What is Litecoin? Well, it’s a fork of Bitcoin that has its divisions too! While both are cryptocurrencies based on blockchain technology, there are some critical differences between these two coins.
For example, while Bitcoin only allows for 21 million cash to existing in total (and 84% already mined), one can mine Litecoins infinitely.
In this post, we’ll be discussing Litecoin and its forks. We will also go over why you should invest in Litecoins instead of Bitcoins and how to purchase them with your credit card or PayPal account.
If you’re looking to learn more about cryptocurrencies like Bitcoin and want to know the difference between them and other coins, keep reading.
Litecoin: What Is It?
Litecoin is a cryptocurrency that one launched in October 2011. It’s based on an open-source global payment network and works without a central authority or banks. Litecoins were created by Charlie Lee, who also worked for Google before he started the coin project.
He has said publicly that his goal is to create a bitcoin alternative that one can use effectively for day-to-day transactions worldwide – including buying pizza!
Furthermore, Litecoin is a fork of Bitcoin. This means that it’s based on the same protocol as Bitcoin but has some changes to its code which makes it act differently than BTC.
For example, one can mine Litecoins infinitely instead of just 21 million coins like Bitcoin (and 84% already mined). It also allows for mining transactions to process four times faster than those in Bitcoins.
Litecoin appeared via an open-source client on GitHub. It released the software under the MIT/X11 license. This gives users the ability to run, modify and copy the software and source code or distribute modified versions.
You can even use this cryptocurrency without installing any additional software. This is because someone posted their wallet online.
What Are Its Key Features?
Unlike Bitcoin, Litecoin has some very interesting things going for it. The key features of Litecoin are as follows:
- Can handle higher transaction volume than Bitcoin (around 56 times more)
- Faster block generation rate; therefore, confirmations happen faster
- Has a more significant number of coins that one can mine (84 million Litecoins will ultimately exist, four times as many currency units as will ever exist with bitcoin)
Litecoin is essentially the silver to bitcoin’s gold. In this way, it serves as an effective hedge against other cryptocurrencies and has been adopted by multiple exchanges worldwide.
The fact that there are more Litecoins in existence than Bitcoins makes it easier for people who cannot afford or choose not to purchase one whole coin at a time – which may cost well over $200 US dollars each.
This aspect also encourages micro-transactions between users under their dollar value since they don’t have to use many cryptocurrencies!
The price of each Litecoin was around $45 US dollars when one wrote this article.
What Are Forks of It?
Like Bitcoin, Litecoins are also forks of bitcoin! They have their version where they make changes to adapt it for improvement purposes. These types of coins are called “forks.” There are four major ones in total. We will take a look at each down below.
The Litecoin community has also planned for more forks in 2018, named “Litecoin Cash.” This is just another way to create a new version of LTC without making too many changes. This project exists because it allows people with mining equipment to mine even when there are no block rewards left.
There will be four times as much Litecoin Cash created compared to what’s available now! However, don’t think you’ll get rich by investing in these coins. Most likely, their price won’t go up at all, and anyone who holds onto them risks losing money!
What Is A Fork?
A fork is essentially when a coin splits into two different currencies.
This happens because developers want to make changes or improvements to the original code of that particular cryptocurrency, and they can’t agree on how one should do it.
Thus, people with lots of power get together and decide they will take their version in one direction or another!
Furthermore, it’s important to note that not all forks are successful. This is because cryptocurrencies can be really complicated and people may lose faith in the new version if it doesn’t work as promised or expected or, they simply don’t like its changes!
However, even though some folks do fail or take a long time before their code gets good enough to be used, there are some that do succeed! These forks can be created out of any cryptocurrency (whether it’s a fork already or not) because the code is usually open-source.
In the case of Litecoin, of which there are four major forks, the most popular and successful one is Litecoin Cash (LCC). However, there are several others that are not as effective, to say the least.
First Litecoin Fork: What It Meant?
The first fork of Litecoin occurred on October 13th, 2011. Charlie Lee announced the launch, and mining/sale began soon after that.
The primary motivations for this update were to increase speed (the “mining” process was taking too long), reduce orphan rates that would occur from a blockchain split due to two hashing algorithms being used at once within the network, and decrease transaction fees because more transactions can be fit into each block when there are fewer data in it overall.
What Are Some Key Changes?
This fork implements three fundamental changes to his division:
- The difficulty retarget time is increased from one minute per block to four minutes per block
- A new address version will start with L instead of M while retaining the same prefix
- A new block hashing algorithm will change from SHA256 to script
The first two changes are meant to solve problems with the network and mining. The third one is a significant change.
