Litecoin 101

Litecoin 101

By: William McCormick - Posted in:
An image of a man holding a Litecoin for WealthHunters' article on The History of Litecoin

How Litecoin Became an Elite Crypto-coin!

Recently, WealthHunters explored the basics of cryptocurrency. After that, it’s a natural progression to move onto Bitcoin. With that knowledge under your belt, it’s the next step to learn about Litecoin. We’ll look into Charlie Lee, the history of Litecoin, and Litecoin price history. In just a few minutes, you will develop a solid foundational understanding of one of the most relevant cryptocurrencies in the market today.

What is Litecoin?

Litecoin, also known as LTC, is a peer-to-peer cryptocurrency featured on an open-source payment network- much like Bitcoin. LTC followed in Bitcoin’s footsteps as a peer-to-peer cryptocurrency that functions in a decentralized payment network without a central bank. However, faster transaction speed and storage efficiency makes Litecoin more appealing to some crypto traders.

Before you buy Litecoin, it’s better if you know why it’s considered by many to be superior to Bitcoin. If Bitcoin (BTC) represents “gold” in the cryptocurrency community, Litecoin (LTC) represents “silver.”

Similar to Satoshi Nakamoto, Litecoin founder Charlie Lee created an open-sourced digital currency on a blockchain-based, peer-to-peer network. Litecoin’s network is completely decentralized without a central bank or authority. The differences between the two cryptocurrencies are related to the mining process. You can learn the basics of Bitcoin mining right here.

Bitcoin vs. Litecoin

For mining enthusiasts, Litecoin holds a better hashing algorithm. In order to put the difference in hashing power of the two assets into perspective. As of this writing, the Bitcoin network processes 20,000 Terra Hashes every second. Litecoin can process at least 90,000 Mega Hashes per second. Even if you don’t understand what that means, you can see the dramatic difference in those numbers. Litecoin is more powerful in comparison to Bitcoin’s hash rate because it uses the “scrypt” algorithm instead of the SHA-256 that Bitcoin uses. Scrypt is known as a “memory hard problem,” which means it prefers to use large amounts of high-speed RAM instead of raw processing power.

The simple way to say it is the LTC network can handle a much higher volume of trades and transactions than BTC. That gives Litecoin the bragging rights in terms of hashing rate and efficiency of the network. Another good example of their differences is block creation. The golden standard set by Bitcoin for block creation is ten minutes. Litecoin has established a mean block time of two and a half minutes. That means it creates four blocks in the same amount of time as it takes Bitcoin to create one. All of this sounds great, but being so efficient creates complex problems. The result of the network being so powerful is the system contends with a larger blockchain and unnecessary blocks. Ultimately, Litecoin’s users greatly benefit the most from the speed advantage.

You Don’t Have to Choose Between Litecoin and Bitcoin

In spite of the comparisons and debate amongst crypto traders, Charlie Lee doesn’t regard Litecoin as a direct competitor to Bitcoin. Charlie views the former as complimentary to Bitcoin. Rather than gold vs. silver, Charlie Lee sees Litecoin as much better suited for smaller transactions. He believes the “heavyweight” transactions should be for Bitcoin. From his perspective, the two assets are a one-two punch for cryptocurrency as a whole, not two prizefighters competing for the top spot. At the end of the day, our goal at WealthHunters is to arm you with the information so you can can choose for yourself.

History of Litecoin

Much like Evan Duffield of Dash, the history of Litecoin began with the simple goal of improving upon Bitcoin’s shortcomings. Before creating the cryptocurrency, Charlie Lee was a software engineer working at Google. He spent 5 years at Google and discovered Bitcoin for the first time. Charlie Lee grew up skeptical of the Federal Reserve system so cryptocurrency was an extremely interesting concept for him. Lee’s attention was really about capitalizing on blockchain technology and expanding on its capabilities.

In early 2011, Bitcoin was amidst its first surge of popularity and everyone in the tech industry was trying to develop the next great cryptocurrency. Charlie Lee’s first attempt was “Fairbix.” The asset launched in September 2011 and was quite similar to another cryptocurrency “Tenebrix.” Lee’s development team copied the Tenebrix source code and improved upon it, but the official release was a complete disaster. Charlie Lee team had pre-mined 7 million Fairbix coins before its release which caused a lot of scrutiny from the crypto community. Fairbix’s demise came when some major software bugs were exploited and couldn’t defend itself from a 51% attack. The end of Fairbix was necessary for the history of Litecoin to begin.

Learning From Their Mistakes

The history of Litecoin began in October 2011 when Charlie Lee released the asset less than a month after his failure with Fairbix. After learning from their mistakes, the development team copied the Bitcoin source code and make adjustments. During the creation of Litecoin, an emphasis on improving the platform and creating a more powerful system to include block creation, hashing protocol, and everything previously mentioned.

Two years after its launch, Litecoin had reached a market capitalization of one billion dollars. Shortly afterward, Charlie Lee left Google to become of the first employees at Coinbase. He worked there as an Engineering Manager for four years until leaving in 2017.

As the Managing Director of the Litecoin Foundation, Lee oversees the development of the cryptocurrency. As a result, Litecoin had its best year in 2017. The currency was the subject of the first Lightning Network transaction and the asset reached a whole new level of success.

Litecoin’s Price History

Litecoin’s price reached a market cap of one billion dollars only two years after Charlie Lee debuted the asset. In 2017, Litecoin price rose in value from $4 to $350- a return of over 8000 percent. As of this writing, LTC’s market cap is 3.1 million and has a value of $52 per coin.

Most crypto analysts blame the cryptocurrency market crash in early 2018 for Litecoin’s loss in value. Litecoin’s price has come back down to Earth over the course of the year, but it’s still valued as the seventh most valuable coin in the cryptocurrency market. Other assets such as Ethereum have surpassed its position, but the history of Litecoin is far from over. After all, some people like silver better than gold. Litecoin is expected to bounce back in the future once the entire market snaps out of its bullish run.

Litecoin’s price history has been generally consisted when adjusted for macro-crypto trends. Over seven years, LTC has remained a valuable asset because of its network and other similarities to Bitcoin. However, the comparisons expose the biggest difference between the two cryptocurrencies.

Bitcoin has a coin limit of 21 million. Meanwhile, LTC has a token limit of 84 million. That means LTC coins will be created long after Bitcoin’s limit has been reached. While Litecoin will continuously have to increase demand in order to remain competitive on per-coin value- Litecoin’s price history has many years of evolution in its future.

How to Buy Litecoin:

Any market where Bitcoin can found, so can Litecoin. If you’re confused on how to buy Litecoin in the future, Coinbase is a great place to start. How to buy Litecoin isn’t the important question to ask. The first question should be how to store the tokens after you’ve bought them. How to buy Litecoin wallets isn’t a hard question to answer, but there are some options to consider before making a decision.

LTC Core is the original wallet for the currency and can be installed on your desktop for free. The program downloads the entire LTC blockchain on your device with the wallet. That can be a dealbreaker for new investors. As a result, Electrum-LTC provides a lighter option with multi-coin capability. Loafwallet is also a good choice for you since it was developed specifically for LTC tokens by Charlie Lee himself. Now that you’ve got a beginner’s level understanding of the short history of Litecoin- leave questions, comments, and opinions below! We want to hear from you.

What’s Your Opinion On Litecoin’s Future? Let Us Know!

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