Litecoin is one of the biggest cryptocurrency by market cap that operates as a peer-to-peer network. The open-source software project was released under MIT/X11 license on GitHub on October 7, 2011. Charlie Lee, a Google Employee, is believed to be the creator of the popular cryptocurrency looking to revolutionize peer-to-peer payments.
The Litecoin network became operational on October 13, 2011, as a source code forked out of Bitcoin Core. The cryptocurrency operates as a full decentralized network without any intermediaries or central authorities. Likewise, it features fast transaction confirmation times as well as enhanced storage efficiency.
How Does Litecoin Work
Litecoin operates as a peer-to-peer network that people use to send payments. Powered by blockchain technology, there are no middlemen or entities that control or approve transactions. While the network does not handle fiat currencies such as the dollar or Euro, it relies on the native token LTC and blockchain to complete transactions.
In the Litecoin network, LTC coins can be bought and sold. Similarly, the digital currency is transacted on a variety of exchanges.
Unlike other cryptocurrency projects whereby tokens are released at inception, Litecoin is mined. Mining is the process by which new Litecoin coins are generated and made available for circulation. The mining process is not for the faint-hearted.
The mining process entails assembling the necessary hardware, software, and operating system. Once everything is in place, the computers are used to solve complex mathematical puzzles for which correct answers are rewarded, resulting in a new block in the blockchain. In return, miners receive rewards in the form of Litecoin coins for each correct answer.
While mining can be a great way to profit while supporting the Litecoin network, it’s become increasingly competitive and expensive. The amount of power used to run powerful computers to solve complex puzzles can drain one financially.
Bitcoin vs. Litecoin
While Litecoin came much later after Bitcoin, it shares lots of attributes to the flagship cryptocurrency. Bitcoin is often seen as the equivalent of gold in the cryptocurrency space, Litecoin, on its part, is often seen as Silver. However, the two differ a great deal.
For starters, Litecoin tends to offer faster confirmation when it comes to transactions. The Litecoin blockchain processes transactions every 2.5 minutes compared to 10 minutes for Bitcoin.
The total number of Litecoin coins that will ever be in circulation is pegged at 84 million. In contrast, the Bitcoin coin supply is pegged at 21 million.
Where to Spend Litecoin
With mainstream cryptocurrency adoption gaining traction by the day, it’s become increasingly possible to spend Litecoin and generate some value out of it. Currently, there are a number of online stores that accept LTC as a means of completing transactions on the purchase of goods and service.
Just like other cryptocurrencies, Litecoin comes with its fair share of risks. For starters, by virtue of being one of the biggest cryptocurrencies, it tends to be extremely volatile. What this means is that it is difficult to assess its true value as its prices tend to fluctuate rapidly.
The unregulated nature of the altcoin means there are limited ways one can use the cryptocurrency. Currently, there are a few stores or businesses that accept the cryptocurrency. Therefore, LTC is mostly used for price speculation in the market, despite providing an ideal way of transferring money efficiently cost-effectively.