Litecoin Definition


What is Litecoin (LTC)?

Litecoin (LTC) is a cryptocurrency which was founded in 2011, two years after Bitcoin, by a former Google engineer named Charlie Lee. Like Bitcoin, Litecoin is based on an open source global payment network that is not controlled by any central authority. Litecoin differs from Bitcoin in aspects such as a faster block generation rate and the use of Scrypt as work test (PoW) scheme.

It is considered one of the first altcoinsderived from the original open source code of Bitcoin.

Initially, it was a strong competitor to Bitcoin. However, as the cryptocurrency market has become much more saturated and competitive in recent years with new offerings, Litecoin’s popularity has waned somewhat.

Litecoin has always been seen as a reaction to Bitcoin. In fact, when Lee announced the debut of Litecoin on a popular Bitcoin forum, he called it the “light version of Bitcoin.” For this reason, Litecoin has many of the same features as Bitcoin, while also adapting and changing some other aspects that the development team felt could be improved.

As of November 2021, 1 LTC (a Litecoin) is worth around $215, making it the 14th largest crypto with a market capitalization just under $15 billion.

key takeaways

  • Litecoin is a cryptocurrency that was founded in 2011, two years after Bitcoin, by a former Google engineer named Charlie Lee.
  • Litecoin can be used as a way to pay people anywhere in the world without an intermediary having to process the transaction.
  • Measured by market capitalization, Litecoin is the 14th largest cryptocurrency.
  • There will never be more than 84 million Litecoins (LTC) in circulation.

Understanding Litecoin

Like other decentralized cryptocurrencies, Litecoin is not issued by a government, which has historically been the only entity that society trusts to issue money. Instead of being regulated by a central bank and coming off the press at the Bureau of Engraving and Printing, litecoins are created through an elaborate cryptocurrency procedure called miningwhich consists of processing a list of Litecoin transactions.

Unlike traditional currencies, the supply of Litecoins is fixed. There will never be more than 84 million Litecoins in circulation. Every 2.5 minutes, the Litecoin network generates a new block—a ledger entry of recent Litecoin transactions worldwide.

The mining software verifies the block and makes it visible to any system participant (called a miner) who wants to see it. Once verified by a miner, the next block enters the chain, which is a record of every Litecoin transaction ever made.

There are incentives to mine Litecoin: the first miner to successfully verify a block is rewarded with 12.5 Litecoins. As with Bitcoin, the amount of Litecoins awarded for such a task reduces over time. In August 2019, it was halved, and the halving will continue at regular intervals until 84 million Litecoin is mined.

The halving dates for LTC have been:

  1. August 25, 2015 (50 -> 25 LTC)
  2. August 5, 2019 (25 -> 12.5 LTC)
  3. August 23, 2023 (expected) (12.5 -> 6.25 LTC)

Special Considerations

Mining cryptocurrencies at a rate worthwhile for miners requires a great deal of processing power, courtesy of specialized hardware. The central processing unit (CPU) in most personal computers is not fast enough to mine most cryptocurrencies. However, Litecoin can be differentiated from most other cryptocurrencies in that it can be mined using personal computers. However, the higher the mining capacity of a machine, the higher the chances that it will earn something of value for a miner.

Any currency, even the US dollar or gold bullion, is only as valuable as society believes it to be. If he Federal Reserve (Fed) too many bills began to circulate, the value of the dollar would plummet in a short time. This phenomenon transcends currency. Any good or service becomes less valuable the easier and cheaper it is available.

The creators of Litecoin understood from the start that it would be difficult for a new coin to develop a reputation in the market. But by restricting the number of Litecoins in circulation, the founders could at least allay people’s fears of overproduction.

The Litecoin Foundation estimates that it will be around 2142 when the maximum of 84 million Litecoins will be reached.

How is Litecoin different from Bitcoin?

The most important distinction between Litecoin and Bitcoin is the crypto difference. algorithms that everyone uses. Bitcoin uses the SHA-256 algorithm, while Litecoin uses a newer algorithm called Scrypt.

Litecoin has some inherent advantages compared to Bitcoin. It was founded with the goal of prioritizing transaction speed, and this is one of the main reasons for its popularity. The average transaction confirmation time of the Bitcoin network is currently just under nine minutes per transaction, while that of Litecoin is approximately 2.5 minutes. The Litecoin network can handle more transactions due to its shorter block generation time.

Bitcoin has a significantly larger market capitalization than Litecoin. As of August 31, 2021, the total value of all bitcoins in circulation is around $1 trillion, while Litecoin’s market capitalization is around $11.9 billion. Bitcoin’s market capitalization still dwarfs all other digital currencies.

Both Bitcoin and Litecoin have fixed supplies. However, the supply of Bitcoin is limited to only 21 million coins, while the total fixed supply of Litecoin is 84 million coins.

Litecoin Targets

Litecoin, like all virtual currencies, is a form of digital money. Both individuals and institutions can use Litecoin to buy things and transfer funds between accounts. Participants can transact Litecoin without the use of an intermediary such as a bank, credit card company, or payment processing service.

Instead of focusing on its functionality, many investors are interested in Litecoin as a potential long-term investment. Like investments in any type of currency, investors speculate that Litecoin will build relative wealth over time.

What is Litecoin and how does it work?

Litecoin is a peer-to-peer (P2P) virtual currency, which means that it is not governed by a central authority. The Litecoin network offers almost zero-cost instant payments that can be made by individuals or institutions around the world.

Bitcoin, Litecoin, and many other cryptocurrencies use the Proof-of-Work (PoW) algorithm to protect their networks. Basically, PoW requires a party to prove to all other participating parties in the network that a required amount of computational effort has been expended. Unlike Bitcoin, which uses the SHA-256 PoW hashes algorithm, Litecoin uses the Scrypt PoW algorithm which consumes less resources.

What is Litecoin used for?

Litecoin can be used as a way to pay people anywhere in the world without an intermediary having to process the transaction.

What has been the highest price of Litecoin?

On May 10, 2021, Litecoin (LTC) reached an all-time high of $410.26. Its all-time low of $1.15 was recorded on January 14, 2015.

What was the original price of LTC?

When it debuted in 2013, 1 LTC was worth around $4.30.

When was the last Litecoin halving?

Just like Bitcoin, creating Litecoin tokens involves a process called mining. For participating in the act of mining, miners are rewarded with Litecoin. A Litecoin halving refers to an instance of halving the amount of Litecoin rewards miners receive for each block.

The Litecoin halving is intended to preserve the purchasing power of Litecoin. The last Litecoin halving took place on August 5, 2019. On this date, the mining reward was reduced from 25 LTC per block to 12.5 LTC per block. The next halving (from 12.5 LTC per block to 6.25 LTC per block) is expected around August 23, 2023.

How many Litecoins are left?

Ultimately, there will only be 84 million LTC in circulation. As of November 2021, there were just over 69 million LTC in circulation. That leaves less than 15 million LTC to mine.

The bottom line

Once a coin reaches a critical mass of users who trust that the coin is really what it represents and likely won’t lose its value, it can hold its own as a payment method. Litecoin is nowhere near universally accepted. But as cryptocurrencies become more widely accepted and their values ​​stabilize, one or two of them, possibly including Litecoin, will emerge as the standard currencies of the digital realm.

Invest in cryptocurrencies and others initial coin offerings (ICO) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decision. Investopedia makes no representations or warranties as to the accuracy or currency of the information contained in this document. As of the writing of this article, the author does not own Litecoins.