What is Litecoin (LTC)?

Litecoin (LTC) is an altcoin founded in 2011 by former Google engineer Charlie Lee. Its goal was to be the light version of Bitcoin that allows almost instant and low-cost payments. Litecoin has adopted the code and certain characteristics of Bitcoin in its blockchain, but prioritizes the speed of transaction confirmation to facilitate a higher TPS (transaction per second) and a shorter block generation time.

Due to its similarity to Bitcoin, the Litecoin blockchain has been used as a testing ground for developers to experiment with technologies they wish to implement in Bitcoin. For example, Segregated Witness (SegWit) and the Lightning Network ran on the Litecoin blockchain before Bitcoin.

Litecoin has a total supply of 84 million. Like Bitcoin, it is deflationary in nature, halving every 840,000 blocks (approximately every 4 years). The next halving is expected to occur in August 2023. Litecoin can be purchased on various cryptocurrency exchanges,

Litecoin (LTC) is one of the oldest altcoins on the market. When it was first introduced in 2011, Litecoin was dubbed "Bitcoin's silver to gold" because its blockchain was largely based on Bitcoin code. While some crypto investors see Bitcoin as a good store of value, Litecoin is often considered a better option for peer to peer payments due to its faster confirmation time and low transaction fees.

What is Litecoin (LTC)

Litecoin (LTC) is one of the first altcoins. Created in 2011 by former Google engineer Charlie Lee, its blockchain was developed based on the open source codes of Bitcoin. But Litecoin added certain modifications, such as a faster block generation rate and a different Proof of Work (PoW) mining algorithm called Scrypt.

Litecoin has a total supply of 84 million. Like Bitcoin, Litecoin can be mined and has a halving mechanism that occurs every 840,000 blocks (approximately 4 years). The last LTC halving was in August 2019, and block rewards were halved from 25 LTC to 12.5 LTC. The next halving is expected to occur in August 2023.

How Litecoin works

As a modified version of Bitcoin, Litecoin was designed to facilitate cheaper and more efficient transactions than the Bitcoin network. Like Bitcoin, Litecoin adopts the Proof of Work mechanism to allow miners to earn new coins by adding new blocks to their blockchain. However, Litecoin does not use Bitcoin's SHA-256 algorithm. Instead, LTC uses Scrypt, a hash algorithm that can generate new blocks approximately every 2.5 minutes, while Bitcoin's block confirmation time takes 10 minutes on average.

Scrypt was initially developed by the Litecoin development team to grow their own decentralized mining ecosystem outside of the Bitcoin system and make the 51% attack on LTC more difficult. In its early days, Scrypt allowed for more accessible mining for those using traditional GPU and CPU cards. The goal was to prevent ASIC miners from dominating LTC mining. However, ASIC miners were later developed to mine LTC efficiently, making GPU and CPU mining obsolete.

As Bitcoin and Litecoin are somewhat similar, Litecoin was often used as a "testing ground" for developers to experiment with blockchain technologies that would be adopted in Bitcoin. For example, Segregated Witness (SegWit) was adopted in Litecoin before Bitcoin in 2017. Proposed for Bitcoin in 2015, SegWit aims to scale the blockchain by separating the digital signature of each transaction to better utilize the limited space in a block. This allowed blockchains to process more transactions per second (TPS).

Another scalability solution, the Lightning Network, was also implemented on Litecoin before Bitcoin. The Lightning Network is one of the key components that makes Litecoin transactions more efficient. It is a Layer 2 protocol built on top of the Litecoin blockchain. It consists of user-generated micropayment channels, allowing for lower transaction fees.

Additionally, Litecoin aims to address the transaction privacy issue by adopting a privacy-oriented protocol called the MimbleWimble Extension Block (MWEB). His name is a reference to a charm described in the Harry Potter books, with which the victim's tongue is tied to prevent them from revealing information. Similar to this charm, the MimbleWimble protocol prevents transaction information from being revealed, including sender and recipient addresses and the amount of crypto sent. At the same time, MWEB removes unnecessary transaction information and block sizes are more compact and scalable. As of December 2021, Litecoin's MWEB protocol is still under development.

Litecoin Use Cases

As one of the first altcoins, Litecoin improved on Bitcoin's code to increase its scalability for faster transactions and lower fees. Despite not being able to compete with Bitcoin in terms of market capitalization, it has a competitive advantage as a peer to peer payment system. In fact, the Litecoin Foundation announced in November 2021 that LTC could be used as a payment method through the Litecoin VISA debit card by converting LTC to USD in real time. Also, certain companies have added Litecoin as a payment method, such as travel companies, convenience stores, real estate agencies, and online stores.

Another thing to consider is the highly anticipated launch of MimbleWimble on the Litecoin network. MimbleWimble can not only hide wallet addresses in a transaction, it could also double Litecoin's TPS. If successfully implemented, the update can further improve the privacy and fungibility of LTC transactions. However, as of December 2021, there is still no set launch date on mainnet.

Conclusions

Litecoin has demonstrated a continuous development effort to be "Bitcoin's silver to gold" since its launch in 2011. While not as popular as Bitcoin or Ethereum (ETH) in terms of market capitalization, the Litecoin community expects a further development that can provide enhanced features and use cases.