If ever there is a bible written for cryptocurrencies, it will most definitely begin like this; “in the beginning, there was Bitcoin.” After the release of Bitcoin in 2009, the stage was set for a massive explosion of a new emerging technology called cryptocurrency. The aim of many developers during that time was to create the “silver to Bitcoin’s gold.” While there are many potential claimants to that throne, some experts would agree that if Bitcoin is akin to the gold standard for cryptocurrencies, then Litecoin is the silver standard.
Bitcoin was a revelation of sorts upon release. It showed that a Distributed Ledger Framework (DLT) could successfully be implemented. This implementation required something called a blockchain which provided theoretical immutability for the entries in the shared distributed ledger. This meant that the nagging issue of the double-spending problem had been taken care of.
For all the laudable innovations that Bitcoin introduced into the digital currency space, there were, and still are some fundamental issues with its protocol. A considerable percentage of the Bitcoin-derivative cryptocoins that were launched after Bitcoin was designed to improve on these flaws. Litecoin is one of the more successful of these Bitcoin-derivative cryptocurrencies.
The History of Litecoin
Litecoin was launched in October of 2011, the brainchild of MIT graduate and former Google employee; Charlie Lee. He launched the Litecoin cryptocurrency via an open-source client on the popular open-source development platform; GitHub. Charlie had been actively trying to develop blockchain-based and crypto-based applications for a while prior to his creation of Litecoin. He had previously experimented with a coin named Fairbix which was to be a solution for digital security protocols.
These first few attempts were unsuccessful with most of the code being invalid. Litecoin was Charlie’s first successful cryptocurrency implementation. It featured a number of modifications from the core Bitcoin construct especially in the areas of block transaction time, hashing algorithm, and GUI.
In terms of market growth, it has experienced good, steady growth in the market over the years. Though not quite the same astronomic increase as Bitcoin but early adopters of the coin who were smart enough to “hodl” are now Litecoin millionaires. The price growth was a little slow at the start, reaching 7 cents at the start of 2013 but that’s when the explosion began. In December of 2013, the price of Litecoin had climbed to $23 which was an increase of about 328% in less than a year. To understand the growth, a $100 investment in Litecoin at the start of 2013 would have been worth almost $30,000 at the end of 2013.
This is when investors began to reckon with Litecoin. It’s market capitalization hit the $1 billion mark in November of that same year. As at the time of writing this article (January 7, 2018), the trading price of Litecoin is $288.75 and the market capitalization stands at $15 billion.
The Litecoin Blockchain
The Litecoin blockchain bears a lot of similarities with the Bitcoin blockchain. It is in fact, a fork of the core Bitcoin client but with some modifications. These modifications make the Litecoin protocol to be entirely different from the Bitcoin protocol. Litecoin at its most basic is a Peer-to-Peer (P2P) cryptocurrency system that allows users to perform instant transactions at minimal fees.
One of the motivating factors for the pioneers of cryptocurrencies was the huge fees being charged by third-party payment processing companies. These fees made financial transactions all the more expensive. Hence, the emergence of the blockchain and cryptocurrencies. The middleman was eliminated and transactions occurred directly between the two parties at almost no cost.
While Bitcoin originally held to this idea, problems with the network meant that huge transaction fees began to slowly creep into the system. The Litecoin protocol was designed specifically to address this issue which makes it in a way complementary to Bitcoin, rather than a direct competitor. Charlie Lee cloned the Bitcoin core code but made some adjustments to particular areas like block generation timing, maximum coin supply, and the hashing algorithm used by the network.
The Litecoin protocol is all about enhanced speed and reduced transaction cost. In the years that followed, the development team has also introduced some advanced features to the cryptocurrency. Two of such major advancements were the adoption of SegWit and Atomic Swap. SegWit even further enhanced the speed of the Litecoin network while Atomic Swap could possibly revolutionize the cryptocurrency exchange market.
The LTC Token
Like Bitcoin, Litecoin is the name for both the protocol and the cryptocurrency. The 3-letter designation for the coin is LTC and the currency symbol is Ł. LTC is divisible up to 8 decimal places with the smallest unit of the currency called a “photon.” There is also a subunit called “lites” which is one-thousandth of a Litecoin. The total supply of LTC is capped at 84 million coins.
LTC: The Undervalued Top Tier Crypto
Despite some of the unique features of Litecoin, one could argue that it doesn’t get as much traction in the mainstream news as Bitcoin. However, upon deeper examination, LTC offers up some truly remarkable features, functions, and capabilities that make it a suitable alternative to Bitcoin. Granted that it is a true payment processing cryptocurrency, just like Bitcoin and not an application building platform like Ethereum, it still performs quite well.
The present situation of LTC is one in which its utility as a cryptocurrency in wide use isn’t being adequately reflected in its value. On the average, Litecoin performs millions of dollars of transactions every 24 hours. In fact, based on 24-hour trading volume, Litecoin regularly outperforms many of the more fancied coins on offer in the market.
Litecoin Vs. Bitcoin: Comparing LTC to BTC
1. Transaction Speed
The average block processing time on Bitcoin is 10 minutes while on Litecoin, it is 2.5 minutes. This means that Litecoin is theoretically 4 times faster than Bitcoin.
2. Hashing algorithm
Litecoin uses a Scrypt-based cryptographic hash for its mining algorithm. Bitcoin uses SHA-256. The Litecoin hashing algorithm makes it difficult to employ hardware-heavy Field-Programmable Gate Arrays (FPGAs) and Application-Specific Integrated Circuits (ASICs) mining setups. So, while a veritable “arms-race” has developed in the Bitcoin network leading to the formation of centralized mining cartels, such an occurrence is difficult in the Litecoin network.
3. Total Supply
The total supply of Bitcoins is capped at 21 million BTC. For Litecoin, this figure is quadrupled to 84 million LTC.
Comparison with other Major Altcoins
Litecoin maintains a level of similarities with most Bitcoin-derivative altcoins in that it is a way for users to make fast transactions at relatively low costs. Litecoin was the first cryptocurrency to adopt Segregated Witness (SegWit) protocols. By using Scrypt-based hashing algorithms thereby effectively preventing the emergence of mining pools, it closely resembles Ethereum. The difference here is that Ethereum uses a Proof-of-Stake mining algorithm whereas Litecoin still uses Proof-of-Work.