An Overview on Litecoin and How this Cryptocurrency Works
What is Litecoin and why does it so suddenly jump to the moon? To understand what Litecoin is and to what chances and advantages it carries, we need to look at some of the basics, so let’s jump straight into it. If you have any questions, feel free and leave us a comment down below the article.
Litecoin is coined as Bitcoin’s little brother. It’s a peer-to-peer cryptocurrency that has gained worldwide popularity ever since it was introduced back in 2011. Using a blockchain to maintain a public ledger of all financial transactions, Litecoin is able to transfer funds straight to individuals and/or businesses without the help of a mediator in the form of banks or payment processing services.
What Sets Litecoin Apart from Other Cryptocurrencies?
There are three main things that make Litecoin unique from the rest:
- Coin Limit
- Market Cap
One reason why various cryptocurrencies have intrinsic value is because they have limits. For example, once Bitcoin has reached a specific number, it will no longer be possible to create more new coins.
However, as Bitcoin’s capacity sits at 21 million coins, Litecoin’s is at 84 million.
Though Litecoin’s market cap is still a far cry from that of Bitcoin, it still ranks as one of the top 5 cryptocurrencies to date. The ranking will vary depending on the price and the total number of coins currently in circulation.
Litecoin is also based on the same open-source behind Bitcoin; however, there are a few distinctions. The brainchild of engineer Charlie Lee to serve as the cryptocurrency next to Bitcoin, one of the notable differences between Litecoin and Bitcoin is their transaction speeds.
Litecoin is able to generate blocks up to four times faster as compared to Bitcoin. Due to this, it can verify a transaction’s legitimacy a lot quicker. Moreover, it can process a higher number over the same period. If you want to know more about the creation of blocks and how transactions are verified, check out this primer on blockchain technology.
How to Mine Litecoin
Another notable difference between BTC and LTC is the hashing algorithm used for solving a block, along with the number of coins distributed after finding a solution successfully. A successful transaction is then flocked together with other recently submitted transactions within cryptographically-protected blocks.
Miners, which refer to computers used for mining cryptocurrencies, use their GPU and/or CPU power for solving complex problems and pass the data within a block through the said hashing algorithm until they are able to come up with a solution. Once this happens, all transactions that are within the same block get verified and are considered legitimate.
Of course, miners can benefit from their labor each time a block is successfully solved. The rewards come in the form of a predefined amount of coins that are distributed to those who helped solve the problem. Typically, those with more powerful hashers can get a bigger share. Those who want to mine for cryptocurrencies normally participate in mining pools since their computing power can combine with others in the said pool, thereby allowing them to obtain rewards much easier.
As said earlier, BTC and LTC use different hashing algorithms. Bitcoin uses SHA-256 or Secure Hash Algorithm 2, a more complex algorithm. Meanwhile, Litecoin employs a memory-intensive algorithm which is known as “scrypt”. Different algorithms call for different hardware; hence, you should ensure that your miner can meet the requirements needed for mining Litecoin.
If you are interested in Litecoin but don’t want to mine it, you can instead buy it using another form of cryptocurrency, such as Bitcoin, from exchange websites. Such services, Coinbase for example, make it possible for you to buy LTC using actual fiat currency such as US dollars.
Litecoin Block Explorer
Like any other public cryptocurrencies, you can search all Litecoin transactions within the blockchain since they are available to the public. To quickly and easily look for an individual block, transaction, or record, you can use a Litecoin Block Explorer. You can actually find a lot of them on the internet by doing a Google search. Moreover, you can choose one that suits your preferences.
Just like any other cryptocurrency, Litecoin is also stored in a digital wallet.
It could either be a software-based wallet which you have on your computer and mobile device or a physical hardware-based one. If you want to secure your wallet the old-fashioned way, you can instead create a paper wallet by generating and printing your private key on a computer offline. However, the method is somewhat complicated as compared to other wallet types.
Each wallet will have its own private keys necessary for making any transaction and sending/receiving coins to and from your Litecoin address. Since the keys are stored offline in a hardware-based wallet, they are considered more secure as compared to online wallets.
These wallets could be in the form of a desktop or mobile application and are designed for almost all devices and operating systems. Moreover, third-party applications such as Electrum, along with desktop and laptop users, can choose to install Litecoin Core. If you’re wondering, this is the official client which was created and maintained by the Litecoin Development team. Since Litecoin Core downloads the full blockchain straight from the peer-to-peer network, it prevents any middleman or mediator from getting involved.