The Litecoin project was developed by Charles Lee in 2011. Initially, the creator of the cryptocurrency did not plan to release new coins. His main goal was to upgrade Bitcoin, following negative feedback from Bitcoin’s holders.
Litecoin (LTC) is an alternative cryptographic currency based on the basic principles and software of Bitcoin. The main goal of the Litecoin developer was to improve the functioning of the Bitcoin system. Charlie Lee came up with a way to reduce the time it takes to confirm transactions in the system. But this required changing the algorithm of coin mining itself. As a result, different users of the system were able to participate in the process of obtaining cryptocurrency. There is still some active talk about what the differences between BTC and LTC are.
Due to technological manipulations, the time for transaction confirmation was reduced to 2.5 minutes, compared to 10 minutes in the Bitcoin network. Hence, the main advantage of Litecoin is a quick confirmation of transactions and the ability to perform a larger volume of exchange processes. If you have tried to perform Litecoin and Bitcoin transactions, you probably understand what we are talking about and the difference in speed.
Despite the rapid growth in its popularity, Litecoin was necessary to reduce the amount of time spent on processing currency transactions. Besides, the coin was poorly protected from cyberattacks and had a small volume of blocks.
Therefore, in October 2011, a new kind of virtual currency appeared. It differed not only in reduced transaction time but also in more efficient block generation and application of the most advanced hashing methods.
The coin achieved great success and it was able to grab second place and was on the list of popular cryptocurrencies immediately after Bitcoin, in terms of market capitalisation.
This cryptocurrency cannot be obtained only through CPU operation. In addition, the way graphics cards are used is also considered inefficient. Such mining is simply unprofitable. It is almost impossible for the miner to make a profit since electricity costs are also very high. Therefore, the cost of cryptocurrency does not cover the costs associated with its mining.
Another method to mine coins is with the help of special “farms”. These are created by linking several powerful computers, to use their combined processing power and obtaining cryptocurrency. However, even the simplest equipment generally used to mine coins is very expensive. On average, you will have to pay USD $2,000 and during periods of large-scale growth, you can expect the price to reach USD $4,000 per unit, as was the case in 2017. During periods of decline in the cryptocurrency market, equipment for mining loses its value and often the price does not exceed USD $800 per unit.
To make mining your main source of income, you will require more powerful equipment, the cost of which is much higher. This is more suitable for mining cryptocurrencies on an industrial scale. For example, there are huge farms with thousands of devices for the mining of Litecoin in China.
As for the average user, we advise the following:
Mining is not suitable using standard PCs or laptops with hardware capabilities suitable for day-to-day tasks such as word processing and browsing the internet. During the process of obtaining coins, a lot of electricity is consumed, so it often causes overheating and causes standard PCs to malfunction.
Some miners choose to use cloud solutions. The user does not use their computer, but rents equipment for coin mining. So, you do not harm your PC, you do not wear out the equipment, and it can not fail in the process of obtaining cryptocurrency. Another plus is the significant saving on electricity costs.
Consider the fact that as a result of the low cost of Litecoin on any exchange, it is better to buy the cryptocurrency rather than to mine it.
The Litecoin system uses open-source software for its operation. It is MIT/X11 licensed.
But what does this license mean? It provides all system users free access to advanced functionality. Therefore, each user is able to change the code, create copies for distribution, as well as make corrections to the software copies at their discretion.
Due to the fact that the development and release of new software versions are publicly available, it is possible to analyse the source code and binary modules.
System blocks inside a program appear much more often than, for example, when created in Bitcoin. Due to this, it is possible to perform a much larger number of currency processes over time periods. In this case, it is not necessary to confirm transactions by users. Most importantly, such software works without failures. It does not need to be modified or adjusted.
Almost all cryptocurrency operations are carried out through a previously created Litecoin wallet. This is a special place, which can be called temporary cryptocurrency storage through which users can view all current or completed transactions at any time, as well as check the account balance.
However, when logging into a cryptocurrency wallet, the system requires a user to enter a password. The same password is requested when performing various coin transactions.
In this way, all your funds are protected and secure from third-party interference during trading transactions, as well as from malicious programs designed specifically to steal coins.
In practice, most users of the system and experienced traders claim that the issue of Litecoin continues from the legacy of Bitcoin.
