What is Litecoin (LTC)?
Litecoin (LTC) is a peer-to-peer crypto asset that is basically a “lighter” version of Bitcoin. Since it was developed based on Bitcoin, it has many features exclusive to BTC. However, it has much faster transaction speeds, a different market cap, a different hashing algorithm, lower transaction fees, and so on. Take a look at the Litecoin price chart placed above to see the current LTC price.
Litecoin crypto project is open-source. It was developed using the MIT/X11 license which enables you to use, alter, and duplicate the software, as well as to distribute altered copies of the software at your discretion.
Compared to Bitcoin, the Litecoin blockchain can process a higher volume of transactions. The network can support more transactions without having to change the software in the future because blocks are generated more frequently. Overall, since it provides users with fast and low-cost transactions, it’s great for making micro-transactions.
The Story of Litecoin
Litecoin crypto project was developed by Charlie Lee (often known as Chocoboco) in October 2011. Computer scientist and pioneering Bitcoin miner Charlie Lee previously worked as a software developer for Google. Besides that, from 2015 to 2017, Lee was a director of engineering at Coinbase.
Now, together with Xinxi Wang, Alan Austin, and Zing Yang, Charlie Lee manages the Litecoin Foundation. In order to improve Litecoin, the Foundation collaborates with the Litecoin Core Development team.
Essentially, Litecoin was developed in order to prevent mining from being monopolized by businesses with extensive mining capacity. The short intervals between mining blocks allow more miners to mine blocks and collect mining rewards.
The biggest difference between Litecoin and Bitcoin is that Litecoin employs the Scrypt algorithm instead of Bitcoin's SHA-256 for mining. Since Scrypt relies mostly on quick calculation, it enables the use of specialized hardware to achieve large hash rates.
Colin Percival developed the Scrypt algorithm as a password-based key generation function, and it was then adopted for Litecoin mining after some of its settings were adjusted. Litecoin crypto project was the first to use the Scrypt algorithm but some other projects employed it later as well.
However, Scrypt is still a Proof-of-Work (PoW) algorithm but, rather than focusing on pure CPU power (like SHA-256 does), it focuses on memory. This means that, essentially, Litecoin uses the PoW mechanism but is able to access enormous amounts of memory rather than just the processing power of the CPU or GPU.
Litecoin transaction confirmation is fast and error-free thanks to the usage of the PoW consensus mechanism. Numerous attacks, including Double Spending attempts, are prevented using the durability of the Litecoin mining network.
Overall, efficiency and affordability are two of Litecoin's main features. Litecoin usually takes under a minute to confirm transactions, and its transaction fees are incredibly small. It is a great substitute for Bitcoin in countries where transaction costs may be a deciding factor in choosing which crypto asset to endorse.
Again, if you’re interested in the current LTC price, check out the Litecoin price chart above.
Use Cases of Litecoin Tokens
Essentially, LTC coins are used for making various payments. There’s even a Litecoin VISA card. It allows users to utilize Litecoin tokens to make purchases anywhere that VISA cards are accepted, which is pretty much everywhere.
Besides that, Litecoin tokens can be used on a huge variety of dApps. You can use LTC tokens for in-store and online purchases. Talking about dApps, there’s one called SPEDN which allows users to spend Litecoin tokens without the need to exchange them for USD or use the aforementioned Litecoin card. It allows you to spend LTC tokens simply using your phone wherever Flexa is accepted.
Lastly, another way you can use LTC coins is to purchase gift cards on BitPay, eGifter, and other similar platforms. These platforms offer a huge variety of shopping gift cards from various retailers including Apple, Uber, Target, and so on.
Tokenomics of Litecoin
The maximum supply of Litecoin is 84 million tokens. Even though over 72 million tokens are already mined (as of May 2023), it’s estimated that Litecoin will reach its max supply only around 2140 (just like it’s estimated for Bitcoin).
It might seem that there’s no way that it will take that long to mine additional 12 million tokens, however, Litecoin employs Bitcoin’s halving method. Thus, roughly every four years, the amount of LTC tokens mined per block drops by half. The next Litecoin halving is estimated to happen on August 2023. This time, Litecoin block rewards will get reduced from 12.5 LTC to 6.25 LTC.
Initially, around 500,000 LTC tokens were pre-mined on the first day of the LTC Genesis Block release. The first miners included Charlie Lee and other early Litecoin developers. However, they did not directly profit from Litecoin, they could only generate income through regular mining.
The initial Litecoin price was $0.30 when it was listed on a few crypto markets in 2011. Though after a few years, it grew tremendously during a massive bull run. From $0.30 it went to $44.73. Unfortunately, a year later, the Litecoin price crashed due to the bear market and Mt. Gox hack leaving it at $2 to $4. After staying like that for a couple of years, the LTC price increased again in 2017 reaching $358.34. Later on, though, it collapsed once more. See the current LTC price above.
The MimbleWimble (MW) testnet, which was utilized to test Mimblewimble-based private transactions, was released in late 2020. It was used to find a way to enhance the privacy and fungibility of Litecoin transactions. After a few years, on May 19, 2022, the long-awaited Mimblewimble Extension Block (MWEB) upgrade was made public, as a part of the Litecoin Core 0.21.2 release.
MimbleWimble is a privacy-focused decentralized protocol. The name of the protocol was inspired by a tongue-tying curse from the Harry Potter books. Its confidentiality feature allows users to hide transaction data. Though, at the same time, it lays the groundwork for other blockchains to increase the usability of Litecoin tokens.
However, due to the Mimblewimble upgrade, several South Korean exchanges delisted Litecoin right after it was released (including Bithumb, Upbit, and Korbit). This happened because of the amount of privacy and anonymity Litecoin now offers to users, which makes it impossible to adhere to the Act on the Reporting and Use of Specific Financial Transaction Information regulation used in South Korea.