It alters Litecoin’s security measures by making them more memory-intensive than processing intensive. This means miners can’t mine with ASICs anymore.
The results of this fork were primarily positive. This is because it improved upon some known issues with Litecoin up until that point in time (e.g., people using GPUs to mine. This caused high temperatures and made noise.
It also reduced orphan rates while improving decentralization overall. This is because there was no longer any dependency on ASICs.
Second Litecoin Fork: What It Meant?
The second Litecoin fork occurred on August 11th, 2015. Some key features were changed or added.
This update makes two main changes:
- Segregated Witness (SegWit) was implemented, which helps add more transactions to each block and speed up transaction times
- A new address version appeared, which starts with M while retaining the same prefix.
The first change, SegWit, is a proposed solution to synchronizing transactions and verifying them. It does this by “segregating” or separating signatures from other data so they no longer need to be attached in the blockchain (hence the name). As a result, more transactions can be fit into each block, and transaction times decrease.
The second change is meant to resolve problems with compatibility and simplifying Litecoin’s code while also making it so that upgrades don’t need to happen as often in future updates (by introducing new address versions which will start with L or M depending upon which version of Litecoin you’re using).
This fork has had some success since it’s one of the more recent forks. SegWit allowed for an instant decrease in transaction times and fees while allowing for better features to be added on top of this base code update (e.g., Lightning Network transactions).
Third Litecoin Fork: What It Meant?
The third Litecoin fork occurred on October 12th, 2017, and was a part of the SegWit upgrade made in August.
A new address version is launched, which starts with M while retaining the same prefix, and for every four months (roughly), this update will reduce block rewards by half until the block reward is only 0.25 Litecoin.
The first change to this version of Litecoin was another new address format while also reducing mining rewards by 50%.
This means that miners will have less incentive to mine since there are fewer rewards for doing so even though transaction fees remain about the same (as a result, you’ll likely see more fluctuations in hash rate here). The second part of this fork’s changes has already happened because it mimics Bitcoin’s halving schedule.
There haven’t been significant results from this update yet but expect some stability and security improvements after future forks occur on top of these base protocol updates.
Fourth Litecoin Fork: What It Meant?
The fourth Litecoin fork occurred on February 18th, 2018. This update was a part of the SegWit upgrade made back in August and introduced some fundamental changes:
- A new address version is launched, which starts with M while retaining the same prefix
- Every four months (approximate), this change will reduce block rewards by half until it becomes 0.125
The first significant change here is another addition to an existing Litecoin feature: decreasing mining rewards once more over time after previous updates reduced them already.
As mentioned before, every four months, the premium for mining each block falls roughly 50% from its original amount. Eventually, you’ll see less hash power available since there isn’t as much incentive to mine anymore (similar to the third fork).
Another way of reducing mining rewards sounds like a bad idea, but this update has already shown some benefits. Learn more about mining rewards at Byte Federal.
The second significant change was reducing that transaction fee even further than before. This is beneficial for Litecoin users since they can use it more without paying as much in fees (similar to SegWit transactions).
This makes Litecoin an even better option than other cryptocurrencies because you don’t have to worry about ever-increasing prices due to high demand and low supply.
Litecoin vs. Bitcoin
The significant difference between Litecoin and Bitcoin is that the transaction time for LTC transactions is much faster. It usually takes Litecoin around two-and-a-half minutes to generate a block, while it can take up to ten minutes with BTC! Other than this, they’re almost identical in every other way.
Furthermore, Litecoin has more currency units available for mining (84 million LTC vs. 21 million BTC). The block generation time is also shorter on average, with Litecoin being at around every two-and-a-half minutes compared to Bitcoins ten!
However, even though these differences give it an advantage over its predecessor, there are some drawbacks. These are, namely, transactions fees. With Bitcoin, it is much more expensive to transfer funds than it is with Litecoin.
Therefore, if you wanted to send $100 US dollars worth of BTC right now and we’re in a hurry, the fees would be around $20 or so. This makes sense since there are currently well over 200,000 unconfirmed transactions! However, with LTC, this fee would only go up by another dollar because we have fewer people using the network overall.
What is Litecoin? Your Understanding Enhanced
So, what is Litecoin, Litecoin is a fork of Bitcoin that has had several knives on its own. The significant difference between the two cryptocurrencies is in block generation time and transaction fees.
Lastly, the most recent update for Litecoin was a part of SegWit. This reduced mining rewards while also making transactions cheaper to carry out across the network overall.
If you’re interested in diving deeper into the world that is crypto, please check out some of the curated content on the sidebar. You will learn so much more, allowing you to make better decisions in this digital space.
