Litecoin

Litecoin (LTC) is a peer-to-peer cryptocurrency created in 2011 by Charlie Lee, a former Google engineer. Often referred to as the “silver to Bitcoin’s gold,” Litecoin was developed as a lighter and faster alternative to Bitcoin. While it shares many similarities with Bitcoin, Litecoin came with several key improvements, making it one of the most prominent and widely used cryptocurrencies in the world.

Litecoin was launched on October 7, 2011, through an open-source client on GitHub, and the Litecoin network went live on October 13. Charlie Lee’s vision for Litecoin was to create a cryptocurrency that was more accessible for everyday transactions while also addressing some of Bitcoin’s perceived limitations. The primary changes included a faster block generation time, a larger supply cap, and a different hashing algorithm, which have all contributed to Litecoin’s longevity and popularity in the crypto space.

Quick facts about Litecoin

• Currency code: LTC
• Sign: Ł
• Release: October 7, 2011. Litecoin was a source code fork of the Bitcoin Core client.
• Litecoin is a decentralized peer-to-peer cryptocurrency and open-source software project. It was written in C++ and released on the MIT/X11 license. The Litecoin main chain uses a slightly modified Bitcoin codebase.
• Hash function: Scrypt
• Timestamping scheme: Proof-of-work
• Code repository: Github.com/litecoin-project/litecoin
• There are one thousand millilitecoins (mŁ) in 1 Litecoin. Millilitecoins are called ”lites”.
• There are one million microlitecoins (μŁ) in 1 Litecoin. Microlitecoins are called ”photons”.
• There are one hundred million ”litoshi” in 1 Litecoin.

Maintenance and community

The Litecoin project is maintained by the Litecoin Foundation, a non-profit organization that oversees its development and adoption. The foundation, led by Charlie Lee and other prominent figures in the crypto space, actively works on improving the Litecoin network and promoting its use.

The Litecoin community is known for being very active, with numerous forums, social media groups, and events dedicated to Litecoin enthusiasts.

Technical information

Blockchain and transactions

Just like Bitcoin, Litecoin operates on a decentralized blockchain where transactions are recorded in blocks. Litecoin, however, has a block generation time of 2.5 minutes, compared to Bitcoin’s 10 minutes. This means that transactions on the Litecoin network are confirmed faster, making it more suitable for smaller, everyday transactions.

Maximum supply

Litecoin has a maximum supply of 84 million coins, which is exactly four times the supply limit of Bitcoin. This higher supply makes Litecoin more accessible and it is intended to support more widespread use.

Halving

Like Bitcoin, Litecoin undergoes a halving event approximately every four years, where the reward for mining a block is reduced by half. This halving helps to control the supply of Litecoin and introduces a deflationary aspect to the currency.

Scrypt algorithm

One of the key differences between Litecoin and Bitcoin is the use of the Scrypt hashing algorithm for mining. While Bitcoin uses the SHA-256 algorithm, Litecoin’s Scrypt algorithm was chosen to allow for more democratic mining, as it is less susceptible to the specialized hardware (ASICs) that dominate Bitcoin mining. Although ASICs have since been developed for Scrypt, Litecoin mining remains more accessible to individual miners compared to Bitcoin. Since Scypt is more accessible to small-scale miners, using Scrypt decreases the likelihood of mining centralization. Scrypt includes a sequential memory-hard function and therefore requires asymptotically more memory.

Although Litecoin has helped make it famous, the Scrypt function was not developed for Litecoin. It was created in 2009 and the idea was to make it expensive to use FPGA och ASIC chips for mining acceleration. On example of an early cryptocurrency that used Scrypt is Tenebrix (TBX), and one of the people who were vocal in their criticism of TBX was Charlie Lee, who disliked how the TBX developers had put a clause in the code that would give them 7.7 million TBX for free. Lee set out to create an altnernative cryptocurrency that would also use Scrypt, but would not have that type of clause in its code.

MWEB

The MWEB (Mimblewimble Extension Blocks) upgrade was activated on the Litecoin network in May 2022, when it was added to the base layer as a soft fork. MWEB can be utilized for increased privacy regarding transfer amounts and wallet amounts.

Market position and use

Litecoin is often used as a medium of exchange due to its faster transaction times and lower fees compared to Bitcoin. It is widely accepted by merchants and is often used for transferring value between exchanges. Additionally, Litecoin is frequently used as a testbed for new features that may eventually be implemented in Bitcoin. For instance, Litecoin was one of the first cryptocurrencies to implement the Segregated Witness (SegWit) protocol, which improves transaction capacity and security.

Litecoin’s widespread adoption is evident in its availability across nearly all major cryptocurrency exchanges and its support in various payment processors and cryptocurrency wallets. This accessibility has made Litecoin one of the most traded cryptocurrencies globally.

Competition from other cryptocurrencies

Litecoin has consistently ranked among the top cryptocurrencies by market capitalization. However, it faces competition from both older and newer cryptocurrencies. Bitcoin remains the dominant player in the market, while other altcoins like Ethereum, Ripple (XRP), and Bitcoin Cash have also garnered significant attention. Despite this competition, Litecoin has maintained a strong presence due to its reliability, established history, and active development community.

Challenges and criticisms

While Litecoin has been successful, it is not without its challenges and criticisms. The development pace of Litecoin has sometimes been slower compared to other projects, leading some to question its long-term viability.

Another criticism is that Litecoin has struggled to differentiate itself, as its primary appeal—faster transactions and lower fees than Bitcoin—can also be achieved by newer cryptocurrencies with more advanced features.

One notable challenge is the emergence of “Bitcoin forks” such as Bitcoin Cash and Bitcoin SV, which have aimed to offer faster and cheaper transactions. These alternatives have introduced further competition, though Litecoin has remained resilient due to its established user base and market presence.

Association with Dogecoin

Created by software engineers Billy Markus and Jackson Palmer, the cryptocurrency Dogecoin was launched on December 6, 2021, and soon got a large userbase. In early 2014, Charlie Lee proposed merge mining (auxPOW) Dogecoin with Litecoin, and the idea got traction within the Dogecoin community. In September 2014, Dogecoin commenced merge-mining with Litecoin.

The future for Litecoin

Despite these challenges, Litecoin continues to evolve. The Litecoin development team is working on implementing technologies like the Lightning Network, which aims to further improve transaction speed and scalability.

Using PayPale to purchase a derivative of Litecoin became possible in 2020, and in June 2022, additional restrictions were lifted and it became possible to transfer Litecoin from PayPal to other wallets and to exchanges. (This is also possible for Bitcoin, Bitcoin Cash, and Ethereum.)

As the cryptocurrency market matures, Litecoin’s future will depend on its ability to innovate and maintain relevance amidst growing competition. However, its solid track record, active community, and commitment to development suggest that Litecoin will continue to be a significant player in the crypto space for years to come.

Litecoin has established itself as one of the most enduring and reliable cryptocurrencies since its inception in 2011. With its faster transaction times, lower fees, and strong community support, Litecoin remains a popular choice for both everyday transactions and as an investment. As it continues to develop and adapt to the changing crypto landscape, Litecoin’s role in the broader cryptocurrency ecosystem appears secure, providing a dependable alternative to Bitcoin for millions of users worldwide.