We eavesdropped on the Litecoin leadership, and here’s what they are thinking…
CMC Live brings nothing but the best guests on its episodes.
But the latest CMC Live episode with Litecoin was a special one. Charlie Lee, the creator of Litecoin, had a fireside chat with his team about Litecoin and what is still to come for the network.
You think Litecoin is so 2017?
After reading the following brief, you won’t be thinking that anymore…
What Is Litecoin and How Does It Work?
Litecoin is a fork of Bitcoin. It launched in 2011 and is also a decentralized, open-source cryptocurrency. The goal of Litecoin was to provide faster transaction times and lower fees than Bitcoin.
Like Bitcoin, Litecoin is a peer-to-peer network that allows cryptocurrency to be transferred without intermediaries. And just like Bitcoin, Litecoin is a proof-of-work chain with miners enabling a steadily shrinking supply of new LTC.
Similar to Bitcoin, Litecoin has a "halving," where mining rewards are cut in half. Halvings happen every four years and are designed to control inflation by slowing the introduction of new LTC into circulation over time. The last Litecoin halving was in August 2023.
Litecoin vs Bitcoin
Litecoin and Bitcoin are quite similar, but there are some important differences between the two, making Litecoin the “digital silver” to Bitcoin’s digital gold.
Transaction Speed
Litecoin launched with the goal of providing faster transaction confirmation times than Bitcoin. Litecoin blocks are generated every 2.5 minutes on average compared to Bitcoin's 10 minutes. This allows payments to settle faster on the Litecoin network.
Total Supply
Litecoin has a four times higher supply than Bitcoin. 84 million Litecoins will ever exist, compared to 21 million Bitcoins.
Mining Algorithm
Litecoin does not need specialized hardware like Bitcoin in order to mine the cryptocurrency. Where Bitcoin requires the use of ASICs according to its SHA-256 algorithm, Litecoin uses Scrypt, an alternative proof-of-work mining algorithm. That means Litecoin can be mined alongside other crypto without specialized hardware.
Level of Decentralization
Some argue Bitcoin is more decentralized than Litecoin due to its wider base of miners and nodes globally. Litecoin mining and development is seen as more centralized.
Brand Recognition
Bitcoin enjoys far greater mainstream recognition compared to Litecoin. Bitcoin is sometimes viewed as "digital gold" while Litecoin is described as "digital silver."
Future Development
The Bitcoin network has a bigger developer community working on its core protocol and is not dependent on Satoshi Nakamoto. Litecoin's development is more dependent on its founder Charlie Lee.
What Is Mimblewimble? Litecoin's Privacy Upgrade Explained
In May 2022, the Litecoin blockchain implemented a major upgrade called Mimblewimble to improve privacy. Mimblewimble is named after a tongue-tying curse from the Harry Potter series.
Litecoin transactions are normally transparent – anyone can see the sender, receiver, and amount sent. This is concerning for user privacy.
Mimblewimble introduces confidential transactions to Litecoin. Users can optionally move their LTC into privacy-preserving "Extension Blocks". Once inside these blocks, their transactions are hidden from view. Only those involved can see sender, receiver, and amounts.
To use Mimblewimble, users first "peg-in" LTC to move it into an Extension Block. They can later "peg out" to move it back to the transparent blockchain. When inside an Extension Block, Mimblewimble uses technologies like CoinJoin to mix transactions and hide identities.
Extension Blocks run parallel to the main Litecoin blockchain. Most Litecoin activity still happens on the public ledger. But those wanting privacy can now enable it.
All in all, Mimblewimble brings optional confidential transactions to Litecoin. Users can choose privacy when desired, while still maintaining a transparent blockchain for regulatory compliance. This balances privacy and transparency on the network.
Litecoin in 2023
The Litecoin network continues to grow, despite falling out of the top 10 of cryptocurrencies by market cap. As Charlie Lee noted on the CMC Live episode, Litecoin has processed over 175M transactions as of August 2023. In 2023 alone, Litecoin has processed over 44M transactions, breaking its previous 2022 record with four months to go.
The number of long-term Litecoin holders is also steadily increasing. It doubled in 2023 to 1M addresses holding Litecoin, with a total of 9M active Litecoin addresses. This is only surpassed by Bitcoin and Ethereum.
Bitcoin saw two new rising trends in 2023: Bitcoin Ordinals and BRC-20 tokens. However, there was also a surge in equivalent tokens on the Litecoin network. LTC-20 tokens were all the hype as well, however, thanks to the increased block size of the Litecoin network, it did not get clogged up like its bigger brother. As Charlie Lee put it on CMC Live:
“The Litecoin network didn’t miss a beat. Litecoin didn’t flutter. It’s a real testament to how scalable Litecoin is.”
In addition, unlike the Bitcoin blockchain, Litecoin can create “fully fungible” Litecoin, thanks to its Mimblewimble update and its privacy features.
Conclusion
If you want to learn more about the Litecoin network, visit the Proof of Work Summit in Prague. You can hear all the details about the summit, its guests and its agenda in our CMC Live episode about Litecoin.
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