You probably know what Bitcoin is, but do you know about Litecoin? The cryptocurrency is one of the biggest forks of Bitcoin and has done well to earn a large market capitalization and trading volume. The altcoin remains fixed in the top 15 biggest cryptocurrencies and is a firm favourite for transferring money across international borders. What is Litecoin? Jump in to find out.
What Is Litecoin?
Litecoin is a hard fork of Bitcoin, created in 2011 by Charlie Lee, a former Google and Coinbase engineer. Designed to complement Bitcoin and improve on some of its features, Litecoin’s development team made a few tweaks to the blockchain structure.
Three key changes were made to the blockchain, namely increased block sizes, increased maximum supply and a different hashing algorithm. Referred to as digital silver, compared to Bitcoin’s digital gold, Litecoin has firmly established themself in the cryptocurrency market and is a favoured option to include in your cryptocurrency portfolio.
What Does Increased Block Size Mean?
Each blockchain is a series of blocks that store information pertaining to the relevant network. The size of the block illustrates how much information a block can hold, and how fast or slow a transaction will take to be processed. While Bitcoin has block sizes of 1MB, Litecoin’s network utilises block’s of 8MB.
This means that transactions are executed more quickly because more transactions can be incorporated into a block at any given time. Compared to Bitcoin, Litecoin’s transactions are executed 4 times faster, and while a Bitcoin block takes roughly 10 minutes to be completed, Litecoin’s take 2.5 minutes. Increased block sizes mean that Litecoin transactions are much faster.
What Is The Maximum Supply Of Litecoin?
Cryptocurrencies typically have limited supply as an anti-inflation mechanism. By incorporating a fixed number of coins that can ever be in existence, this ensures that the coin will only increase in value as the supply is diminished and demand increases. Litecoin’s maximum supply is 84,000,000 coins, meaning that once that number of coins has been minted there will be no further creation. As of 2020, just over 65,000,000 are in circulation.
How is Litecoin Mined?
Like Bitcoin, Litecoin is mined by a decentralized network of miners. These miners are responsible for verifying transactions and in the process creating new coins. Different to Bitcoin, Litecoin implemented a different hashing algorithm which allows more users to become miners, as opposed to complicated and expensive machinery needed to Bitcoin mining.
The Scrypt algorithm is a more memory intensive process and offers a lower hash rate, when compared to Bitcoin’s SHA-256 hashing algorithm.
How Is Litecoin’s Transaction Fee Structured?
Compared to Bitcoin’s dynamic transaction fee structure (fluctuating based on network activity), Litcoin’s transaction fee structure is a fixed amount that does not waver. No matter how much LTC you are sending or how far it is going, the cost of making that transaction will always be 1/1000 of a Litecoin to process.
What Do People Use Litecoin For?
Litecoin is predominately a medium of exchange, and due to its fast transactions and low transaction fees, the cryptocurrency is often used to transfer funds from one international location to another.
When fiat currencies are sent cross border they need to go through various local banks and are often exchanged into different currencies, incurring exorbitant banking fees and foreign exchange charges.
By using Litecoin as a medium of exchange, an amount of fiat can be transferred into LTC (the sender buys LTC with the fiat currency) and then sent to the recipient's wallet address and then sold. This process is not only much faster, it is also much cheaper.
With Oobit’s instant credit or debit card process, this couldn’t be easier. One party simply buys the amount of LTC they require, sends it to the other party’s wallet address and within the hour they will have the funds and can choose whether they’d like to keep the LTC or sell it.
Understanding What Is Litecoin
Arguably one of the best altcoins, Litecoin has created a perfect solution to a growing problem. Increasing the block sizes gives Litecoin an advantage over its predecessor, as well as offering a more fair opportunity to miners. If you’re looking to develop your cryptocurrency portfolio, Litecoin is a popular choice as it’s proven its worth in the past decade by increasing in value by over 1,000%.