At one time, Litecoin was the second coin in terms of capitalization after Bitcoin. The popularity of this currency was determined primarily by its rapid growth. The Litecoin project was launched in 2011, and by 2013, much news was designating it as an alternative to Bitcoin. Moreover, in 2016, the LTC use case reached its peak and Litecoin became the second most expensive and significant cryptocurrency, overtaking many existing altcoins.
However, over time, the situation has changed and now this project from the second most popular cryptocurrency takes 13th place in the world. This Litecoin blog review will help you get a more specific idea about this cryptocurrency, its goals, Litecoin’s advantages over other coins, and answer the question of whether the LTC can repeat its past success.
What Is Worth Knowing About
· When was Litecoin created? The Litecoin launch date is October 12, 2011.
· Who developed Litecoin? Charles Lee created Litecoin as an alternative to Bitcoin.
· What is Litecoin? Litecoin is a cryptocurrency that takes the Bitcoin program code as the basis for the creation of this coin. That is why in the Bitcoin and Litecoin networks data is recorded identically - in the form of a connected chain of blocks (the Litecoin blockchain contains a hash of the previous one). However, it is worth noting that despite the similarities, Litecoin is not a copy of Bitcoin, but functions as a full-fledged separate project.
· Is Litecoin a Fork of Bitcoin? Yes. When creating this cryptocurrency, the main goal of Charles Lee was to improve Bitcoin, which had many shortcomings. A “lite” version of Bitcoin features faster transaction confirmation times and includes virtually zero fees anywhere in the world. Thus, the project quickly gained popularity as it solved all the existing problems of Bitcoin at that time.
How Is Litecoin Different From Bitcoin?
Even though Litecoin is similar to Bitcoin in such characteristics as complete anonymity, accessibility, and decentralization, it is still an independent coin and has the following distinctive properties:
• Litecoin mining uses the scrypt hash algorithm as proof of work, while Bitcoin is based on SHA-256.
• Although both cryptocurrencies have a limited issue, the volume of coins in circulation is initially known, and their number is different. For Bitcoin, the emission limit is 21 million coins, but Litecoin maximum supply is 84 million.
• Litecoin is mined 4 times faster than Bitcoin. Litecoin block time generation is only 2.5 minutes, while it takes 10 minutes to generate a BTC block. Thus, more information can be processed at the same time.
• Litecoin has a higher degree of protection against hacking. Since new blocks are generated in Litecoin 4 times faster than in Bitcoin, cyber fraudsters have 4 times less time to carry out a hacker attack.
Summing up the comparison of these two coins, we would like to note the words of Charles Lee himself, who constantly repeated that Litecoin is not a copy or replacement of Bitcoin, but rather its addition. According to his vision, if Bitcoin is good for storing large amounts, LTC coin does a great job for regular transactions such as purchases and money transfers. Moreover, it was Charles who first used the term “digital silver”, which emphasized the difference between two coins, since Bitcoin was called “digital gold” at that time.
How Does Litecoin Work? What Is Litecoin Used For?
If you know the Bitcoin system, it will also not be difficult to understand how Litecoin works. Since LTC uses a modified Bitcoin code, it has many similarities. This coin uses cryptography to allow you to own and exchange this cryptocurrency. Moreover, as already said, the Litecoin software places a hard limit on the amount of LTC that can be issued.
As with Bitcoin, Litecoin uses mining so that anyone who dedicates computing hardware can add new blocks to the chain and earn new Litecoins. As you already know, Litecoin completes transactions faster and uses a different LTC algorithm based on the Scrypt hashing. Initially, the Litecoin mining algorithm was aimed at reducing the efficiency of specialized mining equipment, but this was not successful. However, the Scrypt algorithm still reduces the block confirmation time to just 2.5 minutes, which, as already mentioned, reduces the risk of a hacker attack.
Litecoin, like Bitcoin, controls inflation through the so-called halving, that is, a planned decrease in the rate of issuance of new coins. Another difference between Litecoin is that halving in its network occurs every 840,000 blocks, while in Bitcoin this figure changes every 210,000 blocks. Now, there have already been two halvings in the Litecoin network - in 2015 and 2019. “The next Litecoin halving date is expected to be August 4th, 2023” - BitDegree. It is also worth noting that as of February 2023, the miner’s reward in the Litecoin network is 12.5 LTC, which is equal to about $1,200.
