Litecoin is often called the first successful altcoin. It was created in 2011 as a spinoff of Bitcoin to make a cryptocurrency better suited for use as digital cash.
Litecoin was made by programmer Charlee Lee, and it has some advantages over other cryptocurrencies. For example, Litecoin’s transaction fees are much lower than Bitcoin’s. It’s always in the top five or ten cryptocurrencies, and its market share of about 5% has stayed the same since it was made, even as other coins rise and fall in popularity.
Even though Bitcoin opened up new possibilities in the worlds of finance and technology, its core had major usability and scalability problems. Litecoin (LTC) was made to solve these problems as an alternative.
By making Litecoin, the goal was to make Bitcoin better in a few different ways. Lee came up with a new hashing algorithm called Scrypt for Litecoin (pronounced S-crypt). Litecoin’s faster transaction speeds were made possible by its simpler algorithm. Bitcoin transactions are processed slowly, at a rate of about five per second. It can take about 10 minutes for the Bitcoin blockchain to make new blocks.
This slow speed makes it hard for businesses that want to accept Bitcoin as payment. On average, the six confirmations needed for a Bitcoin transaction can take up to an hour. Imagine using your credit card to buy something online and being on the “your transaction is being processed” screen for an hour.
Litecoin, on the other hand, can process 54 transactions per second, and new blocks can be added to the Litecoin blockchain about every 2.5 minutes. Even though Litecoin still needs at least six confirmations from most exchanges to be considered irreversible, peer-to-peer (P2P) crypto payment networks can often settle Litecoin transactions almost immediately.
The faster transactions were meant to show merchants that they no longer had to be frustrated by Bitcoin’s long settlement time. Instead, they could accept Litecoin and settle payments faster. This would allow them to do business faster and more in line with other digital payment methods.
How Does Litecoin Work?
Litecoin is similar to Bitcoin in a number of ways. Both are open-source projects that check transactions with proof of work.
But Litecoin is also very different from Bitcoin in some important ways. Aside from the speed of processing, there is also the problem of supply. Litecoin can never have more than 84 million coins, while Bitcoin can never have more than 21 million coins.
How to Mine Litecoin
To be able to add new transactions to the blockchain, Litecoin miners have to solve hard math problems called hashes. Once a block is closed, it can no longer be changed. As a reward for being the first miner to correctly solve the hash for a transaction using the proof of work consensus mechanism, the miner gets 12.5 LTC.
Most of the time, you won’t see a computer in someone’s living room being used to mine Litecoin. To solve hashes, you need a lot of computing power, which takes a lot of energy and space.
In fact, most Litecoin mining is done by sophisticated hardware at mining farms and by groups of crypto miners working together.
What Makes Litecoin Halves
Like Bitcoin, Litecoin halves to help control how many are in circulation. There will never be more than 84 million Litecoins. But when Litecoin miners add a new block to the blockchain, they get LTC that was just made. If not for halving, this could increase the amount of Litecoin forever.
The reward for adding new blocks to the Litecoin blockchain decreases (halved) at regular intervals. In the case of Litecoin, it happens every 840,000 transactions. So, when Litecoin first came out, miners were paid 50 LTC for adding a new block to the blockchain. This reward has gone down by half in the past few years, so it is now 12.5 LTC as a block award.
How do you use Litecoin?
Litecoin is a cryptocurrency that is easy to trade because it is very liquid. People who own Litecoin will find that businesses like Newegg, SlingTV, and even charities like the American Red Cross are happy to accept it.
You can also use apps like BitPay or CryptoPay that work with digital currencies to pay with LTC. If you want to pay someone with LTC, you can do so through the Binance app.
Final Words
Like Bitcoin, Litecoin is an open-source, peer-to-peer digital currency based on the LTC token, the network’s native cryptocurrency. It can be used for many different financial purposes, and only 84 million of them exist.
The fully decentralized payment network for Litecoin (LTC) means that LTC transactions cost almost nothing. Also, the code architecture of the token makes storage as efficient as possible. It also makes your computer safer from malware, viruses, and hacks. One of LTC’s main internal functions within the Litecoin network is to reward miners for doing good things. At first, the reward for a block was 50 LTC. But the algorithm cuts the amount in half every 4 years (roughly, after every 840,000 blocks). At the time of this writing, in early 2021, each block gives miners 12.5 LTC tokens. LTC’s market performance has steadily increased over time, thanks to the network’s features and value.
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