What is Litecoin: A Beginner’s Guide to LTC and How It Works

Litecoin’s 2011 introduction, widely regarded as the first successful “alternative cryptocurrency,” sparked a surge of developers to try to expand the cryptocurrency user base by changing Bitcoin’s code and utilizing it to build new sorts of networks.

While Litecoin was not the first cryptocurrency to replicate Bitcoin’s code and tweak its features, it is one of the most historically significant, with a thriving market.

In this beginner’s guide, we will look at the Litecoin price prediction and how the currency works in depth.

What is Litecoin?

Litecoin (LTC) is a peer-to-peer Internet currency that allows for near-instant and low-cost payments to anyone around the globe. It is based on an open-source blockchain that is not managed by a central body, similar to Bitcoin (BTC).

It was created on October 13, 2011, to become “the silver to Bitcoin’s gold” and it is today one of the most valuable cryptocurrencies in terms of market value. Litecoin employs cryptography to facilitate ownership and trading. Its system sets a hard limit of 84 million LTC that can ever be created.

Who Created LTC?

Since 2011, Charlie Lee, a computer scientist, and alumnus of the Massachusetts Institute of Technology has been closely identified with Litecoin.

Lee would go on to work at Google before founding Litecoin and pursuing a career in technology. In 2013, he became Director of Engineering at the cryptocurrency exchange Coinbase.

Lee put the development of Litecoin on hold once he joined the company, noting in 2017 that his most important goal at that time was to enable consumers “buy Bitcoin and hold Bitcoin.”

Lee left Coinbase in late 2017 to focus solely on Litecoin’s development. Lee is presently the managing director of the Litecoin Foundation, a non-profit organization dedicated to cryptocurrency.

How Does Litecoin Work?

Litecoin, like Bitcoin, employs proof-of-work mining to allow anybody with dedicated computing resources to contribute new blocks to the blockchain and earn new Litecoin. Each transaction is initially confirmed by the miners themselves, who use high-powered computer gear to confirm and secure each transaction to the blockchain.

If one transaction block has been verified, the next block will be added to the chain. Because each user has a public address, transactions using blockchain technology are often thought to be pseudonymous.

Miners that successfully validate their block are awarded 12.5 Litecoin. The number of bitcoins delivered to the miner is halved, similar to Bitcoin.

Litecoin vs. Bitcoin: What’s the Difference?

Litecoin, like Bitcoin, is a blockchain-based peer-to-peer (P2P) cryptocurrency that was developed to solve some of the perceived shortcomings of Bitcoin.

By making transactions faster than on the Bitcoin network, it hoped to make it easier for merchants to accept LTC payments. One Litecoin block takes about two and a half minutes to mine, compared to ten minutes for Bitcoin. This implies that merchants who only accept safe transactions won’t have to wait an hour for six network confirmations.

While there is a security trade-off here, merchants can be more secure by waiting for additional network confirmations when utilizing Litecoin. Because Litecoin’s blocks are four times faster, the difficulty of mining on its network is reduced.

The Latest Features of Litecoin

The following upgrades were implemented to ensure that the network could scale to accommodate more transactions per second while maintaining decentralization and ensuring transaction privacy.

Segregated Witness (Segwit)

Segregated Witness was one of the first features added to the Litecoin blockchain before it was extended to Bitcoin (SegWit).

SegWit effectively aids a cryptocurrency’s scaling by “segregating” the digital signature data on each transaction (the witness) outside of it, allowing it to make better use of the limited space available. It was created in response to Bitcoin’s scalability difficulties.

Litecoin implemented SegWit in early 2017, and the feature’s deployment received support for Bitcoin due to its success on its blockchain.

Lightning Network

The Lightning Network is a scaling solution that adds an extra layer on top of a cryptocurrency’s blockchain, allowing for quick transactions and low costs. User-generated payment channels make up that extra layer. It was created to be implemented on the Bitcoin blockchain.

The network, like SegWit, was originally deployed on Litecoin, which was widely used to test the feature in a real-world setting.

MimbleWimble

The MimbleWimble protocol is a modified version of the proof-of-work (PoW) algorithm that underpins the blockchain of a cryptocurrency. It protects user privacy and conceals the trace of transactions by making it difficult to track individual inputs and outputs.

In October 2020, Litecoin released the MimbleWimble testnet, with its principal developer concentrating on making it easy for “non-technical Litecoin users” to start testing it.

Conclusion

LTC was created about a decade ago as a result of Charlie’s quasi-experiment with a fork of the Bitcoin network in an attempt to be innovative. It immediately became well-known around the world.

It is one of the top 20 cryptocurrencies since it is extensively adopted and traded. Transaction time has been reduced to 2.5 minutes thanks to the usage of the script and a faster algorithm.