What is Litecoin (LTC)? - all what you need to know

By
Tokeneo
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2 min reading

Litecoin (LTC) is an open-source cryptocurrency based on a decentralised blockchain network, providing fast transfers with low transaction fees. In its original concept, Litecoin was to be faster and cheaper to use than its original bitcoin (BTC). This was also suggested by its name - "lite" means "light".

litecoin what it is

Litecoin is based on modified bitcoin source code, its creator and main developer is Charlie Lee. LTC is one of the oldest cryptocurrency and the second altcoin (other than bitcoin) in history, created a few months after Namecoin (NMC). The first Litecoin block was mined on 11 October 2011. For a long time (until October 2014), Litecoin was the second largest cryptocurrency in terms of capitalization, just behind BTC. It was then overtaken by Ripple ( XRP) and never returned to second place in the market value ranking.

The development of the project is supervised by the Litecoin Foundation, it is not, of course, the issuer, nor is it the control body of LTC, as it is decentralized and its emission takes place during the mining process.

Litecoin does not ensure the anonymity of the transaction (such as Monero or Zcash), and its blockchain is open to the public.

Litecoin - basic technical information

Litecoin is technically very similar to bitcoin as it is based on its source code. LTC block time is four times shorter than BTC and is 2.5 minutes and its capacity is limited to 1 MB (1000 kB), similar to bitcoin. Litecoin is currently able to execute approximately 56 transactions per second (TPS). In May 2017, LTC implemented the so-called Segregated Witness (SegWit) protocol, which provides a smaller transaction size and requires less processing power to confirm it. SegWit was developed by Bitcoin Core developers, but its implementation for BTC took place later than for LTC in August 2017.

As in the case of bitcoin, the Litecoin developers are working on the implementation of Lightning Network, which is a so-called second layer protcol protocol offering high scalability and the ability to perform immediate transactions (including micropayments) outside the blockchain network (so-called off-chain transactions).

The average transaction fee in LTC is significantly lower than in BTC and is below 5 cents (USD).

The maximum number of LTC units (supply) was set at 84m, of which nearly 75% is already in circulation.

Litecoin, like bitcoin, is based on the Proof of Work consensus algorithm, which means that it can be mined, and miners are responsible for confirming transactions, adding new blocks to the network and mining new LTC units. However, LTC differs from bitcoin by the type of cryptographic algorithm.

Litecoin excavator and mining

As mentioned in the previous paragraph, Litecoin is a Proof of Work cryptocurrency, which means that there is a process of mining in it. LTC is based on the cryptographic algorithm Scrypt (similarly to e.g. Dogecoin), which due to its structure (based on the key derivation function) requires high memory speed, which made LTC mining for a long time with CPU (computer processors) and then GPU (graphics cards), as it was not cost-effective to build excavators based on ASICs. The first ASIC miner for Scrypt was manufactured in the second half of 2014. - It was created by Innosilicon, a model A4 Dominator. 

The current block reward for miners is 12.5 LTC, but it decreases by half (this process is called halving) every 840 thousand excavated blocks.

Mining difficulty adjustment, similarly to bitcoin, occurs every 2016 transaction blocks, but it is four times faster due to the average LTC block time of 2.5 minutes (compared to 10 minutes at BTC).

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