What is Litecoin?

Litecoin

Founded in 2011, Litecoin has become the ninth-largest cryptocurrency in existence. Jumping on the trend just two years after the creation of bitcoin, Litecoin was considered one of the strongest competitors for the top cryptocurrency. However, with the addition of new cryptocurrencies to the market, Litecoin has slipped into becoming just another cryptocurrency rather than being one of the leaders.

Created by Charlie Lee, a former engineer at Google, Litecoin is still quite successful even if it has been years since the cryptocurrency was near the top. The name derives from bitcoin as the founder once described it as the light alternative. So, it’s little surprise that Litecoin has many similarities to the highly popular bitcoin with additional features designed to be an improvement.

Set Limit of Litecoin

Arguably the most important aspect that keeps each Litecoin so valuable is the set limit of having just 84 million in circulation. As of April 2021, the value of a single Litecoin was just over $310. This limitation in terms of total numbers means that obtaining a Litecoin is not easy which keeps the value quite high. Although the cryptocurrency does employ some traditional methods.

For example, a new block is generated by the Litecoin network every two and a half minutes based on the most recent transactions of Litecoin around the world. It is this limit combined with the demand that helps secure the value of Litecoin. This is in stark contrast to standard currencies that are backed by governments. The use of mining that unfolds as transactions of Litecoin have provided the security that is needed.

Mining Litecoin

Those who participate in Litecoin, who are called miners, can verify a new block that enters the system. If they are the first to do so, they will earn 12.5 Litecoins. However, the value will be reduced over time and the mining will end when 84 million coins have been successfully mined.

To successfully mine Litecoins, it takes a software system and considerable computing power that comes from hardware specialized to the task. However, unlike many other cryptocurrencies, Litecoin can be mined using standard personal computers, albeit highly specialized ones. The better the computing power and software used, the greater the chance of being the first to verify a block for mining purposes.

Differences with Bitcoin and Litecoin

Despite the many similarities, there are stark differences between Litecoin and bitcoin. The most important is the algorithms employed by both cryptocurrencies. Litecoin uses scrypt while bitcoin uses SHA-256.

However, a more noticeable difference is that Litecoin has a much faster transaction speed. Because of its shorter time for block generation, a typical Litecoin transaction takes about two and a half minutes compared to the nine minutes for Bitcoin. Despite this speed, bitcoin is still far superior in terms of market capitalization. The fact that bitcoin is limited to just 21 million coins compared to Litecoin’s 84 million augments the value of bitcoins in that regard.

Still, many cryptocurrency investors see Litecoin as a strong long-term option when it comes to its value. Which is why that while its popularity has waned over the years, Litecoin is well-poised to make a stronger showing by the end of the decade and beyond.