Also, since the Litecoin mining algorithm tried to reduce the efficiency of mining hardware, LTC has often been a testing ground for experimenting with new blockchain technologies before implementing them into Bitcoin. This happened with Segregated Witness (SegWit), a technology that helps cryptocurrencies add more transactions to each block. SegWit was adopted by Litecoin in 2015, and after two years of successful operation, it was implemented in Bitcoin in 2017. “Later that year, the first Lightning transaction was completed on Litecoin, a development that showcased how it could use a layered network design.” - Kraken. It is also worth noting that the SegWit utility increases the bandwidth of the Litecoin network and makes it an attractive payment instrument.
Another feature that was adopted by Litecoin and then by Bitcoin was the Lightning Network. It is a Layer 2 scaling solution that allows you to make micro-transactions for almost no cost. Moreover, do you want to know how to use Litecoin? You can now use LTC to pay for everyday purchases and also work on different blockchain networks.
Litecoin MimbleWimble Upgrade
In 2019, Litecoin developers announced two absorbing changes. The first proposal was to introduce extension blocks, and the second most significant update of the Litecoin blockchain was to implement MimbleWimble. Moreover, in 2020, the Litecoin MimbleWimble wallet upgrade was implemented on the test net via Extension Blocks under the codename MimbleWimble Extension Block (MWEB). MWEB is a modified PoW protocol that allows you to hide not only wallet balances but also the data of transaction participants. A fun fact is that it got its name because of the tongue-tying spell from the Harry Potter universe.
MimbleWimble is an update of the LTC blockchain that includes several technologies. They also suggested the CoinJoin payment anonymization solution, which combines several transactions into one and hides data about both the recipient and the sender. If you are wondering how this works, then the participants in the transaction create a multi-signature key for it, after which the protocol “cuts” all additional data about the transaction. This also reduces the size of the blockchain and increases network speed while lowering fees.
Thus, now Litecoin users can choose whether to enable the private transaction mode or conduct a regular public one. In addition to increasing privacy, MWEB also improves the scalability of the Litecoin network. It is also a notable fact that after the MWEB implementation, the two largest South Korean exchanges, Bithumb and Upbit, delisted Litecoin due to local legislation that restricts the use of anonymous cryptocurrencies.
Litecoin Use Cases
Now, Litecoin lags far behind other popular cryptocurrencies in terms of innovation and hasn’t overlapped with smart contracts, DeFi, NFT, and GameFi support for quite some time. Despite launching a Litecoin-based fantasy role-playing game LiteBringer (in partnership with CipSoft) in 2020, it has not gained significant recognition. In 2021, the Litecoin Foundation launched a decentralized OmniLite platform for creating tokens (including stablecoins and NFTs), but it's hardly a success either.
However, do not forget that the main goal of Litecoin is to be a fast and reliable payment system, as well as a decent alternative to Bitcoin, but more focused on the mass user. Also, the hallmarks of this cryptocurrency were and remain high settlement speed, low fees, and good anonymity. So far, LTC has been accepted by several thousand merchants worldwide, some video games, and even charities.
Moreover, we should note that in 2021, Litecoin VISA virtual debit cards became available to users. Now they can deposit LTC to their account and spend tokens wherever a VISA is accepted since LTC is converted into fiat and sent to the merchant. Also in 2021, Litecoin was added to the BitPay crypto payment service, and now LTC holders can buy gift cards for use with many retailers. And finally, LTC is also one of the few coins that the PayPal payment service supports.
What Does The Future Hold for Litecoin?
The peak of Litecoin cryptocurrency came in 2017. In 2016, it grew incredibly, and even Bitcoin did not have such dynamics then. However, will this phenomenon repeat itself? Unlikely. Therefore, the version of replacing Bitcoin also does not seem possible, since from the very beginning LTC pursued completely different goals. While powerful and expensive BTC attracts attention mainly as a means of storage, LTC, due to its speed and cheapness, can be used as a universal payment solution. Moreover, in the future, the speed of operations will play an even more crucial role.
However, even though Litecoin was created as an improved version of Bitcoin, the market does not need it now. Currently, it is innovative projects with unique value propositions that attract attention. However, we also want to disprove the notion that Litecoin will sink into oblivion. Although LTC is unlikely to return to the top 10 largest projects by capitalization, it is still a sought-after asset that has proven its reliability over the 11 years of its existence and has firmly established itself in the market thanks to fast and cheap transactions.
Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.