While Litecoin (LTC) may not make headlines as frequently as Bitcoin (BTC), it is still one of the most popular cryptocurrencies. It’s also the oldest crypto after Bitcoin.
What Exactly Is Litecoin?
Litecoin was one of the first “altcoins”—cryptocurrencies other than Bitcoin—created by former Google engineer Charlie Lee (and sometimes other than Ethereum).
“Litecoin is the second-oldest cryptocurrency, having forked from the Bitcoin protocol in 2011,” says Jay Blaskey, a BitIRA digital currency specialist. “It was designed to be used for quick, secure, low-cost payments.” Consider it a Bitcoin offshoot.
Litecoin was created with the intention of improving on Bitcoin in a number of ways. For example, Lee created Scrypt, a new hashing algorithm for Litecoin (pronounced S-crypt). The faster transaction speeds of Litecoin were made possible by the simpler algorithm. The transaction speed of Bitcoin is about five transactions per second.
Merchants who want to accept Bitcoin as payment are frustrated by the slow transaction speed. The six confirmations required for a Bitcoin transaction can take up to an hour on average. Consider purchasing something online with a credit card and being stuck on the “your transaction is processing” screen for an hour while buying a mexc or anything such.
Litecoin’s transaction processing speed, on the other hand, is 54 per second—and new blocks on the Litecoin blockchain can be created about every 2.5 minutes. While most exchanges still require at least six confirmations for Litecoin transactions to be considered irreversible, peer-to-peer (P2P) crypto payment networks can often settle Litecoin transactions almost instantly.
The faster transaction speed was intended to demonstrate to merchants that they no longer needed to be frustrated by Bitcoin’s lengthy settlement time. Instead, they could accept Litecoin and settle payments more quickly, allowing them to conduct business more quickly and at speeds comparable to other digital payment methods.
How Does Litecoin Function?
Litecoin shares several similarities with Bitcoin. Both are open-source projects that use proof of work to verify transactions.
But Litecoin has some notable differences from Bitcoin, too. Aside from processing speed, there is also the issue of supply. While Bitcoin has a maximum supply of 21 million coins, Litecoin has a maximum supply of 84 million coins.
How is Litecoin mined?
Litecoin miners earn the right to record new transactions to the blockchain by solving complex mathematical problems known as hashes.
Once a block is closed, the blockchain cannot be altered. The miner receives 12.5 LTC as a reward for being the first miner to correctly solve the hash associated with a transaction using the proof of work consensus mechanism.
Litecoin mining operations aren’t typically seen running on a computer in someone’s living room. Solving hashes necessitates massive computing power, which necessitates a significant amount of energy and space.
In fact, mining farms and pools of crypto miners using sophisticated hardware perform the vast majority of Litecoin mining.
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