What Is Litecoin LTC? The Silver to Bitcoin’s Gold

Litecoin is highly liquid, which makes it a crypto for easier trades. In fact, Litecoin holders will find that merchants such as Newegg, SlingTV and even nonprofits like the American Red Cross are happy to accept their cryptocurrency. IThe comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Rather than focusing on its functionality, many investors are interested in Litecoin as a potential long-term holding. They speculate that Litecoin will build relative wealth over time like other investments. So how would you know, is bitcoin better than litecoin or vice versa?

The Litecoin network has undergone two halvings so far, first in 2015 and then in 2019. Block rewards began with 50 LTC at launch and currently stand at 12.5 LTC. The next halving is estimated to occur in August 2023 and will reduce the rewards to 6.25 LTC per block (which is similar to Bitcoin’s current mining rewards). In 2020, the Litecoin PoS network was launched, a unique take on the Bitcoin codebase, with significant performance and consensus enhancements. Validators staking LTCP must stake matured coins because it is a proof-of-stake system. Additionally, the coins to be staked must be in address/transaction types that are compatible.

Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Litecoin could be a decent place to place a small stake to get used to the “ins and outs” of crypto trading for the https://1investing.in/ newer crypto investor, some experts say. Litecoin wasn’t intended to be a speculative investment or a method of storing value. It’s best to consult a professional advisor to see if Litecoin is a good investment for you. Some exchanges may let you withdraw fiat currency, so if you’re looking to exchange your LTC for fiat, you’ll have to find an exchange that allows it.

What is Litecoin used for?

It also largely avoided something called a premine, which allows the creators of a blockchain-based cryptocurrency to mine coins before the project is launched to the public. Premining was originally used as a way to reward the project’s creators and to fund its development. The other key difference Lee employed with Litecoin’s creation, was in his choice of hashing algorithm.

However, examining Litecoin’s price behavior during prior halving events could provide insight into how the market has traditionally responded. While past outcomes may not guarantee future results, they can provide some important information. You run the risk of going a long time without discovering a block if you mine alone.

Consider adding a second or third option to some of your LTC buys to add a bit of stability to your portfolio in case one of the cryptocurrencies in your wallet takes a dive. Former Google engineer Charlie Lee released Litecoin (LTC) as an alternative profitability index method to Bitcoin (an altcoin) back in 2011. Despite all of Litecoin’s similarities to Bitcoin, it has a few noteworthy features that set it apart. Litecoin has many attractive traits that have helped it become one of the most traded altcoins.

They were also dissatisfied with large mining companies hoarding transactions (using conflicting encryption methods) from individual miners. Naturally, it took some time for Litecoin to fend off competitive mining companies, but it has since become known for championing individual miners and faster processing times. Through halving, the miner reward for successfully recording new blocks to the Litecoin blockchain is decreased (halved) at regular intervals. So when Litecoin first launched, the miner reward for adding a new block to Litecoin’s blockchain was 50 LTC.

Moreover, it is a better investment option for those looking for long-term growth. On the other hand, digital currency like bitcoin is good for short-term benefits. On this date, the mining reward was reduced from 25 Litecoins per block to 12.5 Litecoins per block. Litecoin’s mining method and reward-halving mechanism are comparable to Bitcoin’s. Although Litecoin is one of the easiest cryptocurrencies to mine, competition is fierce and profitability can vary. Litecoin’s mining profitability may also decline due to the constrained supply and halving process.

Litecoin maximum supply

The vast majority of people who jump into the cryptocurrency world will buy Bitcoin first. If their hunger isn’t satiated they may also grab some Litecoin and Ethereum too. The cost of sending any denomination of LTC costs around $0.02, whereas Bitcoin currently hovers around $0.35.

• If you plan to trade it regularly and/or use it on a daily basis there are some more convenient options.
• Just because Litecoin transactions are quicker and cheaper than Bitcoin’s, you shouldn’t assume that it is the better option.
• Another area in which Bitcoin and Litecoin differ significantly is their market capitalization, the total dollar market value of all the created coins.
• Because exchanges are regulated and regulations are still being developed, the places you can buy and sell cryptocurrencies fluctuate.

This article covers Litecoin mining and everything that you need to know about it. Litecoin uses the same proof-of-work (PoW) consensus mechanism on the Bitcoin network. Anyone can validate blocks of transactions on Litecoin’s blockchain through crypto mining. Every 2.5 minutes, Litecoin miners have to solve an advanced algorithmic puzzle to add a transaction to the blockchain.

However, if you locate a block mining solo, you keep the entire 25 Litecoin plus fees. Please note that it is only possible if you have a significant amount of hash power (multiple ASICs). Litecoin’s consensus algorithm is memory intensive in a bid to thwart a potential mining arms race. In practice, that arms race never occurred and specialized mining hardware has been developed to be used on the Litecoin network. As a result, Litecoin can be used as a peer-to-peer (P2P) payment system to pay people all over the world without the need for an intermediary. It can also be used as a haven or as part of a diversified cryptocurrency portfolio.

