Litecoin: History and Prospects
Litecoin is one of the first virtual currencies. It was developed by a former Google employee Charles Lee back in 2011, when Bitcoin cost less than fifty dollars. The cryptocurrency was created on Bitcoin blockchain in is actually quite similar to this world’s first peer-to-peer payment system. As of April, 2018, Litecoin is among top-6 coins by market capitalization and one LTC costs around $150.
The aim of this new coin was to improve Bitcoin. Litecoin provides faster transactions and has smaller commissions. The main difference between the two cryptocurrencies is that Litecoin block is generated 4 times faster than the block of Bitcoin blockchain. This is rather important both for users and miners. Bitcoin uses the SHA-256 algorithm, while Litecoin has more complex Scrypt, where SHA-256 is only a part of a program. LTC mining effectiveness depends on RAM but not on the performance of the device (as in Bitcoin). It takes 10 minutes to generate Bitcoin block, while Litecoin miners will cope with this task just in 2.5 minutes. For each generated block, miners receive 25 LTC, and this reward is reduced by 50% every 840,000 blocks or every 4 years, similarly to Bitcoin. The total supply of coins in the Litecoin network is four times bigger than in Bitcoin – 84 million LTC vs 21 million BTC.
Litecoin may become something like cryptocurrency “cents” in the future, enabling its users to spend virtual money for their daily expenses. It’s known that small transactions in Bitcoins are not effective, so this important and rather liquid market share of everyday small payments may be taken by Litecoin. In 2017, Litecoin introduced SegWit to solve the scalability problem. The update of the SegWit protocol was long discussed as a possible solution to improve Bitcoin`s scalability. Bitcoin block has a limited size of 1 MB and as the transaction volume increases, payment processing gets slower and commission fees grow. In a nutshell, SegWit means that transactions that had “to stand in a line” to get to the block, are processed in the similar structure outside this block, so the block is not overloaded and its capacity increases.
Here are some Litecoin advantages:
higher transaction speed due to the faster generation of blocks (2.5 minutes vs Bitcoin`s 10 minutes);
faster confirmation of transactions;
suitability for small transactions;
flexibility and scalability of the network;
less volatility – LTC rate is more stable than its “big brother” and, probably, less dependents on hype;
transparency – there is a public figure behind this cryptocurrency – Charlie Lee, not a mysterious developer Satoshi Nakamoto (this argument, however, can be disputed);
higher emission (84 million Litecoins vs 21 million Bitcoins);
However, Litecoin has its drawbacks. For instance, high speed of block generation makes it vulnerable to certain attacks (for example Time Warp), and mining of these “lite coins” is currently rather “hard”. Anyway, Litecoin is a strong cryptocurrency market player and has significant prospects, but the time will show, whether the cryptocurrency will succeed in a long term.
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