Everything You Need To Know About Litecoin And How It Works

Litecoin, which was created in 2011 by Charlie Lee- a former employee of Google, is a cryptocurrency built on the source code of Bitcoin. Abbreviated to LTC, Litecoin was created to improve some of the flaws in bitcoin, such as reduced transaction speed. In addition to being one of the first altcoins (alternative to bitcoin), Litecoin has similar features.

Although Litecoin boasted initial popularity when it entered the Crypto market, it has displayed volatility like many other cryptocurrencies and stocks and bonds by continuously gaining and losing value. By the end of October 2021, Litecoin had a market capitalization of roughly $13.42 billion and was worth $195.13.

This post explains in detail Litecoin trading, how it works, what it is used for, and whether or not you should invest in it. Read on to understand more.

How Does Litecoin Work?

Like all other cryptocurrencies, Litecoin is a devolved, peer-to-peer altcoin that was forked from the bitcoin blockchain, a digital public ledger. It paved the way for an instantaneous almost-zero cost payment between two parties anywhere in the world.

Litecoin utilized a proof-of-work system for every transaction on the blockchain. It is considered a lighter and faster version of bitcoin since it uses scrypt, a mining algorithm that enables faster transaction times. Moreover, unlike Bitcoin, which generates a single block to be mined every 10 minutes, Litecoin’s generates a new block every 2 1/2 minutes.

Litecoin is mainly used as a medium that enables the transaction of payments without involving third-party intermediaries such as banks. However, unlike bitcoin, which you can use as a store of value for long-term reasons, Litecoin is more efficient for cheaper day-to-day transactions.

How To Invest In Litecoin?

It is not possible to purchase Litecoin (or any other cryptocurrency in that manner) through a traditional broker. Instead, you can purchase it through cryptocurrency exchanges or an online brokerage firm such as PrimeXBT, an award-winning multi-currency trading site. Besides charging favorable fees, PrimeXBT guarantees security and accessibility when trading cryptocurrencies.

To store Litecoin securely, you are required to open a cryptocurrency wallet which is simply a software that helps manage the assets. However, you will be required to set a secure password that you will use to access the wallet.

How Does Litecoin Differ From Bitcoin?

Litecoin and bitcoin differ in several ways, including the difference in supply. Bitcoin is capped at 21 million, while Litecoin is capped at 84 million coins. However, bear in mind that not all cryptocurrencies are capped. For instance, Ethereum, the second most valuable crypto, has an unlimited supply. Besides the difference in supply, there are more distinctions between the two cryptocurrencies.

Cryptography

Miners must solve hash functions using sophisticated hardware before adding a new bitcoin or Litecoin block to the blockchain. A big differentiator is that both Litecoin and bitcoin employ different cryptographic algorithms. While Litecoin uses a modern algorithm known as swift, bitcoin operates under the SHA-256 algorithm. Developers of Litecoin chose scrypt since it was considered less vulnerable to cyber-attacks. Additionally, using scrypt meant that ASIC-based miners wouldn’t dominate mining LTC, thus giving room for CPU and GPU-based miners to compete.

Speed

Charlie Lee, who created Litecoin, wanted to prioritize transaction speed, which is the main reason behind LTC’s popularity. Litecoin’s network allows a transaction confirmation time of 2.5 minutes against bitcoin’s ten minutes per transaction. Thus, the shorter block generation time allows Litecoin’s network to handle more transactions.

Market Capitalization

Bitcoin tops the crypto market in terms of market capitalization. The value of all bitcoins in circulation stood at $1.1 trillion in October 2021, which highly contrasted Litecoin’s $13.42 billion.

Litecoin has experienced a fascinating journey for the 10 years it has been in use. What started as a pseudo experiment by a curious engineer quickly became an altcoin that ranks among the top 20 cryptocurrencies today.

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Team 3ptechies is a legion of tech apostles who are gadgets freak, tech enthusiasts, and lover of modern techs. Note: Our words are ours and as such doesn't represent the opinion of 3rd Planet Techies.

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