What is Litecoin?

04 May 2021

1. “Lite” version of Bitcoin

Litecoin was conceived in 2011 by Google engineer Charlie Lee, who stated it to be a “Lite” version of Bitcoin. While retaining key features of Bitcoin they felt were good, they simultaneously changed some aspects of Bitcoin they felt could be improved.

2. Litecoin processes transactions faster than Bitcoin

Litecoin can validate transactions approximately 4 times faster than Bitcoin – taking around 2.5 minutes, to Bitcoin’s 10 minutes. This mean that every 2.5 minutes, a block (ledger) of all transactions within that timeframe is generated, validated, and added to the end of the blockchain, while new LTC tokens are minted and distributed to miners helping to power the validation of transactions.

3. Major difference to Bitcoin lies in their mining complexity

Bitcoin uses the SHA-256 – a more complex algorithm that requires ever more advanced “mining equipment” to garner elusive rewards. Litecoin uses the relatively simpler Scrypt algorithm instead,  designed to make it easier to mine Litecoin without the need for increasingly sophisticated mining methods and equipment.

In essence, this makes it easier for individuals with off-the-shelf computers or smaller pools of miners to mine Litecoin, as compared to Bitcoin – the Bitcoin mining ecosystem itself has evolved to incredibly sophisticated levels by comparison, with complex hardware requirements spawning billion-dollar crypto hardware industries since, and the resulting Bitcoin mining network chewing through a small country’s worth of electricity annually.

4. There will only ever by 84 million LTC

As at time of writing (2021), there are 66 million LTC tokens in circulation. Litecoin is growing at a rate of 12.5 LTC every 2.5 minutes, with the amount of new LTC minted getting cut in half every 4 years or so in a halving event –  similar to BTC.

5. Litecoin transactions are incredibly “cheap”

It only ever costs 1/1000th of a LTC to process a transaction of any size. At prices seen in 2020 ($200), that works out to $0.20 per transaction – again, of any size, a financially ruinous business pricing for modern payments companies.

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