What is Litecoin for Dummies | Litecoin Review

What is Litecoin?

Started in 2011, Litecoin (LTC) was one of the first blockchain projects to branch off of Bitcoin. Thus, the core technology is the same with a few key differences. Most notably, its transactions are faster and cheaper, and it is easier for individual miners to participate in the network.

As one of the few cryptocurrencies directly exchangeable for fiat currency (dollars, euros, yen, etc.), it has become popular as a speedy, low-cost way to purchase other coins, as well as a medium of exchange in its own right. It experienced a major surge of interest in late 2017, when Bitcoin’s slow transaction times and high fees began to turn off many users.

How Litecoin works

Litecoin is a clone of Bitcoin with some tweaks. When you make a transaction with either of these cryptocurrencies, your request is placed into a block of transactions. This goes to multiple other computers for verification. These computers solve the block’s math problems, see that your transaction is unique (no double-spending!) and valid, and send in confirmations. Once a block is confirmed the ledger is updated with the new account values, and your transaction has gone through.

LTC’s fast and cheap transactions are due to new blocks being generated every 2.5 minutes, as opposed to Bitcoin’s block-generation rate of 10 minutes. This means your transaction doesn’t have to wait long before it can be sent around for confirmation.

With the network’s ability to process more blocks simultaneously, and do it faster, LTC transactions will probably remain very cheap, especially relative to Bitcoin. With the mining limit for LTC set at 84 million (four times higher than Bitcoin), there is a lot of room to scale these benefits up.

The most technical difference between BTC and this coin is the hashing algorithm they each use to generate each block's math problems for miners to solve. While Bitcoin uses SHA-256, which depends on processing power, Litecoin uses Scrypt, which uses memory (RAM, GPUs, etc.). Basically, this means that there can be more individual miners to balance out big companies, making the network more decentralized.

Recent major developments

Charlie Lee, Litecoin’s founder, has been very active in its development and marketing. Recently, however, he sold off his entire stake of LTC, saying that he wanted to remove his personal interest and focus only on improving it. This caused a minor panic among investors, and though there was no lasting damage, it raised concerns about how much public influence Lee wields.

In May 2017 the network implemented Segwit, which Bitcoin has since adopted as well. Put simply, this update allows more transactions to be executed at once, and prepares it for even more future upgrades.

How to buy Litecoin

Litecoin’s coin is mostly bought and sold on Coinbase.

  1. Register for a Coinbase account and verify your information.
  2. Link your preferred payment method to deposit funds.
  3. Buy Litecoin on Coinbase's exchange, and you’re done!

Fun fact

Before his cryptocurrency career, Charlie Lee graduated from MIT and worked at Google. He has also been involved in the development of Coinbase, currently the world’s biggest exchange between fiat currency and cryptocurrencies.

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