LitecoinLitecoin is a fully decentralized, open-source peer-to-peer digital cryptocurrency often named “digital silver”, envisioned as a counterpart to Bitcoin (“digital gold).
What is Litecoin?
Litecoin is a fully decentralized, open-source peer-to-peer digital cryptocurrency often named “digital silver”, envisioned as a counterpart to Bitcoin (“digital gold). It was developed by Charlie Lee, MIT graduate and ex-Google engineer, as a fork of Bitcoin, differing from Bitcoin in a few key aspects including decreased block generation time, increased maximum number of coins, different hashing algorithm and modified GUI.
How does Litecoin work?
In technicalities, Litecoin is almost identical with Bitcoin, however, Litecoin differs in a few key aspects:
- The Litecoin network aims to process a block every 2.5 minutes, which is in contrast with the Bitcoin network’s 10 minutes block procession and in theory allowsfor faster transaction confirmation. Subsequently the maximum number of coins (84 million LTC) is four times higher than the maximum limit of Bitcoin (21 million BTC)
- Instead of using SHA-256, the Litecoin network utilizes Scrypt for its Proof of Work (“PoW”) algorithm. Scrypt is a memory-hard function that requires more memory and hence mining devices are both more complicated to create and more expensive.
The future of Litecoin is considered stable due to the dedicated technological community and regular updates. For example, Litecoin successfully activated Segregated Witness (“SegWit”) in May 2017 which allows for further upgrades for the cryptocurrency, such as the Lightning Network that allows for off-chain transactions which significantly decreases the cost of transactions and increases speed.
Another notable innovation for Litecoin would be the possibility for smart contracts or conditional payments between parties. Smart contracts would make Litecoin similar in technology to Ethereum.