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What Is Litecoin And Its Development In 2021

4.6 | by Taylor T.

Litecoin (LTC) is a cryptocurrency that is largely similar to Bitcoin. Fundamentally, Litecoin is also a decentralized cryptocurrency which utilizes similar protocols as Bitcoin except for a few parameter tweaks. Much like Bitcoin, Litecoin also relies on proof-of-work for consensus and operates on a permissionless peer-to-peer network where users are able to transfer funds to one another without the need to rely on any central authority.

 

Who Created Litecoin?

Litecoin was created by Charlie Lee in October 2011 as a spinoff of Bitcoin, and is considered as one of the early alternative cryptocurrencies (altcoins). Litecoin aims to be the “Silver to Bitcoin’s Gold” by taking on the best innovations of Bitcoin with a more lightweight approach to achieving Bitcoin’s noble goals.

The first block of the Litecoin network, or the Genesis Block, was mined on the 7th of October 2011.

 

What is Litecoins’ Value?

Litecoin (LTC) is one of the top-10 cryptocurrencies, and is traded in over 300+ exchanges integrated with CoinGecko. The most common trading pairs are against Bitcoin (LTC/BTC) and Tether (LTC/USDT).

Much like Bitcoin, Litecoin also does not have a set exchange rate in the beginning, so its price is fully determined by the markets’ perceived value by supply and demand.

It is also worth noting that the block rewards of Litecoin follow the same halving schedule as Bitcoin, going from 50 LTC to 25 LTC, to 12.5 LTC and so on every 4 years. The next Litecoin halving is expected to happen sometime in 2023, where the block reward decreases from 12.5 LTC to 6.25 LTC per block.

 

How is Litecoin Different from Bitcoin?

While Litecoin was created by cloning Bitcoin’s codebase, there are several key differences:

1. Block time

The Litecoin Network targets a block time of 2.5 minutes, while the Bitcoin network targets a block time of 10 minutes. This means that transactions can confirm faster compared to Bitcoin, and the network has a higher throughput.

2. Maximum supply

The Litecoin protocol states that there can be a maximum of 84 million Litecoin, while Bitcoin has a maximum supply of 21 million Bitcoin.

3. Proof-of-Work Algorithm

Litecoin uses a different proof-of-work algorithm called Scrypt, while Bitcoin uses the SHA-256 algorithm. Scrypt is a memory-hard algorithm which was initially created to be ASIC-resistant.

4. Address

Litecoin addresses start with either “L” for legacy, non-Segwit addresses or “M” for Segwit-enabled addresses. Bitcoin addresses start with either “1”, “3” or “bc1”.

 

Litecoin Development in 2021

Since its inception, Litecoin has closely followed Bitcoin closely. Litecoin’s core protocol updates are mostly based on Bitcoin’s core protocol updates. 

At the height of the scaling debate in 2017, Litecoin was the first among the top 5 proof-of-work cryptocurrencies to adopt Segwit in May 2017, with Bitcoin following a few months later in August 2017.

In 2019, Litecoin creator Charlie Lee announced that Litecoin will be planning for private transactions using the Mimblewimble protocol (popularized by Grin and Beam). Development is currently under audit and is expected to be available around end of 2021.

 

How can I Mine Litecoin?

Litecoin uses the Scrypt algorithm, a memory-hard algorithm that was initially designed to be resistant to Application Specific Integrated Circuit miners (ASICs). However in 2014 the Litecoin network eventually became dominated by ASICs as manufacturers began making Scrypt ASICs that overpowered CPU and GPU miners.

Mining Litecoin currently requires ASICs from manufacturers such as Innosilicon. Profitability from mining can be estimated using sites such as WhatToMine or ASICMinerValue. Do not forget factors such as Litecoin’s price, miner efficiency, electrical prices and more!

 

How do I Keep My Litecoin Safe?

Much like owning Bitcoin - if you lose the private keys to the wallets holding your Litecoin, it is lost permanently and it is unlikely that you will be able to retrieve them. As a decentralized, permissionless cryptocurrency, it is unlikely that you will be able to retrieve your Litecoin if you ever send it to an unintended address so do take note of that as well. 

With that in mind, it is important to mitigate the risk of losing private keys or having your coins sent over to unintended recipients. Both can happen in the case of a computer compromised by malware or spywares, so it is important that you have sufficient measures to guard against that, such as using anti-virus softwares and practicing safe browsing habits (don’t click on suspicious links!).

Another additional measure that can help safeguard your cryptocurrencies is also to make use of hardware wallets such as Trezor and Ledger. These devices essentially isolate your private keys (a.k.a your Litecoin balance) onto an external device so that hackers do not have access to it without passphrases that only you as a user have.

It is important to note that properly securing cryptocurrencies is very much like being your own bank, and quite literally - if you lose access to your private keys without a backup, there is most likely no way to recover your funds. Make sure to always have backup copy (or copies) in secure and secret locations.

 

Are there any Litecoin Derivatives?

Yes, there are - the crypto derivatives market is heating up with many cryptocurrencies joining the scene. Litecoin is no exception and you can choose to trade Perpetual Swaps or Futures across many derivative exchanges such as BitMEX, Binance Futures, FTX and many more. Check out the full list of derivative products or derivative exchanges!

Related article: 5 Differences Between Litecoin and Bitcoin

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Taylor T.
Taylor T.

Taylor T. is enthusiastic about cats and learning more about the cryptoverse.

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