What is Litecoin (LTC)?
Litecoin (LTC) is one of the oldest cryptocurrencies, having launched back in 2011 – just two years after bitcoin. It was designed to be faster and more efficient than bitcoin, hence the name ‘Litecoin.’ It can directly trace its origins to two previous crypto projects; Tenebrix (TBX) and Fairbrix (FBX).
Tenebrix was launched in 2011 in response to Bitcoin becoming too difficult to mine using CPUs. By using the scrypt function, instead of the SHA-256 used in Bitcoin’s mining algorithm, it made the new crypto ‘GPU resistant’ – making it more suited to mining using CPU’s again. Another difference was that there was no limit to the supply of TBX tokens. Unfortunately, the project fell out of favour when it emerged the developers had added some code that would entitle them to 7.7 million TBX for free. Needless to say, this irked the community.
Following the TBX debacle, future Coinbase engineer Charlie Lee launched Fairbrix (FBX, which was based on TBX, minus the controversial code. Subsequently, Lee developed a crypto based on Fairbrix, but reverting to a Bitcoin-style limited token supply. He named the new project Litecoin, and released it as open-source code on Github on 7 October 2011. Less than a week later, on 13 October 2011 the Litecoin network went live.
In many technical respects, Litecoin is very similar to bitcoin, being a truly decentralised peer-to-peer digital currency. This means it is not controlled by a central authority, like a business, regulator, or government. All transactions are immutable and verifiable on a public ledger, but no personally identifiable information is viewable, meaning users’ privacy is protected.
The Litecoin Foundation promotes the adoption and development of Litecoin.
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In September 2021, the price of Litecoin surged by 30% following a report that the crypto project was partnering with US retail giant Walmart. However, the press release responsible turned out to be a hoax.
Litecoin can be divided down to eight decimal places. Litecoin can be further subdivided into lites, millilitecoin, photons, microlitecoin, and litoshi.
The Litecoin blockchain is based on a modified version of the Bitcoin codebase. Like Bitcoin, it uses a proof-of-work consensus mechanism. However, instead of relying on processing power, it harnesses memory – allowing it to run on much lighter hardware.
Although it was originally conceived to be much less demanding than Bitcoin to mine in terms of hardware, most Litecoin miners now employ specialised ASIC (application-specific integrated circuit) machines. As with Bitcoin, miners compete to validate new blocks on the chain, with the successful miner being awarded newly minted tokens.
The total supply of LTC is limited to 84 million. According to CoinMarketCap, in late October 2022 there were nearly 71.5 million LTC in circulation.
Litecoin Adoption & Usability
In the years following launch, Litecoin became one of the most popular cryptocurrencies in the world. However, as competition increased it fell down the rankings, and as of late October 2022, was the 20th biggest crypto by market capitalization, at just over US$4 billion according to CoinGecko. Litecoin remains popular as a day-to-day payment method, thanks to its widespread acceptance, and low cost, high speed transactions. In June 2022, it was one of the cryptos PayPal started supporting along with Bitcoin, Ethereum, and Bitcoin Cash.
Despite its age, and falling down the rankings, development of Litecoin has continued. For example, in May 2022, the MWEB (Mimblewimble Extension Blocks) upgrade was implemented, allowing users to keep the amount of LTC in transactions confidential if desired.
Litecoin Fees & Speed
Transactions on the Litecoin network are among the cheapest of any cryptocurrency. Typically, a transaction costs less than one US cent.
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Like Bitcoin, the Lightning Network also supports Litecoin. The first Litecoin transaction via the Lightning Network took place in late May 2017, when Ł0.00000001 was sent from Zürich to San Francisco. Incredibly, the transaction took less than one second.
Litecoin Security and Safety
Although the Litecoin network benefits from a large decentralised network of miners to secure it, and it has proven highly robust, it is theoretically less secure than Bitcoin because the network is still small by comparison. To address this, Litecoin is now merge mined with Dogecoin (DOGE) – this expands the size of the network, and boosts security.
Still, the main risk with using LTC is, like with all cryptos, when interacting with third party platforms like exchanges. Hence, you should always follow best practices to keep your Litecoin safe.
Security and safety tips:
- Don’t leave your LTC on exchanges. Use exchanges for buying and selling only. Always transfer your crypto to a local wallet for short-term storage.
- For long-term storage, keep your crypto in a hardware wallet.
- Always keep your wallet keys in multiple safe places – they cannot be recovered.
- Never tell anyone about your crypto holdings. No matter how secure your storage is, if you or your loved ones are physically threatened, you’ll probably hand over your personal keys.
Litecoin has, like all cryptocurrencies except for stablecoins, been subject to a lot of volatility since launching. For example, as with most cryptos, it saw huge gains in the great crypto bull run of 2021, but then crashed in 2022’s crypto winter.
According to CoinGecko, Litecoin hit an all-time high of $410.26 on 10 May 2021, and an all-time low of $1.15 on 14 January 2015. At the time of writing, in late October 2022, it was trading around $57.
Final Word on Litecoin (LTC)
There is no doubt that Litecoin benefited enormously from being one of the first altcoins. When it launched there simply wasn’t much competition, but interest in cryptos was exploding. At that time, it did genuinely offer something new – secure, low cost, fast crypto transactions. However, over time, competition has increased massively, and LTC has found itself falling in popularity. Despite this, it still remains a widely supported, trusted and useful payment method – and, some would argue, it still has decent long term investment potential.