What exactly is Litecoin?
Like many other cryptocurrencies, Litecoin is a decentralized and P2P cryptocurrency. It had been developed from a fork in the blockchain of Bitcoin, the digital and transparent public ledger used by the majority of the cryptocurrencies at present. The primary intention of introducing Litecoin was to allow almost instant cost payments that could be exchanged between institutions or individuals across the globe.
Like Bitcoin, a proof-of-work system is employed by Litecoin for verifying transactions on the blockchain; however, one can consider it to be a faster and lighter version of Bitcoin because of certain modifications. The primary difference between these two cryptocurrencies is that Litecoin uses a mining algorithm known as a script for allowing quicker transaction times.
Litecoin generates a new block for mining at 2.5 minutes which is approximately 4 times quicker than Bitcoin. The supply of Litecoin is likewise 4 times greater. The overall supply of Litecoin comes with a cap of 84 million, while Bitcoin comes with a cap of as many as 21 million coins.
The supply of Litecoin is 84 million. Approximately 68 million Litecoins were mined in October 2021.
How does Litecoin function?
Litecoin has a number of identical features to that of Bitcoin. Consequently, it will not be difficult for you to comprehend the working of Litecoin case you know how Bitcoin works.
Litecoin’s cryptocurrency or LTC also works on cryptography. The software of Litecoin puts a hard limit on the number of LTC that can be generated at 84 million.
Litecoin, just like Bitcoin, likewise implies a type of proof-of-work mining for allowing anyone dedicating computer hardware to including fresh blocks to the blockchain of Litecoin and getting the new Litecoin that is created.
The 2 primary differences happen to be that Litecoin can finalize transactions quicker by using a different algorithm for mining. Fresh blocks will be added to Litecoin’s blockchain at the interval of approximately 2.5 minutes, unlike Bitcoin, which is approximately 10 minutes.
The mining algorithm of Litecoin intends to minimize the efficiency of specialized equipment for mining, although this proved to be unsuccessful in the long run. At present, one can nevertheless mine Litecoin using hobbyist equipment, even though large-scale miners are known to dominate its market.
Since then, Litecoin has been an important test ground for more cryptocurrency features.
Litecoin adopted a technology known as Segregated Witness in 2017 that allowed the cryptocurrencies to add more transactions. The initial Lighting transaction had been completed on Litecoin later that year, which depicted how it was able to make use of layered network design.
- For what is Litecoin used?
The primary objective of Litecoin will be to function as a medium to transact payments sans any third-party intermediary or a bank.
Litecoin had been designed for usage in more inexpensive transactions, which will be more efficient for day-to-day usage. On the contrary, Bitcoin is usually utilized as a store of value for any long-term purpose.
Litecoin versus Bitcoin
There are several ways in which Litecoin is different from Bitcoin. We have mentioned several of those distinctions right here.
Miners need to solve hash functions to include fresh Bitcoin or Litecoin blocks to the blockchain. A significant differentiator between Bitcoin and Litecoin happens to be the cryptographic algorithms. The algorithm that runs at the core of cryptocurrency plays a significant role, Litecoin uses Scrypt which is a more recent one as compared to Bitcoin.
The founder of Litecoin, Charlie Lee, wished to prioritize transaction speed, which is now a significant reason for the popularity of LTC. The average transaction confirmation time of the network of Bitcoin is approximately 10 minutes for every transaction, while that of Litecoin is approximately 2.5 minutes. Thus, the network of Litecoin can manage more transactions due to its shorter time for generating blocks.
If you are also interested in Bitcoin, you can learn these steps to invest in Bitcoins.
- Market capitalization
The market capitalization of Bitcoin is much more than that of Litecoin. The total value of all circulating Bitcoins was approximately $1.1 trillion in 2021, while that of Litecoin had been approximately $14 billion.
Wrapping it up !!!
This informative write-up will help you in understanding the key concepts of Litecoin. It will help in framing your decision when it comes to investing in it.