Recall that the first awards, which were assigned for new blocks received, amounted to 50 coins in total. However, the system itself provides for the reduction of this amount by half every 840 thousand blocks. This is how the issue is managed. The more coins the miners receive, the less commission will be assigned to them as bonuses.
The total issue of Litecoin is 84 million. Here, a question arises: “If crypto traders abandoned Litecoin, why are investors hoarding LTC?” This is because investors have been speculating about a potential Litecoin integration with Cardano (ADA) and if this is true, it could be a bullish factor for Litecoin.
This cryptocurrency is similar to BTC. Due to the fact that Litecoin is not managed by a single state center, the coin’s value is dependent on factors.
First, let’s talk about the cost of mining. The issue of Litecoin is a matter for the miners. They perform mathematical calculations, implement signatures for new blocks. That is what they are given the established amount of remuneration for.
To issue a certain amount of cryptocurrency, a miner must have powerful equipment to perform complex computational operations. Therefore, it is quite logical – if a miner spends a large sum of money to mine coins, it pushes up the selling price of Litecoin.
Besides, limited issuance also has an influence. The fewer coins there are, the higher the demand for them, and the higher the price. Therefore, there will never be more than 84 million LTC on the market. At the same time, it must be remembered that the majority of crypto coins have been withdrawn from circulation by now, as they are stored in inaccessible wallets.
The last factor determining the price of Litecoin is demand. Litecoin is currently quite in demand. It is used for various exchange and trade operations across the world. The greater the demand, the higher the cost of a product. Most investors use LTC as an asset.
Despite the fact that this cryptocurrency does not provide any material benefits, it still commands a price. After all, every user is ready to pay the market value for one coin. Therefore, Litecoin is increasingly common when paying for goods and services.
In addition, the cryptocurrency is supported by mathematical calculation of the appearance of new blocks. This means that the algorithm itself contains a limited number of coins available for release. This number always remains the same.
As for the function protocol, nothing affects it. It continues to work according to the prescribed order. Therefore, we can conclude that the limited issue of the coin is, in fact, an effective way to avoid inflation.
Despite the fact that LTC was made on the basis of BTC, it could be expected that the differences between both are insignificant. However, this is not the case, since there are a number of differences. So, what are the main differences between LTC and BTC today?
Litecoin uses a proof-of-work scheme based on the adaptive cryptographic key formation function (script). This function adds algorithms that work intensively with memory to reduce paralleling that took place on CPUs in the early stages of Bitcoin mining. Initially, this led to Litecoins also being mined using CPUs. More energy-efficient GPUs, which appeared in July-August 2012, challenged CPUs and were able to increase the hashing power of the network dozens of times. Graphic processors are the main tool for Litecoin mining today.
Adaptive cryptographic key formation function has been less widespread and studied than the SHA256 hashing algorithm used by Bitcoin.
The chain of Litecoin blocks is different from Bitcoin because it generates blocks every 2.5 minutes on average (4 times faster than Bitcoin). This means that system members, for example, coin sellers, carrying out transactions with depths equal to one block, are guaranteed to receive faster confirmations.
Do not forget that you need more blocks to receive the same confirmation power as Bitcoin (6 blocks of Litecoin can not be equal to 6 blocks of Bitcoin due to the higher complexity of algorithms of hashing of BTC). Unfortunately, this increases the number of hashes used, since sometimes the miners will mostly work empty, and not the best blocks.
Initially, Litecoin offered miners to generate 50 coins per block, as in the case of Bitcoin, but in order to maintain the inflation rate on a schedule of changes, the block decreases by half every 840,000 blocks. As a result, the network is designed to produce a total number of Litecoins equal to 84 million units.
Litecoin addresses begin with the letter “L”. All other parts of addresses are generated in the same way as Bitcoin addresses.
Within preliminary mining (pre-mining), Litecoins receive two blocks, which is one block more than the minimum required number equal to one genesis-block to form a chain of blocks.
Litecoin is a peer-to-peer Internet currency. LTC is an open-source, global payment network that is fully decentralised and has no control from any central authority. LTC is a very promising project. It constantly develops and increases its own popularity. Math protects the network and empowers people to manage their own finances. Litecoin features faster transaction confirmation times and better storage efficiency than the leading math-based currency. With strong industry support, trading turnover, and liquidity, Litecoin is a proven tool for commerce, in addition to Bitcoin.