What is Litecoin? A Quick Guide for 2024

Key Takeaways

• Litecoin, often compared to Bitcoin, offers faster transactions and lower fees, making it ideal for everyday use. Its blockchain records all transactions securely and transparently.
• Created in 2011 by Charlie Lee, Litecoin aimed to address Bitcoin’s shortcomings, making cryptocurrency more accessible and less centralized.
• Litecoin functions both as a digital currency and a store of value. Although it is less well-known than Bitcoin, its low fees and speed make it practical for daily transactions.
• Litecoin faces challenges like declining relevance and limited DeFi capabilities, but solutions like Zetachain could help revitalize its utility in the future.

Imagine Litecoin as Bitcoin‘s little brother, described technically as a source code fork. The two coins are similar but also have a few differences. Both are decentralized, meaning they don’t have a central authority. They also use a blockchain, like a digital ledger of all transactions.

But here’s among the differences: Litecoin is faster and cheaper than Bitcoin. It’s like comparing a regular car to a sports car. Both get you from point A to point B, but the sports car is faster.

In this article, we’ll explore Litecoin, providing details about how it works, its history, utility, relationship with Bitcoin, and where to purchase the digital asset.

What is Litecoin (LTC)?

Litecoin is a decentralized, peer-to-peer cryptocurrency. As an open-source fork of Bitcoin, it operates on a global payment network secured by mathematics and cryptography. Litecoin enables instant, low-cost transactions, empowering individuals to control their day-to-day finances.

How Does Litecoin Work?

Miners compete to solve complex cryptographic puzzles to secure the network and confirm transactions. The first miner to solve the puzzle wins a reward of newly minted Litecoin and transaction fees. 

Unlike Bitcoin, which generates blocks every ten minutes, Litecoin generates blocks every two and a half minutes. This quicker pace enables faster transaction processing. But how does Litecoin achieve these higher speeds?

Litecoin uses a different mining algorithm called Scrypt, designed to be more energy-efficient and less susceptible to centralization than Bitcoin’s SHA-256 algorithm. It makes mining Litecoin more accessible to individual miners.

Fun Fact

Dogecoin also uses the Scrypt algorithm used by Litecoin.

Litecoin blockchain records all transactions, enstransparency and security. Miners verify transactions using cryptographic techniques and mathematical calculations before adding them to the blockchain. Like Bitcoin, Litecoin has a fixed supply of 84 million coins, limiting inflation to preserve the currency’s value.

History of Litecoin

Charlie Lee, a former Google engineer, created Litecoin in 2011. Lee developed Litecoin to respond to some perceived shortcomings in Bitcoin. He wanted to create a cryptocurrency that was more accessible to the average person and less prone to centralization. Lee’s efforts to improve Bitcoin involved making several adjustments to its original code, ultimately leading to the development of a faster, more efficient crypto.

Since its launch, Litecoin has become one of the most popular and widely used cryptocurrencies globally. Its strong community of supporters and developers continues to work on improving the network and adding new features.

Litecoin Utility

Litecoin has two notable functions, primarily as a digital currency and a means of preserving value.

Digital Currency

Litecoin functions as a digital currency similar to traditional money. You can use it to purchase products, send funds to others, or make online transactions. Compared to Bitcoin and some other digital currencies, Litecoin offers quicker transaction speeds and lower fees – a practical choice for everyday purchases.

Store of Value

Though less recognized than Bitcoin, Litecoin offers a compelling option for wealth storage. Its limited supply and robust network security make it a viable choice.

Litecoin vs. Bitcoin – Key Differences

Although Litecoin and Bitcoin share the same foundation, Litecoin being a fork of Bitcoin, they have several key differences in their features and network functions.

Transaction Speed

Litecoin processes transactions much faster than Bitcoin, primarily due to Litecoin’s shorter block generation time. 

Number of Coins

Another difference between the two cryptocurrencies is the maximum supply of coins. Bitcoin has a cap of 21 million coins, while Litecoin has a maximum supply of 84 million. The higher supply means Litecoin is more accessible.

Algorithms

Litecoin and Bitcoin also use different mining algorithms. Bitcoin uses the SHA-256 algorithm, which requires a lot of processing power and has led to the development of specialized mining hardware known as ASICs (Application-Specific Integrated Circuits). 

Litecoin uses the Scrypt algorithm, which is less resource-intensive and was initially designed to make mining more accessible to everyday users.

Block Time

The average block time for Litecoin is 2.5 minutes compared to Bitcoin’s 10 minutes. Litecoin transactions are confirmed more quickly, making it a better option for time-sensitive transactions.

Market Cap

In terms of market cap, Bitcoin is far ahead of Litecoin. Bitcoin’s market cap is over $1 Trillion, making it the largest and most well-known cryptocurrency. Litecoin, while still among the top performers in cryptocurrencies by market cap, is much smaller, with a market cap of approximately $4.5 billion.

Track Litecoin’s market cap in real time on CoinMarketCap.

Halving Schedule

The halving process reduces the reward for mining a Bitcoin or Litecoin block by half. This event happens approximately every four years to control the supply of new coins entering the market. For Litecoin, the halving schedule occurs every 840,000 blocks, while for Bitcoin, it occurs every 210,000 blocks. Litecoin’s next halving may take place in mid-2027.

Litecoin Advantages

So, what makes Litecoin an attractive cryptocurrency?