Price seasonality, a predictable annual price fluctuation pattern seen in sectors like agriculture and tourism, is a key feature of Seasonal Tokens. This market feature, used by farmers to forecast market shifts and strategize investments, creates a transparent, fair trading environment where success hinges on knowledge and skill. On August 2nd, 2023, Litecoin’s halving impacted LTC trading strategies, mining and price. Despite being less impactful than Bitcoin’s halving, it presents a significant trading opportunity as traders anticipate the long-term value effects of reduced coin issuance.

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Except for a handful of minor distinctions, Litecoin serves the exact same purpose as Bitcoin. This does heavily depend on the timing and your reasoning for wanting to invest in Litecoin, in the first place. Once you find out what is Litecoin and what it can be used for, you might then want to invest in it, sure.

In late 2017, Lee left the company to pursue LTC’s development full time. Now, he serves as the managing director of the Litecoin Foundation, a non-profit dedicated to supporting the cryptocurrency. After joining the crypto exchange, Lee largely set aside the development of Litecoin. At the time, he said he believed it was important to help people “own Bitcoin and hold Bitcoin” as Litecoin “wasn’t ready” to grow.

When developers “fork” a blockchain, they make a modified chain related to the original network. Litecoin was launched with the aim of being the “silver” to Bitcoin’s “gold.” Like Bitcoin, Litecoin is a peer-to-peer internet currency. Lee developed Litecoin with the aim to improve on Bitcoin’s shortcomings. The broader differences between the two cryptocurrencies are listed in the table below.

Litecoin Vs. Ethereum

Another of the main differences between Bitcoin and Litecoin concerns the total number of coins that each cryptocurrency can produce. The Bitcoin network can never exceed 21 million coins, whereas Litecoin can accommodate 84 million coins. Whether Litecoin succeeds or fails as a cryptocurrency depends on a few factors. The rate of user adoption matters, and, if more people buy Litecoin either to transfer funds or as a store of value, then its value is likely to increase.

The coin supplies of Litecoin and Bitcoin are capped, with Litecoin’s maximum being four times greater. Litecoin transactions also process in about a quarter of the time as Bitcoin transactions. Litecoin more recently has developed a reputation as a less sophisticated copy of Bitcoin. Its founder, Charlie Lee, during a bull market for crypto in December 2017, sold all of his Litecoin. Both cryptocurrencies run on a proof-of-work consensus mechanism, however Ethereum is scheduled to “merge” to Ethereum 2.0 and fully transition to a proof-of-stake blockchain in 2022.

So, if Litecoin is an “altcoin” or alternative to Bitcoin, what are the major differences between Litecoin and Bitcoin? Below are some of the aspects that differ between the two cryptocurrencies. At the time of this writing, Bitcoin transaction fees were significantly higher, at around 3.92% on average, compared with Litecoin’s transaction fees of roughly 0.06%. Solving hashes requires immense computing power, which requires significant energy and space. Halving refers to reducing the reward given when a block’s hash and the transaction information within the block are validated and a new block is created. Halving reduces the number of Litecoins awarded by one-half, which helps to slow down the creation of new coins.

Litecoin Disadvantages

It was originally designed to be implemented on the Bitcoin blockchain. While Bitcoin uses an SHA-256 hashing algorithm, Litecoin uses a Scrypt hashing algorithm, a password-key derivation function. While there is a security trade-off here, merchants can also wait for additional network confirmations to be more secure while using Litecoin. Because blocks are four times faster on Litecoin, the difficulty of mining on its network adjusts faster, roughly every three and a half days.

• Solving hashes requires immense computing power, which requires significant energy and space.
• Some people also mine Litecoin, which allows them to earn the cryptocurrency as a reward for devoting computing power to help verify transactions on the network.
• The Litecoin network consistently processes over 100,000 transactions per day and usually has between 200,000 and 300,000 active addresses.
• Litecoin is a digital currency that is decentralized, meaning that it functions without relying on any centralized financial institution.
• Her expertise is in personal finance and investing, and real estate.

While Litecoin was launched to be the digital “silver,” just like BTC, it’s a blockchain-based P2P cryptocurrency that was designed to address some perceived shortcomings in Bitcoin. A total of 150 LTC were premined as the genesis block — the first one on the network — and two subsequent blocks to confirm were initially mined its validity. When Litecoin launched, the reward for mining one block was 50 LTC, which was essentially worthless at the time. Before you invest in Litecoin, learn how to buy Litecoin and read up on cryptocurrency wallets.

If you plan to buy Litecoin from exchanges like Coinbase or Binance rather than mining it, you need to set up an account with the exchange of your choice. Security, fees and ease of use are the various metrics you can gauge before choosing an exchange. In addition, you have virtually no chance of ever earning any LTC if you mine alone using a GPU or CPU.

The costs are all but negligible currently, however, during peak traffic, Bitcoin transaction costs appear to rise quite dramatically. This is an immediate advantage for small transactions since splitting a $10 Uber with a friend doesn’t make sense for most people if you have to pay $5.00 on top of that. Litecoin offers the option to pay for everyday goods without high fees that start to add up very quickly. Comparing Litecoin to Bitcoin not only makes sense from a convenience point of view, but it also lets us zone in what makes it different at a technological level. It is actually able to accomplish the same job Bitcoin does at a faster and cheaper rate.