With the price of an LTC surging to $64 in August 2017 as the cryptocurrency market reached a peak of $175 billion, Litecoin is attracting the attention of cryptocurrency enthusiasts.
The digital currency's revival coincided with community efforts to activate Segregated Witness, or SegWit, a scaling solution that unlocks new features like smart contracts and makes the litecoin blockchain more dynamic.
Let's talk about litecoin and how it differs from other well-known cryptocurrencies like bitcoin before we delve into the technical aspects of one of the most widely used cryptocurrencies.
A peer-to-peer digital currency called Litecoin generates and sends coins based on an open-source cryptographic protocol.
The currency is modelled after the well-known cryptocurrency bitcoin, but litecoin was developed to improve upon it in various ways, including speeding up the process of verifying transactions on the blockchain.
Although this altcoin was launched in 2011, it has gained popularity quickly and recently surpassed the No. 4 cryptocurrency ranking.
Here is a brief guide to help you comprehend litecoin and what the cryptocurrency's future may hold.
A Brief Overview of Litecoin's History
Bitcoin, which Satoshi Nakamoto introduced in 2009, is frequently contrasted with Litecoin. Rather than being a single person, Nakamoto is thought to be a group of people who published the research paper "Bitcoin: A Peer-to-Peer Electronic Cash System" before launching bitcoin. At this point, a lot of people were becoming aware of the cryptocurrency, which would be totally decentralised — without a server or central authority — and would use a peer-to-peer network to prevent double-spending.
Charlie Lee, an MIT alumnus and former worker for Google and Microsoft, was one of those taking note.
Lee used bitcoin, followed it, and educated himself on the technology's underlying principles. As he began to identify additional ways in which this currency might be enhanced, he was motivated to develop his own cryptocurrency so that he could further develop these key components.
When litecoin was introduced in 2011, people discovered that one crucial aspect was very different from bitcoins: the speed.
A benefit of mining Litecoin is that transactions happen much more quickly than they do with Bitcoin. While many of the fundamentals resembled those of bitcoin, Lee's "proof of work" algorithm was implemented differently. He chose Scrypt instead of the popular SHA-256, a decision that would be the foundation for numerous significant differences.
This is a brief overview of the history of litecoin; now let's discuss its functioning and the reasons why users prefer it to other cryptocurrencies. When measured in US dollars, Litecoin is less expensive than bitcoin, but there are still significant differences that make this currency a desirable choice for miners.
Key learnings
While litecoin was inspired by bitcoin and is similar to the latter, there are important distinctions between the two that make litecoin a worthwhile alternative for those interested in mining and cryptocurrencies.
What Are Litecoins? How Do Litecoins Work?
In a few crucial ways, litecoin's operation resembles that of other cryptocurrencies. There is a finite supply of litecoins, and once they are mined and added to the system, no more LTC will ever be created.
This is very dissimilar to fiat currencies, where it is possible to print more money, which could have widespread effects and change the value of the money that is already in circulation. Unlike fiat money, litecoins have strong security and it is nearly impossible to mine the same coin twice. Let's take the scenario where someone tries to mine the same coin twice.
Another miner would immediately notice the activity, making it impossible for the fraudulent activity to occur.
Cryptocurrencies like litecoin make it virtually impossible to "game the system" or produce fake money as a result. People who are interested in litecoin find this security feature appealing because they believe that it protects the value of their currency from this kind of threat. During the mining process, transactions are verified and added to a public ledger, at which point Litecoins are released. A "block chain" is the term used to describe this open ledger. The miner (or mining group, if multiple people work together to complete this task) will be given 25 litecoins once it is finished. Every 840,000 blocks, the block mining reward for Litecoin is cut in half, and the next time it does, recipients will receive 12.5 coins per block. As a result, receiving coins becomes increasingly challenging over time.
Key learnings
Not much distinguishes Litecoin from other varieties of cryptocurrencies. Although litecoins have a lower value when converted to fiat than bitcoins, it's still worth considering, especially for those who are new to cryptocurrency mining, because you can create blocks more quickly and get started with it.
Where Are Litecoins Available?
If you've never used cryptocurrencies before, you might be unsure of how to get your hands on them. Exists a location where you can convert your local currency into LTC? Receiving through mining is one way to get LTC (more on this in a minute). As an alternative, you can buy coins from a market.
However, the difficulty with litecoins is that very few exchanges will sell litecoins directly, necessitating the use of a workaround. The simplest method is to buy bitcoins with your local currency. Now, it's simple to convert your bitcoins into litecoins and add them to your digital wallet. The procedure ought to be quick, taking only a few minutes. However, suppose you prefer to obtain litecoins through mining as opposed to buying them. What should you do first?
Key learnings
There are primarily two methods for buying litecoins. First, you can buy them, and second, you can mine them. If you're interested in mining Litecoin, this can result in significant rewards; however, if you simply want to learn about cryptocurrencies or diversify your current holdings, consider making a purchase.
A Quick Guide to Mining
When litecoin first launched, miners received 50 coins for each block they successfully verified. Since this number is divisible by 2, the reward today is 25, but it is still valuable. In actuality, litecoin's halving happens less frequently than bitcoin's, which happens once every 210,000 blocks. Mining for litecoin is also said to be simpler than mining for other cryptocurrencies because of many of Lee's improvements.
Bitcoin and Litecoin both employ the "proof of work" principle. In essence, this algorithm verifies work. When Lee created Litecoin, he made the decision to use a completely different algorithm. The SHA-256 hashing algorithm used by Bitcoin rewards systems with the most processing power during mining.
The Scrypt algorithm, which is used in the creation of Litecoin, adopts a different strategy and encourages mining on devices with the most RAM. Large-scale customer hardware attacks are said to be expensive to carry out, decreasing the likelihood of such an attack.
Additionally, it is claimed that the litecoin mining algorithm is less complex than the bitcoin one, making it possible to mine litecoin on computers with lower processing power and consuming less energy overall. This is advantageous for those who are thinking about mining because there is a scarcity of graphic cards and the demand for these cards is rising.
Additionally, litecoin verifies blocks much more quickly than bitcoin. As a matter of fact, it takes less time—only 2.5 minutes as opposed to 10 minutes for bitcoins. As a result, litecoin transactions are reportedly four times quicker than bitcoin transactions.
Lastly, a few words
Cryptocurrency Litecoin is not a recent invention. In actuality, it was developed just a few years after bitcoin. As people learn more about this hotly debated but surprisingly well-established cryptocurrency, lower transaction fees, quicker transaction times, and an increasing value make an interesting case for adoption of litecoin.
Many people are taking a second look at the cryptocurrency market and wondering, "Bitcoin may be No. 1, but what other opportunities exist?" as a result of the recent increase in litecoin's value.
Not all of the new cryptocurrencies that have entered the market over the past ten years have survived. Litecoin is an intriguing choice because it is not only expanding but also because it has established and demonstrated its relevance by surviving while others have vanished.
The best course of action is always to proceed slowly, with caution, and deliberately, just like with any new technology.
Test the cryptocurrency, either by buying it on an exchange or by mining it, and track your progress. You'll learn more about the advantages and whether litecoin offers long-term rewards for you as a result of this testing.
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