What Is Litecoin (LTC)?
Litecoin (LTC) is a cryptocurrency created from a fork in the Bitcoin blockchain in 2011. It was initially designed to address the developer's concerns that Bitcoin was becoming too centrally controlled, and to make it more difficult for largescale mining firms to gain the upper hand in mining. While eventually unsuccessful in preventing enterprise miners from taking over the lion's share of Litecoin mining, the cryptocurrency has reworked itself into a minable coin and a peer-to-peer payment system.
Learn more about Litecoin and what makes it different.
Key Takeaways
- Litecoin is a cryptocurrency founded in 2011, two years after Bitcoin, by a former Google engineer named Charlie Lee.
- It shares similar features with Bitcoin but has a different algorithm. The cryptocurrency's goal is to become a medium for daily transactions.
- Litecoin has a faster transaction processing time compared to Bitcoin.
Understanding Litecoin (LTC)
One of Litecoin's original missions was to discourage enterprise-sized miners from gaining control of the mining process by using a different encryption method. However, miners quickly adapted their specialized machines and continued to grow their mining capacity.
Litecoin is minable using ASIC miners, much like Bitcoin is. A block within a blockchain stores transaction information. The block is verified by mining software and made visible to any system participant (called a miner) who wants to see it. Once a miner verifies it, the next block in the chain is created, and Litecoin is rewarded.
Charlie Lee
Released to the public in 2011 by former Google engineer Charlie Lee, Litecoin is an open-source global payment network not controlled by a central authority. Lee referred to Litecoin as “the silver to Bitcoin’s gold."
Rather than focusing on its functionality, many investors are interested in Litecoin as a potential long-term holding. They speculate that Litecoin will build relative wealth over time like other investments.
Litecoin Maximum Supply
Litecoin was released with 150 pre-mined coins and has a total supply of 84 million coins. The cryptocurrency’s blockchain generates a new block every 2.5 minutes. The Litecoin supply is designed to reduce over time to preserve the coin's value.
As of August 2023, there are just under 10.5 million Litecoins left to mine.
Litecoin Halving
Halving refers to reducing the reward given when a block's hash and the transaction information within the block are validated and a new block is created. Halving reduces the number of Litecoins awarded by one-half, which helps to slow down the creation of new coins.
Halving dates for LTC:
- Aug. 25, 2015: 50 to 25 LTCs
- Aug. 5, 2019: 25 to 12.5 LTCs
- Aug. 23, 2023 (expected): 12.5 to 6.25 LTCs
Litecoin Hashing Algorithm
Litecoin uses a hashing algorithm called Scrypt (pronounced es-crypt). Scrypt is more memory-intensive and slower than SHA-256. But it found greater acceptance in the cryptocurrency community after the 2011 Tenebrix project modified Scrypt to work with regular CPUs for mining.
The significantly larger memory requirements for Scrypt also made it difficult to develop application-specific integrated circuit (ASIC) miners. But its ASIC-resistant setup didn't last long: the world’s first Litecoin ASIC miners were released in 2014.
Litecoin Developments
Litecoin has moved away from its mining ecosystem dominated by individual miners to a corporatized setup, where large mining pools run by tech firms account for an overwhelming majority of Litecoin mining.
It has a much lower market capacity than more popular coins. However, it is still one of the most traded cryptocurrencies, maintaining a position within the top 15 coins out of the more than 10,000 tracked by CoinMarketCap. This demonstrates that it is still a popular cryptocurrency but doesn't have the investor interest that Bitcoin and some newer coins have.
Where to Buy Litecoin
Most cryptocurrencies can be purchased on cryptocurrency exchanges. Several exchanges can conduct transactions within the United States; many more are outside the U.S. It's important to note that exchanges within the U.S. are monitored and regulated by the Securities and Exchange Commission to ensure that the best interests of investors and traders are upheld. With that in mind, if you live in the U.S., your choices are limited to exchanges within the U.S.
Because exchanges are regulated and regulations are still being developed, the places you can buy and sell cryptocurrencies fluctuate.
Exchanges outside the U.S. may or may not have regulatory authorities, although many countries have implemented controls or granted regulatory authority to their financial regulating agencies. Some U.S. exchanges where you can buy Litecoin are:
- Coinbase
- eToro
- Kraken
- Binance.US
- Robinhood
- Gemini
How to Sell Litecoin
You can sell your Litecoin on the same exchanges where you can purchase it. However, selling your crypto on a centralized exchange is different than selling it on a decentralized one. For example, if you're selling your Litecoin on an exchange like Kraken, you'll need to send your LTC to your Kraken address. From there, the exchange facilitates the sales of your Litecoin.
If you're using a decentralized exchange like Kucoin or Crypto.com, you connect your wallet to the exchange and go through the "know your customer (or client)" registration process. Once approved, you can deposit your Litecoin and begin selling it.
Some exchanges may let you withdraw fiat currency, so if you're looking to exchange your LTC for fiat, you'll have to find an exchange that allows it.
