Litecoin is a digital currency similar to Bitcoin, one of the dozens of cryptocurrencies that have arisen since the introduction of Bitcoin. Litecoin is one of several cryptocurrencies which have been growing in popularity in recent years, with a market capitalization over $13 billion and price of $238.67, as of January 2018.
Regarding market capitalization, Litecoin is the ninth most prevalent cryptocurrency today, behind Bitcoin, Ripple, Ethereum, Bitcoin Cash, Cardano, NEM, Tron, and Stellar.
Litecoin is defined on its website as “a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities.”
Litecoin was initially established using many components of Bitcoin, with a few alterations to improve upon Bitcoin weaknesses as perceived by Litecoin’s founders. Today, Litecoin is a well-known cryptocurrency seen as complementary to Bitcoin.
This article will explore everything you need to know about Litecoin, including background information about cryptocurrencies, Litecoin history, how to purchase or trade Litecoin, and current Litecoin prices and rates.
Because Litecoin is a cryptocurrency, it’s important to understand the basics of cryptocurrencies before diving into more Litecoin-specific information.
Cryptocurrencies were initially created with a goal of establishing digital currency that is independent of any government influence. The value of traditional currencies, such as the dollar or euro, is significantly impacted by government policy and actions, including inflation, interest rates, tariffs and more.
Cryptocurrencies are designed to be decentralized from any single authority or entity, allowing users to send and receive funds without an intermediary. Bitcoin was the first cryptocurrency, created and released by Satoshi Nakamoto in 2009.
Since there is no central authority or administrator of a cryptocurrency, it instead exists in a public ledger available for any users to see. This ledger, also known as a blockchain, maintains a record of every transaction in the history of a particular currency, is publicly available to view yet unalterable.
Transactions are added to the blockchain through the process of mining. When a transaction occurs, it is placed within a block of recent transactions. A new block with the latest transactions is generated at a pre-defined interval. Then other users must then verify the transactions within that block, through a complicated process called mining. Once transactions within a block are verified, that block is added to the chain of previous blocks (hence the term “blockchain”), and those records are permanently recorded.
Though mining is an elaborate, complex process, miners are rewarded for doing so. The first miner to verify a particular block is rewarded with additional funds from that currency (e.g., bitcoins, litecoins). This process is the only way coins are released within a cryptocurrency, and only a set number of coins can be mined.
Litecoin was created in 2011 by software engineer Charles Lee, in concert with a six-person team. Lee and the other founders saw some flaws in Bitcoin they wanted to address when creating Litecoin.
Their goal was not to replace Bitcoin but to create a “silver” cryptocurrency complementing Bitcoin’s “gold,” or a “lite” version of Bitcoin. Litecoin is closely based on Bitcoin in many fundamental ways, but has some benefits over Bitcoin. They aimed to make Litecoin smarter, cheaper and faster than Bitcoin. Below are differences between Bitcoin and Litecoin in several vital areas.
Block Generation Time
As described above, the latest transactions of a cryptocurrency are grouped into a block automatically generated by the cryptocurrency network. Once that block is created, a miner can verify those transactions using complex calculations and software, after which makes that block becomes a permanent part of the blockchain (or transaction ledger).
- Bitcoin generates a block every 10 minutes
- Litecoin creates a block every 2.5 minutes
Because mining blocks is extraordinarily complicated and time-consuming work, miners are rewarded with new coins for each block mined. That reward is cut in half at pre-determined intervals, as more and more coins are released.
- Initial reward per block: 50 bitcoins
- Block reward is halved every 210,000 blocks
- Current reward per block: 25 bitcoins
- Initial reward per block: 50 litecoins
- Block reward is halved every 840,000 blocks
- Current reward per block: 25 litecoins
One of the most significant differences between Bitcoin and Litecoin is the mining algorithm. Bitcoin uses the SHA-256 algorithm, while Litecoin mining uses an algorithm known as Scrypt. The algorithm for each cryptocurrency relates to how users can mine individual blocks.
Put simply, Bitcoin mining today has advanced to a point where only experts using special hardware systems can mine Bitcoin. Litecoin founders hoped that their algorithm would keep Litecoin mining more fair and accessible to everyday users.
Maximum Number of Coins
Both Bitcoin and Litecoin have a maximum number of coins that will ever be produced. Litecoin was designed to create four times as many coins, as the founders felt that would keep it from becoming too scarce and therefore too expensive.
- A limit of 21 million bitcoins will be produced
- A limit of 84 million litecoins will be produced
Like Bitcoin and other cryptocurrencies, litecoins are stored within a digital wallet. It is essential to keep in mind that the litecoins themselves are not physically stored within the Litecoin wallet, but rather the total value of your litecoins is stored. Your wallet also allows you to send and receive litecoins, and monitor your transaction history.
Your Litecoin wallet, like other cryptocurrency wallets, is protected using cryptography. This means that you have a private key (known only to you) and a public key. Other users can send or receive funds from your using your public key, and you must use your private key to access your account. It is imperative that your private key is kept in a secure place, as that is your only way to access your litecoins.
There are multiple types of wallets, including software you install on your computer, hardware that connects to your computer and web-based wallets from a third-party provider. Each has unique features, functionality, and benefits, depending on your expertise and desired level of control over your litecoins. Some wallets only manage Litecoin, while others allow transactions within multiple currencies.
When researching Litecoin wallets, consider your experience with cryptocurrencies, as well as how and where you want your litecoin data stored (e.g., natively on your computer vs. a third-party server). The most significant concern to consider is the security and reputation of the provider, to ensure protection of your Litecoin.
While your wallet will securely store your litecoin data and allow for sending and receiving funds, you need to visit a Litecoin exchange to purchase litecoin. Buying and selling of litecoin is sometimes also referred to as litecoin trading.
There are fewer exchanges available for trading Litecoin than Bitcoin, but there are still several good options out there. You will find Litecoin under the symbols LTC or XLT on exchanges. Today, one of the easiest ways to buy litecoins is to purchase them with bitcoins. More exchanges support this option, and it is usually the fastest and cheapest option.
If you want to buy litecoin using traditional currency (such as the U.S. dollar), it may be more cumbersome and tougher to find an exchange that will support that transaction. This Litecoin website offers some suggestions for exchanges that support Litecoin.
As you explore buying and selling options, it’s crucial to beware of so-called litecoin generators. These generators may promote themselves as a service to generate free litecoins, but they are all scams in one way or another. The only way to acquire litecoin is to mine it yourself, or more commonly, to buy it through an exchange.
You may also find it useful to download a Litecoin app. Several options are available for Litecoin mining, Litecoin wallets, and other Litecoin needs.
Litecoin Value, Price and Rate
If you are interested in buying Litecoin, you first want to check on the current Litecoin price. You can find a Litecoin chart with up-to-the-minute Litecoin market capitalization and rates on any number of sites online. Many of those sites also offer the ability to calculate the Litecoin rate in other currencies, whether Bitcoin, USD or others.
The value of Litecoin changes many times a day. For example, on January 4, 2018, at 7:00 pm CST, according to www.coinbase.com, Litecoin price was $238.17. Throughout the day it ranged from $227.23 to $244.51. In the past 30 days, the price was as low as $96.94 and as high as $371.74.
You may also want to keep an eye on Litecoin’s market capitalization, which measures how much of a currency is in circulation at a given time. As of January 2018, Litecoin had a market capitalization of over $13 billion, making it the ninth most prevalent cryptocurrency. For reference, Bitcoin’s market capitalization is currently over $257 billion.
Before purchasing or selling Litecoin, be sure to research current pricing trends and consider consulting with a financial expert or advisor.