Litecoin is a more flexible version of bitcoin. With reduced transaction time and a higher cap on the total number of tokens in circulation, it is a more usable, more affordable cryptocurrency.
The Problem and Solution
Bitcoin is poorly suited for popularity.
The world’s most popular cryptocurrency was built around an inherently limited design. Creator Satoshi Nakamoto (quite likely a pseudonym) built bitcoin to digitally mimic gold, with new coins appearing at a slow, steady rate up until an absolute cap. It is a system which worked reasonably well when relatively few people used the system. When the cryptocurrency gained popularity, though, prices shot to the tens of thousands of dollars per token.
With demand for bitcoin stronger than ever and no countervailing increase in the supply, the basic economics of the project have gotten far out of whack. Bitcoin is hard to mine, hard to spend, and hard for most people to realistically contemplate. Enter Litecoin, the kinder, gentler bitcoin.
Litecoin is an open-source, peer-to-peer cryptocurrency, which means that no central organization runs it. Instead, it relies on its own cryptography and blockchain architecture to secure the token, as well as the community which supports Litecoin overall.
The currency has a different architecture from bitcoin, including shorter intervals between creating new blocks on its chain, which pushes the processing time of each transaction down. The goal is to improve on bitcoin’s transaction time, which can take anywhere from 1 – 16 hours depending on network traffic. At the time of writing, Litecoin generally handles transactions about four times as fast as bitcoin thanks to reduced block creation time.
Litecoin also was designed to resist some of the more intense coin-forming operations which have helped drive both the prices of bitcoin and related hardware sky-high. With its Scrypt algorithm, dedicated bitcoin algorithm hardware does not work for Litecoin. (However, you should note that with the increased popularity of Litecoin, successful farming devices have begun to roll out for it as well.)
Litecoin has been called the silver to bitcoin’s gold, and that is an apt comparison. Litecoin will cap at 84 million tokens to bitcoin’s original 21 million and halves its rewards at a quarter of the rate that bitcoin does. It is designed to be cheaper, faster, and more broadly available than its progenitor, and so far that has been the case.
That said, the project is still built with bitcoin’s underlying flaw baked in. Even with four times the total count of coins in circulation, a currency built around a fixed supply and hard cap will always be subject to inflation, deflation, and price spirals based on popularity.
As an open source, peer-to-peer project, Litecoin does not have a defined team.
The currency was created by Charles (Charlie) Lee, a former engineer with Google who currently works with Coinbase. Lee remains an active part of Litecoin, although he no longer holds any actual tokens as he felt that was a conflict of interest for someone so involved in the project.
The two most prominent Litecoin communities are Litecoin.org and Litecoin.com. Each presents a thorough guide to finding, buying, and using Litecoin. Litecoin.org is the closest thing that the currency has to an official website.
Lee remains one of the best sources of information for ongoing development in and around the Litecoin project. His Twitter account is active, and he frequently speaks with the media about his project.
Litecoin, like bitcoin, is a project entirely about its token. There is no overlying architecture which the Litecoin token supports. The project is to release a substantially similar, more broadly accessible token in parallel to bitcoin. The Litecoin token works on a distributed blockchain network like bitcoin, one in which miners decrypt the block each time a token is transferred.
Users can acquire Litecoin in the same manner as acquiring bitcoin. Litecoin tokens are available for sale at market prices or are available as awards for miners who help operate the processing network. Litecoin awards 25 coins for each successful block miner and will halve that every 840,000 blocks.
The token trades on most major exchanges as LTC. At the time of writing, it sold for $179.54. It is accepted by many businesses which accept cryptocurrency, and a partial list is available here.
Caution: You should be aware that the upcoming Litecoin Cash project, despite its similar name, has no relationship with Litecoin itself. Lee has issued numerous warnings about this potential scam.
The Bottom Line
All things considered, Litecoin has both short- and long-term potential, garnering a Bitcoin Market Journal score of 3.9 on a scale of one to five. Thus, Litecoin might be an attractive addition to your crypto portfolio if you are planning to diversify.
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