Is Litecoin the 'lighter' sibling of Bitcoin? Bitcoin is no doubt a more well-known cryptocurrency, but you might be surprised to learn that Litecoin was introduced more than five years ago.
Time to have a closer look at what Litecoin stands for and how it compares to Bitcoin!
This article promises to explain such key questions as: How does Litecoin work? How does Litecoin creation work? Is Litecoin risky?
We'll start with the most basic question: What is Litecoin?
Litecoin is a peer-to-peer cryptocurrency. It is an open-source software project released under the MIT/X11 licence, which means that it places only very limited restrictions on its re-use.
Litecoin is, in many ways, similar to Bitcoin as it's also considered a digital currency and a digital payment system. With Litecoin encryption techniques are used for two critical features:
Although Litecoin and Bitcoin are similar in many ways, there are a couple of major differences between the two cryptocurrencies.
Some traders say that if Bitcoin is the equivalent of gold, Litecoin could be compared with silver. In fact, this is exactly what Litecoin developers had in mind when creating it.
Both coins do share many similar characteristics, and Litecoin is similar to Bitcoin except for a couple of differences:
All in all, Litecoin can process and handle a larger amount of transactions which reduces potential bottlenecks, as sometimes seen with Bitcoin. Please check out the image below for a quick overview of both cryptocurrencies.
Advantages can include greater resistance to a double spending attack over the same period as Bitcoin.
Source: Coin Desk 2
The abbreviation for Litecoin is simply LTC. The same principle as with USD (US Dollar) and EUR (Euro) applies.
Litecoin can also be paired to other currencies. In that case, the currency pair name could be, for example, Litecoin vs US Dollar, or LTC/USD.
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Litecoin is an online network that people can use to send payments from one person to another. Litecoin is peer-to-peer and decentralised, meaning that it is not controlled by any entity or government.
The payment system does not handle physical currencies, like the Dollar or the Euro; instead, it uses its own unit of account, which is also called Litecoin (symbol: Ł or LTC). This is why you will often see Litecoin categorised as a virtual or digital currency. Litecoins can be bought and sold for traditional money at a variety of exchanges available online.
Litecoin is based on blockchain technology, the same as Bitcoin. According to Litecoin itself, the Litecoin blockchain is "capable of handling higher transaction volume than its counterpart – Bitcoin".4
Litecoin has a higher frequency of block generation, which means that the network supports more transactions and benefits from quicker confirmation times.
New Litecoins are created regularly. The creation of new coins is completed via a special process called mining, which is simply a record-keeping service.
The way Litecoin makes sure there is only one blockchain is by making blocks really hard to produce. Instead of just producing blocks at will, miners have to make a cryptographic hash of the block that meets certain criteria, and the only way to find one is to compute many of them until you get lucky and find the one that works.
This process is called hashing. The miner that successfully creates a block is rewarded with 25 freshly minted Litecoins.
Every few days, the difficulty of the criteria for the hash is adjusted based on how frequently blocks appear, so more competition between miners equals more work to find a block.
The growth of the Litecoin supply is de-centralised and guided by the Litecoin protocol, which assigns the creation of new coins to Litecoin participants.
The maximum number of Litecoins is limited to 84 million in total, but not all coins have been created yet. At the moment, there are approximately 51.7 million coins in circulation, which is about 61.6 of the total.
Once there are 11.3 million new coins created, the block mining reward will decrease from 25 to 12.5 coins, which is expected to occur some time in August 2019.
It is thought that Litecoin was released via an open-source client on GitHub on 7 October, 2011 by Charlie Lee, a former Google employee. It was a fork of the Bitcoin Core client, differing primarily by having a decreased block generation time (2.5 minutes), an increased maximum number of coins, a different hashing algorithm, and a slightly modified GUI.
Although it was built in October 2011, the financial history of Litecoin originates in November 2013. The Litecoin development team released the 0.8.5.1 version first, and the aggregate value of Litecoin experienced massive growth, which included a 100% leap within 24 hours. Early December 2013 saw a new version of Litecoin. This new improved version offered a 20x reduction in transaction fees, along with other security and performance improvements in the client and network.
Our opinion is that trading Litecoin could be more profitable than data mining. By using our most advanced MetaTrader 4 platform and MetaTrader Supreme Edition, your costs are much lower than by setting up the so-called ASICs hardware that is expensive and far from a sure-fire investment. There are a lot of risks involved, including but not limited to:
Simply said, trading Litecoin vs USD should be far more interesting, profitable, and less expensive.
Litecoin can be used and spent for a long list of goods with different types of merchants. The first step is to download a Litecoin wallet to be able to buy Litecoins from an exchange, which you can then use to purchase goods and services with Litecoins.
Litecoin operates independently of any central bank, contrary to other well-known currencies, e.g., the US Dollar and the Euro.
The Litecoin network does not have any other central point or single administrator either, which makes it a decentralised digital currency.
Here are a few points that summarise some of the risks:
The short answer is: yes. Regulations vary country-by-country, but you can expect to see national financial regulators interested in Litecoin and other virtual currencies, potentially along with regional regulators at a sub-country level.
Is Litecoin Safe to Trade?
Yes, it is just as safe to trade as Bitcoin, or any other commodity, for that matter. In fact, the popularity of Litecoin has skyrocketed.
Source: Coin Market Cap 3
The volume of transactions has substantially increased over the past few months. Before April 2017, the average volume of transactions was mostly between 1 and 10 million USD to 200 million USD in May, and even above 400 million USD in June 2017.
Stay tuned for more exciting information and analysis on Litecoin… But why wait? You know it's now possible to trade Litecoin on an Admiral Markets Demo account. Give it a go today… Practise makes perfect!