Litecoin (LTC), sometimes described as ”Bitcoin lite,” is a digital asset that is designed to enable the instant peer-to-peer exchange of value at affordable rates. Litecoin is one of the most veteran crypto projects out there and still has a large active community.
This article will describe how Litecoin works and where you can use it. It will also provide a review of the best crypto wallet solutions to store your LTC, whether you’ve acquired either through trading or mining.
Litecoin first surfaced in October 2011, two years after the Bitcoin’s genesis block was mined. Litecoin was first released on Github by its creator, the well-known computer scientist Charlie Lee – a Google employee and later director of engineering at Coinbase.
Litecoin had the initial aim of supplementing Bitcoin’s economy, rather than competing with it. The crypto community quickly accepted this narrative, calling Litecoin the “silver to Bitcoin’s gold,” which made the digital asset one of the highest-valued coins and a top five crypto for a long time. In November 2013, it witnessed a huge price surge that catapulted the asset into the public limelight.
Lee sparked controversy in mid December 2017 when he publicly declared, while LTC was enjoying an all-time price high, that he had sold and donated all his Litecoin holdings in order to focus more objectively on the currency’s development. Litecoin’s price subsequently tanked. Many irate LTC holders rather unfairly blamed Lee for this – instead of taking into account the end of the 2017 bull run – for allegedly “dumping” his own cryptocurrency.
Litecoin is a fork from the Bitcoin Core source code, with a few key differences that distinguish it from Bitcoin: it has a faster block generation time (two-and-a-half minutes versus Bitcoin’s ten), a larger total coin supply, and use of the Scrypt hash function as opposed to Bitcoin’s SHA-256 encryption.
Litecoin also implemented several upgrades that were initially slated for deployment on the Bitcoin network, such as Segregated Witness (Segwit), with the aim of increasing its transaction throughput. It has also integrated a layer 2 scaling solution called the Lightning Network.
How Many Litecoins Are There?
Litecoin adheres to a scarce tokenomics model, permitting only a limited amount of LTC to be mined. The cryptocurrency’s supply is capped at 84 million, with around 66 million in circulation as of July 2021. Like Bitcoin, Litecoin also undergoes a block reward halving approximately every 840,000 blocks, or four years, which slows down the pace of new coins being mined over time.
The Litecoin network has undergone two halvings so far, first in 2015 and then in 2019. Block rewards began with 50 LTC at launch and currently stand at 12.5 LTC. The next halving is estimated to occur in August 2023 and will reduce the rewards to 6.25 LTC per block (which is similar to Bitcoin’s current mining rewards).
The halving mechanism has been engineered to make it harder to mine LTC as its circulating supply comes closer to its maximum supply, which prevents the indefinite inflation of the coin and rewards those miners who took part in maintaining the network in its earlier days.
Litecoin Vs. Bitcoin
Litecoin began as a fork of Bitcoin and has several differences to its predecessor. First, it goes beyond the block limitations of its parent protocol, with a block time of two-and-a-half minutes. Second, Lee has architectured the network to function as a lighter and faster version of Bitcoin, as its name suggests.
Litecoin also uses a Scrypt hash function instead of Bitcoin’s SHA-256 in order to avoid being taken over by ASIC-based miners and to allow CPU and GPU miners to thrive. However, as time went on, ASIC miners were in fact able to develop Scrypt-based hardware and to infiltrate the Litecoin mining economy.
Litecoin was designed for speed, whereas Bitcoin was built for maximum security and immutability. As a lighter version of Bitcoin, it can process transactions a lot faster and prevent payment delays. Bitcoin payments are processed in around nine or ten minutes, which may be a bit slow for some situations. Bitcoin does, however, offer better security, as it allows more time for information to spread throughout a global network of peers (or nodes) before transactions are confirmed.
Litecoin Vs. Dogecoin
Did you know that the popular meme crypto Dogecoin is a fork of the Luckycoin blockchain, a fork of Litecoin, which is itself a fork of Bitcoin? It’s enough to go mad!
Litecoin and Dogecoin (DOGE) use the same Scrypt-based mining system, so they are commonly used in merge-mining – a mining pool feature that enables users to mine two different cryptocurrencies simultaneously. However, the two protocols differ immensely in their economic models.
Dogecoin has an infinite token supply and does not undergo halving periodically. Dogecoin blocks are generated every minute, making it two-and-a-half times faster than Litecoin. Litecoin, however, is a lot scarcer, which makes it more suitable as an asset to hold long term.
The Best Litecoin Wallets Out There
A Litecoin wallet, which can be an application or hardware device, is necessary to store and manage your LTC holdings, as well as to trade them. Cryptocurrency wallets are designed to keep a copy of your private keys and to generate the public keys that you need to perform peer-to-peer transactions and interact with the currency’s blockchain. As with other cryptos, there are three types of LTC wallets: online, software, and hardware.
An online (aka hosted or hot) wallet is often provided by crypto-custodial services like exchanges and can be accessed through your web browser or app. These types of wallets are usually the most convenient, allowing users to buy, sell, or trade their holdings with a few clicks. However, they do not give you access to your private keys, which compromises the financial autonomy that cryptocurrencies aim to provide. A few popular exchanges that offer wallet services include Binance, Coinbase and Kraken.
Software wallets are applications that can be installed on your computer or mobile phone, enabling you to access your private keys and to control your cryptocurrencies. They are relatively more secure than online wallets as they only allow wallet owners to access the funds.
However, they are still susceptible to hacks and malware contamination, which is a problem with any application that is installed on a computer that is always connected to the internet. Some good software wallets that support LTC are Litecoin Core, Atomic Wallet and Electrum LTC.
A hardware (or cold) wallet is your safest bet when it comes to storing Litecoin, since it is offline, meaning that your private key information will never leave your device. While hardware wallets can be expensive, they’re a worthwhile investment due to their security. LTC is supported on several hardware wallets, including Ledger Nano S, Trezor and Safepal.
Where Can You Spend Litecoin?
You can spend Litecoin at over 2,500 stores and merchants, including Travala, RE/MAX and eGifter Moreover, you can use your LTC to purchase any other cryptocurrency it is paired with on both centralized and decentralized exchanges (DEXs).
Litecoin’s enduring success demonstrates that altcoins can withstand the test of time, remain relevant and continue to evolve. Litecoin’s low-cost and fast transaction capacity, as well as its growing community, have all fueled its adoption as an accepted form of payment at thousands of merchants worldwide. However, only time will tell if Litecoin will remain worthy of its moniker as the silver to Bitcoin’s gold.