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What is Litecoin?
Litecoin is a peer-to-peer (P2P) cryptocurrency (or internet currency) that enables users to send instant payments globally with competitively low transaction fees. Litecoin operates using an open-source, decentralized network that is free from economic and political factors.
A significant competitor of Bitcoin, Litecoin works similarly as both systems use a Proof Of Work protocol which was the first successful decentralized blockchain to use this famous algorithm.
Anybody can use Litecoin to make payments, perform cross-border transactions, and potentially profit through investment. Litecoin is popular among users for its fast and easy transaction rates.
History Of Litecoin
Litecoin was developed by a former Google employee named Charlie Lee in 2011. The development behind Litecoin happened when Lee rewrote the blockchain technology that is used behind Bitcoin. However, his intentions were not to compete with Bitcoin but to develop a system that enabled users to send smaller transactions.
In 2013, Lee left his job at Google and joined Coinbase, the leading currency exchange platform in the US, to begin work as a Director of Engineering. It wasn’t until after Lee had joined Coinbase that they adopted Litecoin.
Lee sold and donated all of his Litecoins in 2017 after a perceived conflict of interest. His current position is the Managing Director of the Litecoin Foundation.
What Makes Litecoin Unique?
So what is it that makes Litecoin so unique and different from other popular cryptocurrencies on the market today? Let’s take a look.
Transaction Rates
The main component that sets Litecoin apart from other highly used cryptocurrencies is the rate at which users can send transactions.
Users can send transactions at near-zero cost portions. Not only are transactions cheap to send, but they are also sent and received much quicker than Bitcoin, the most widely used cryptocurrency in the world. This advantage can be narrowed down to how busy the blockchain is at one time.
Implementation of SegWit
The implementation of SegWit in the blockchain of Litecoin in 2017 ensures quick transactions by making the blocks within the blockchain smaller. This technology was originally proposed for Bitcoin, which became a controversial topic when Litecoin adopted it.
Affordable But High Ranking
Litecoin is the ‘silver’ of cryptocurrency, with Bitcoin taking the lead as ‘gold’. However, Litecoin is generally more affordable than Bitcoin, which makes it so popular even though it isn’t as rare.
Bitcoin holders rarely spend it as it holds so much value, whereas those with Litecoin do not feel as constrained; this appeals to a broader audience.
What Is The Technology Behind Litecoin?
As discussed above, the technology behind Litecoin is not dissimilar to Bitcoin. Litecoin was developed using a blockchain forked from Bitcoin.
A fork is essentially a pathway that is split off from a blockchain, meaning that anyone can access and change its code. The key differences between the two include the following:
Mining
Mining keeps blockchain networks secure and traditionally uses two chips to process information; CPUs (central processing units) and GPUs (graphics processing units).
By 2011, CPU mining was not sufficient for Bitcoin, and instead, the system chose to mine using GPU. Litecoin tried to prevent competition by using CPU technology and adopted a form of mining known as Script.
This paved the way for users to mine using CPU equipment that had previously been deemed obsolete. Scrypt mining is processed through ASICs, which provides the ultimate security for Litecoin because it is more robust than both CPU and GPU mining. Litecoin and Bitcoin are at opposite ends in the mining spectrum, yet there is always a demand for both.
Processing of Transactions
Transactions using Litecoin can be sent in as little as 2.5 minutes – sometimes even less – compared to other systems, which can take between 8-9 minutes. Again, the technology behind this lies in the blockchain when blocks become smaller when a competing block is rejected.
Atomic Swaps
An atomic swap happens between crypto wallets and involves a cross-chain transaction. The word ‘atomic’ involves two outcomes: either both parties receive their desired outcome or remain with the currency they intended to exchange.
Is Litecoin A Good Investment?
As the second oldest coin in the cryptocurrency market, it is safe to say that Litecoin is a good investment. Let’s take a look at the reasons why Litecoin is a good investment.
Popularity
Even though Litecoin sits high up in the market, it is not too popular, which is a big enough reason to invest. Large profits cannot be gained when purchasing popular coins because everybody is buying them. Therefore, it is recommended to invest in less popular coins if you believe they are undervalued and have future potential.
Transaction processing
Litecoin is a good investment for those who appreciate the speediness and ease when sending and receiving transactions. The technology used is what makes Litecoin so unique and appealing.
Affordable
Affordability is a huge factor in terms of investment, particularly for new users or those with experience who may want to play around with alternative currencies. The difference in price between Litecoin and Bitcoin is astronomical. Typically, Litecoin trades for around $200, whereas a single Bitcoin is around $36,000.
Before investing in any cryptocurrency, thorough research is recommended. Experienced investors will often look into the history of a market by analyzing data such as historical price fluctuations, what achievements have been gained, and what that particular community has to say about it.
In other words, don’t simply part with your money because the coin is popular at this moment. Cryptocurrency can be highly volatile and should not be thought of as a quick way to gain profit.
Conclusion
Litecoin is a relatively new cryptocurrency, but the peer-to-peer exchange platform has gained popularity through its competitive transaction speed and cost and its similarities with the leading coin on the market, Bitcoin.