away from it. We've already talked about a couple of the critical differences, but the Litecoin network also used a slightly different hashing algorithm. While Bitcoin went with SHA-256, Litecoin chose scrypt.
While Litecoin never boasted the same value as Bitcoin, it did spark a lot of interest amongst those involved with cryptocurrency. Fast forward to 2013, and the cost of LTC increased by 100% during a single day in November. However, we're still dealing with a very low value here as the price of one Litecoin eventually grew to £4 at the beginning of 2017. Then, we saw the cryptocurrency boom - and LTC was positively affected. It saw growth to $370 in just 12 months. Unfortunately, this value has gone down since them. But, this is to be expected as it follows the general dip seen in 2018 for all cryptocurrency. Now, it's worth around $150 and is sitting pretty stable in the market.
Litecoin is effectively decentralised money. There's no censorship here, no government regulations involved; you have total control over what you do with your Litecoins. As of right now, a lot of people invest in Litecoin and are waiting for the value to increase. It's the classic buy low sell high way of doing things. As soon as things start to get better, the value will rise, and it can be sold for a profit.
But, we mustn't forget the critical use of LTC; to transfer money between more than one place. The transaction fees are low, and there are no restrictions involved here. With regular currency, you may have barriers in place that impact transactions between two different countries. Or, you may have a transaction limit or a specific time of day where you can't send money.
The beauty of Litecoin is that none of these issues exists. Money can be sent and received whenever you want, wherever you are. If you're going to get started with Litecoin, then it's recommended you download and instal the Litecoin Core for free. This is a client developed by the Litecoin team to download the whole blockchain and give you a place to take care of all your transactions while managing your money.
Key features of Litecoin
As a way of concluding this piece, we'll look at some of the key features of Litecoin.
Faster transaction speeds: of course we have to mention the transaction speeds once again. This is the ultimate characteristic that sets LTC apart from other cryptocurrencies. It's all thanks to the Litecoin blockchain and its ability to generate blocks more frequently.
Encrypted wallets for safer transactions: this is something we've not had a chance to discuss as of yet. With Litecoin, your wallet is secured. You can look at your transactions and check your balance, but each transaction has to involve the input of a password. This offers protection from hackers, but it also gives you a chance to review your decision and be sure that you want to go through with it.
Open-source software: Litecoin is entirely open-source, so anyone can adapt, copy, or distribute the software as they please.
As the world continues to develop, Litecoin may become more prevalent. The idea of sending fast and secure transactions all over the world is appealing to many - particularly on a decentralized network.
Could it be the Bitcoin killer?
Well, if transaction speed becomes a vital part of the future battleground for supremacy between the PoW cryptocurrencies, then it may well have the edge.