Have you ever heard of Cryptocurrency? You definitely would have heard about them, as they are always in news or tabloids. But do you any cryptocurrencies other Bitcoin? There are so many they come close to 1600. Yes!! You heard right, the cryptocurrencies came to around 1600 in 2018. One of the currencies in this cryptocurrency family is Litecoin.
Litecoin is considered as one of the many alternatives of Bitcoin. It is a peer-to-peer cryptocurrency incepted in the year of 2011. It has gained popularity worldwide, this is also a digital currency, which uses blockchain to maintain its transaction in a public ledger. Litecoin transfers funds without any intermediary such as a bank. It can transfer between individuals and businesses. Compared to other Cryptocurrencies Litecoin completes transactions quickly. It is scarce and they deflect inflation. Inflation usually affects the paper money but with cryptocurrencies, you can be assured of it not getting affected.
Litecoin and Bitcoin use the same open source code. But still, Litecoin’s transaction speed is higher than Bitcoin. You could say Bitcoin was famous for its transaction speed. But Litecoin can process a transaction 4 times faster than Bitcoin. It can also confirm the legitimacy of a transaction quickly. Only a certain number of coins can be created and the limit for Litecoins is 84 million.
History
It is the brainchild of Charlie Lee released through an open source client back in 2011 and maintained by Litecoin Core team on GitHub. It is a spin-off or alternative of bitcoin. Even though it is a spin-off of Bitcoin, compared to Bitcoin, Litecoin has reduced the block generation time to 2.5 minutes. It uses a different algorithm and modified GUI than Bitcoin. The value of the Litecoin has seen massive growth in 2013. Litecoin has become the first of the top 5 cryptocurrencies to adopt Segregated Witness. The transfer or creation of these coins is based on an open source Cryptographic protocol.
Differences between Bitcoin & Litecoin
Bitcoin takes 10 minutes to process a block but Litecoin completes the process in 2.5 minutes. Which simply means that Litecoin processes transactions much faster than other cryptocurrencies. It uses Scrypt as an algorithm, which is why ASIC and FPGA devices used for mining Litecoin are expensive and complicated to create. Whereas Bitcoin uses SHA- 256. The limit for bitcoins is 21 million, which is less compared to Litecoin.
How is Litecoin Generated?
As you know Litecoins are not generated by the Government, they are generated by a process called mining. Litecoin mining processes a block of transactions into the litecoin blockchain. It requires solving of algorithms. The first one who solves the algorithm is rewarded with tokens as their payment. Others should try again with another block of transactions.
A Litecoin is processed when transactions are added to a block, which is ultimately added to the blockchain. By January 2017, miners were awarded 25 Litecoins for each block they processed. Every four years the miner’s earns are designed to be reduced by one-half and at the end, the compensation will be shifted to the transaction fees.
What is Mining?
Mining technology costs money and time to miners, it is more resource intensive than most people were interested to devote to cryptocurrencies. The cost of hardware is high and the supply for these cryptocurrencies is low, that is why these cryptocurrencies are expensive. Mining requires large amounts of electricity and high-cost hardware, miners purchase GPU to solve the algorithms. As the world started taking interest in Cryptocurrencies such as Litecoin, many started taking interest in mining. Due to all this, the price of GPU’s is raising, which has ultimately led to the discovery of more efficient and specialized software called ASICs (Application-Specific Integrated Circuits).
Once Miners are done setting up the necessary hardware then they have to set-up e-wallets, where their Litecoins are deposited. Now miners can even download software that handles the mining process, it runs a script which activates the mining process and it will attempt to process blocks but will not show the hashing speed. Although the cryptocurrencies are on rage and at their all-time high there are some expensive costs involved in mining the Litecoins.
Benefits of Litecoin
- It performs transaction quicker and handles more transactions, as its block generation only takes 2.5 minutes
- Litecoin lowers transaction fees, regardless of its size it only costs 1/1000 of the Litecoin as transaction fees.
- It inherits scarcity and it makes hyperinflation impossible.
Conclusion
Litecoins are still again acceptance among people, once it gains people’s trust and confidence this cryptocurrency can also be regarded as payment. It has very few users but the global scenario towards cryptocurrencies is changing. Once it stabilizes its value and gets more accepted among people, Litecoin will also emerge as the standard currency in the digital domain. With all this said the future looks bright for cryptocurrencies such as Litecoin.