Store of Value

Litecoin’s limited supply of 84 million coins gives it scarcity, which many believe will help maintain its value. Even though Bitcoin is often the go-to option for long-term investment, Litecoin’s lower market cap makes it an attractive alternative for those looking to diversify their cryptocurrency portfolios.

Fast Digital Payments

Litecoin’s speed is one of its trademarks. Anyone seeking quick transactions will find Litecoin better than some of the other market options.

Cheaper Transactions

Litecoin transactions are also cheaper. The average Bitcoin transaction fee is higher than Litecoin’s. Its cost-effectiveness is ideal for smaller transactions, where high fees could otherwise reduce the transaction value. Litecoin’s low fees make it a practical option for everyday use.

Litecoin Disadvantages

While Litecoin has its strengths, it also faces several challenges that might make some think twice before choosing it over other cryptocurrencies.

Declining Relevance

One of Litecoin’s chief issues is its declining relevance. In 2017, Litecoin’s creator, Charlie Lee, sold most of his holdings, which led to a drop in confidence among investors. This move raised questions about the long-term viability of Litecoin, especially as newer cryptocurrencies with faster transaction speeds and more appeal entered the market.

No Smart Contract Functionality

Litecoin doesn’t support smart contracts, limiting its functionality, especially in areas like decentralized finance (DeFi), where smart contracts are essential. As the crypto space moves beyond simple stores of value, the lack of smart contract support might dim Litecoin’s light further as more versatile platforms take the spotlight.

How to Mine Litecoin in 2024

Mining Litecoin might not be as complex as you think. Here’s a breakdown of what you need to do:

1) Choose and Set Up Your Mining Hardware

To mine Litecoin effectively, you’ll need specialized hardware. While you can technically mine with a regular computer, using an ASIC miner is much more efficient. ASICs are built specifically for mining and provide a much higher hash rate, meaning you’ll find blocks faster and earn more Litecoin. Some popular options include the Bitmain Antminer L9 and the Goldshell Mini-DOGE Pro.

2) Download and Install Mining Software

Choose a Litecoin mining software that suits your needs. Some popular options include:

• EasyMiner
• CGMiner

3) Consider Joining the Litecoin Mining Pool

Mining Litecoin solo can be challenging due to the network’s high difficulty. Joining a mining pool combines your computing power with others, increasing the likelihood of finding blocks. Rewards are distributed proportionally to each member’s contribution, making mining more accessible for individuals.

4) Start Mining

With everything set up, you’re ready to mine. Follow the instructions from your mining pool to connect your miner. You can monitor your miner’s performance and earnings through the pool’s dashboard.

Explore how to mine cryptocurrencies for a general overview. 

How To Buy Litecoin (LTC)

If you’re looking to buy Litecoin in 2024, here’s a simple guide to get you started:

• First, choose a cryptocurrency exchange. Popular options include Binance, Coinbase, and Kraken.
• To start, create an account on your preferred app, verify your identity, and connect a payment method like a bank account or debit card.
• Once set up, search for Litecoin (LTC), enter the amount you want, and click Buy Now.
• Finally, securely store your Litecoin by transferring it to an external crypto wallet. 

Consider a hardware wallet like Ledger for added security, or choose a reputable software wallet.

Litecoin Wallet Options

For those who want to keep it simple and stick solely with Litecoin, the Litecoin Core wallet might be ideal. It’s free to download and offers a secure environment, running a full copy of the Litecoin blockchain on your computer. However, it requires a lot of storage space—about 25 GB—and it’s not the most user-friendly option.

On the other hand, if you’re always on the move, Litewallet could be your best bet. Available for both iOS and Android, this mobile wallet lets you manage your Litecoin easily from your phone. It’s also free and developed by the Litecoin Foundation, so you know it’s made with Litecoin users in mind.

The Future of Litecoin

Once dominated by individual miners, mining PoW cryptocurrency has changed dramatically. Now, large tech firms control most of the mining through expansive pools. This shift raises questions about Litecoin’s decentralized nature, a core principle of cryptocurrencies.

While corporatization can lead to more efficient mining, it also concentrates power in the hands of a few, potentially undermining the decentralized ethos that initially drew many to Litecoin. The balance between efficiency and decentralization is delicate and essential for Litecoin’s future.

The Litecoin community remains steadfast in its belief that the cryptocurrency is a practical, everyday tool rather than just a store of value. However, Litecoin’s limited presence in decentralized exchanges (DEX) and decentralized finance (DeFi) has hindered its utility. Litecoin interoperability solutions with platforms like Zetachain offer hope for overcoming these challenges, potentially revitalizing Litecoin’s utility.

Closing Thoughts

Litecoin has carved out its niche as a faster, more accessible alternative to Bitcoin. Despite its challenges, including reduced relevance and the lack of smart contract functionality, it remains a solid choice for quick, cost-effective transactions. Striking a balance between decentralization and efficiency and implementing interoperable solutions is crucial for Litecoin’s future. Whether it can maintain its place in a rapidly changing market remains to be seen.

FAQs

Is Litecoin Faster Than Bitcoin?

Litecoin is faster than Bitcoin due to its shorter block time (2.5 minutes vs. 10 minutes), higher transactions per second (TPS) (28 vs. 5-7), and more energy-efficient Scrypt mining algorithm.

When Was Litecoin Created?

Charlie Lee launched Litecoin on October 7, 2011.

Should I Invest in Litecoin?

Litecoin offers faster transactions, lower fees, and a proven track record. However, its lack of unique features, limited adoption, and market volatility pose risks. Research, assess the risk, and consider a long-term view before committing any investment choice.