LiteBit

Written by Daan Werkheim a month ago

What is Litecoin?

Many analysts were of the opinion that Bitcoin is digital gold and that, in that sense, Litcoin would be silver. But what is Litecoin in the first place and can we still come to the same conclusion years later?


A short introduction to Litecoin

Litecoin or LTC is the second oldest cryptocurrency ever, and was founded in 2011. The goal of the altcoin's founder, Charlie Lee, was to bring a faster and cheaper digital currency to the market than Bitcoin. The cryptocurrency's main purpose is to quickly transmit digital value from person to person, without the interference of a third party such as banks.


How did Litecoin come about?

Bitcoin’s founder is anonymous, unlike Litecoin’s founder Charlie Lee. The founder of this decentralized peer-to-peer project (LTC) came up with the idea of starting Litecoin after reading the Bitcoin Whitepaper. He was of the opinion that a lot of ground could be gained in terms of transaction speed and price.

So the Litecoin whitepaper is based on that of Bitcoin, but the founder made some adjustments regarding block rate, transaction speed and the algorithm. For example, Bitcoin creates a new block about every 10 minutes, while the Litecoin Blockchain can do this in about 2.5 minutes.

How exactly does Litecoin work?

Litecoin works basically the same as Bitcoin. Litecoin allows you to send digital value quickly and cheaply from one person to another. All transactions are recorded on the blockchain just like Bitcoin. The nodes are responsible for verifying the transactions. All verified transactions are then bundled and processed into a block. Each block is then added back to the chain of existing blocks: the blockchain.

What is Litecoin’s supply?

Litecoin's supply is a lot more compared to Bitcoin, because while Bitcoin has a limit of 21 million BTC, LTC's limit has been increased to 84 million LTC. Like Bitcoin, Litecoin also uses the proof-of-work algorithm.

What does Litecoin's halving look like?

The block reward provides a financial reward for miners of Bitcoin and Litecoin, which can keep them motivated. The Litecoin halving is a way to influence the inflation of LTC. The block reward is halved after every 840,000 blocks.

When Litecoin started in 2011, the block reward was 50 LTC per block mined. So after the first halving, this became 25 LTC per block. At a rate of 2.5 minutes per block, halving occurs every four years.

The inflation of LTC decreases over time, and with the halving every four years, the last LTC is expected to be issued in 2050. The current block reward is 12.5 LTC per block and the next halving will likely be in August 2023.

What are the advantages of Litecoin?

Litecoin is one of the first cryptocurrencies ever on the market and as such it has a long history, giving it both pros and cons. Here are some notable advantages:

  • Cost: One of the biggest advantages of using Litecoin is the price of transactions on the network. In fact, Litecoin is very cheap to use for transactions, especially compared to the cost of Paypal and credit cards. Processing a transaction on the Litecoin network currently costs around $0.042.
  • Transaction speed: Litecoin transactions take about 2.5 minutes on average, which is about four times faster compared to Bitcoin transactions, that take about 10 minutes. The difference in speed is achieved due to the fast processing time of Litecoin blocks.

What are the disadvantages of Litecoin?

Like many other altcoins and cryptocurrencies, Litecoin has its drawbacks, including:

  • Stagnant market position: As one of the first cryptocurrencies, LTC was in the top 10 crypto currencies in terms of market capitalization for years. However, in recent years we have seen the cryptocurreny increasingly drop in the market ranking.
  • Competition: Litecoin was founded at a time when there was very little competition from other cryptocurrencies. Today, there are many more crypto projects that can do everything Litecoin can do. Litecoin will have to rely mainly on its accumulated reputation and perhaps future projects.

What use-cases does Litecoin offer?

Litecoin has some use cases that are important to note:

  • Fast and cheap transactions worldwide: It takes about 2.5 minutes for a Litecoin transaction to be processed and the fees average about 20 cents per transaction. This is a lot faster and cheaper than Bitcoin. Furthermore, the fees and transaction speed are exactly the same worldwide.
  • Use as a means of payment: Initially Litecoin is intended as a decentralized digital means of payment. This allows multiple parties to digitally send value to each other without the intervention of third parties.

What are the expectations for Litecoin?

Bitcoin (BTC) was often seen as the digital gold, where Litecoin would then supposedly be the digital silver. However, the "lite version" of Bitcoin fell off a bit in recent years as people preferred to invest in other crypto currencies such as Ethereum (ETH) or rather stick with Bitcoin.

Of course, that can always change again. The Litecoin Foundation continues to work, also seen in the big MimbleWimble update in 2022. With this, the Foundation aims to put Litecoin back on the map. The update provides the Litecoin blockchain with greater efficiency because nodes can process data more quickly, resulting in lower transaction costs for users. Furthermore, the update offers much more privacy than before.

How can you invest in Litecoin?

Buying LTC is very easy at LiteBit. Both in your browser and through the app you can buy, sell or send LTC in just a few clicks. The LTC is stored in your personal wallet at LiteBit, or you can choose to send your LTC to an external (hardware) wallet.

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