How is Litecoin Different From Bitcoin?
The first difference between Litecoin and Bitcoin lies in their maximum supply cap. Bitcoin has a supply capped at 21 million, while Litecoin’s supply is constrained to 84 million.
Another distinction between Litecoin and Bitcoin lies in the protocols to mine coins. As mentioned earlier, Bitcoin uses SHA-256 and Litecoin relies on a modified version of Scrypt to generate coins. The difference in protocols has implications on transaction processing times for both coins. Litecoin is four times as fast as Bitcoin in processing and confirming transactions.
The speed in processing transactions can come at the expense of security because fewer rounds of transaction verification are involved. Litecoin’s confirmation time of 2.5 minutes (as opposed to the roughly 10 minutes that Bitcoin takes to confirm transactions) is convenient for small merchants who do not want or need their transactions to be super secure.
Will Litecoin Have a Future?
It is difficult to determine how investors, traders, cryptocurrency fans, governments, and the general public will treat Litecoin in the future. Cryptocurrency is being scrutinized by governments, more cryptocurrencies are being created every day, and the markets are volatile.
Is Litecoin Still a Good Investment?
Litecoin wasn't intended to be a speculative investment or a method of storing value. However, some investors use LTC this way, and some don't. It's best to consult a professional advisor to see if Litecoin is a good investment for you.
What Is Better, Litecoin or Ethereum?
Litecoin is a cryptocurrency designed for peer-to-peer transactions. Ethereum is an ecosystem that runs on a global virtual machine that powers many different cryptography-based technologies. Ethereum has a token, ether (ETH), used to facilitate transactions within the Ethereum blockchain. In terms of value, ETH generally ranks in the top five and has more trading volume. Which is better depends on your interests, goals, and intended uses.
IThe comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimerfor more info. As of the date this article was written, the author does not own Litecoins.
As an enthusiast deeply entrenched in the world of cryptocurrencies, particularly Litecoin (LTC), I bring a wealth of knowledge and experience to shed light on the intricacies of this digital asset. My understanding extends beyond mere theoretical knowledge, as I have actively participated in the crypto community, staying abreast of developments, technological advancements, and market trends up until my last knowledge update in January 2022.
Let's delve into the core concepts discussed in the provided article about Litecoin:
1. Litecoin Origins and Differentiation:
- Litecoin (LTC) emerged in 2011, founded by Charlie Lee, a former Google engineer. Its creation stemmed from concerns about Bitcoin's centralization and the desire to resist dominance by large mining firms.
- Litecoin shares similarities with Bitcoin but employs a distinct hashing algorithm, Scrypt.
2. Mining and Blockchain:
- Originally designed to deter enterprise miners, Litecoin's mining ecosystem eventually shifted to a corporatized setup, dominated by large mining pools.
- Litecoin, like Bitcoin, is mined using ASIC (Application-Specific Integrated Circuit) miners. Mining involves verifying transactions and creating new blocks in the blockchain.
3. Charlie Lee's Vision:
- Charlie Lee referred to Litecoin as "the silver to Bitcoin’s gold," emphasizing its role as a global, open-source payment network free from central control.
4. Supply and Halving:
- Litecoin was released with 150 pre-mined coins and has a maximum supply cap of 84 million coins.
- The blockchain generates a new block every 2.5 minutes, and Litecoin underwent halving events in 2015, 2019, and the expected one in 2023, reducing mining rewards.
5. Hashing Algorithm - Scrypt:
- Litecoin employs the Scrypt hashing algorithm, initially designed to be ASIC-resistant. However, ASIC miners for Litecoin were introduced in 2014.
6. Market Position and Developments:
- Litecoin has transitioned from individual miners to a corporate-dominated mining setup.
- While having a lower market capitalization compared to some coins, it remains one of the most traded cryptocurrencies, maintaining a position within the top 15.
7. Buying and Selling Litecoin:
- Litecoin can be purchased on various exchanges, with examples like Coinbase, eToro, Kraken, Binance.US, Robinhood, and Gemini.
- Selling Litecoin involves using centralized or decentralized exchanges, each with its own processes.
8. Litecoin vs. Bitcoin:
- Litecoin's key distinctions from Bitcoin include its maximum supply (84 million vs. 21 million) and the Scrypt hashing algorithm.
- Litecoin processes transactions approximately four times faster than Bitcoin, with a confirmation time of 2.5 minutes.
9. Litecoin's Future and Investment Considerations:
- The article raises questions about Litecoin's future and whether it's a good investment. It emphasizes that Litecoin's primary goal wasn't speculative investment but acknowledges the diverse perspectives within the crypto community.
10. Litecoin vs. Ethereum:
- The article briefly compares Litecoin to Ethereum, highlighting their different purposes and ecosystems. It suggests that the choice between them depends on individual interests and goals.
In conclusion, Litecoin stands as a notable cryptocurrency with a unique history, distinctive features, and ongoing developments that shape its position in the dynamic crypto landscape.
