Home Commercial Awareness Litecoin, Silver To Bitcoin’s Gold

Litecoin, Silver To Bitcoin’s Gold

by Olga Pilat

Litecoin is one of the earliest and the most popular cryptocurrencies. It was created in 2011, had a major boost in 2013 and now continues smoothly in 2021 with a price of USD 370,05. With about 4000 cryptocurrencies on the market, Litecoin is known for its resemblance to Bitcoin and its transaction speed. But what exactly is Litecoin and what makes it unique?

The Beginning of Litecoin

Litecoin was founded in 2011 by Charlie Lee. To create Litecoin, Lee copied the Bitcoin codebase, increased the total supply, and changed the speed at which new blocks were added to the blockchain. He intended Litecoin to be a “lite version of Bitcoin.” What he meant is a connection of Bitcoin’s valuable features with certain improvements. He intended Litecoin to be a complement to Bitcoin, not its competitor.

Now, Litecoin enjoys a stable position among other cryptocurrencies. The Litecoin price today (12th May 2021) is USD 370,05 with a 24-hour trading volume of 7 770 883 706 USD. The current CoinMarketCap ranking is #11, with a live market cap of 24 701 889 024 USD. It has a circulating supply of 66 752 415 LTC coins. So what made Litecoin successful when many others have failed?

What Exactly is Litecoin?

Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open-source software project released under the MIT/X11 license which gives the buyer the power to run, modify, and copy the software and to distribute modified copies of the software. Miners are currently awarded 12.5 new litecoins per block, an amount that gets halved roughly every 4 years (every 840,000 blocks).

Litecoin vs Bitcoin

Litecoin and Bitcoin have a lot in common as it is said Litecoin was created to be “silver to Bitcoin’s gold”. They are both decentralized cryptocurrencies. They are both proof of work ecosystems. Both can be bought via exchange or mined using a mining rig.

There are also a few differences. When it comes to market capitalization, the total value of Bitcoin is about 70 times larger than that of Litecoin. In terms of distribution, Bitcoin can never pass 21mln coins and Litecoin can accommodate up to 84mln coins.

Higher Transaction Volume

The Litecoin blockchain is capable of handling higher transaction volume than its counterpart – Bitcoin. Due to more frequent block generation, the network supports more transactions without a need to modify the software in the future.

In other words, Litecoin can produce a greater number of coins than Bitcoin and its transaction speed is faster. This matters to investors for whom the cost of the transaction and the speed might be important factors. However, it does not impact the value or usability of the currency.

SHA-256 vs Scrypt

Bitcoin and Litecoin use fundamentally different cryptographic algorithms. Bitcoin uses the longstanding SHA-256 algorithm and Litecoin uses an algorithm called Scrypt. What differentiates the Scrypt function from the SHA-256 function is that it is also memory intensive.

Scrypt is memory intensive because as well as requiring miners to generate numbers rapidly, these generated numbers are stored in the Random Access Memory (RAM) of the processor, which then needs to be accessed before submitting a result.

The reason given by Lee as to why he chose Scrypt over SHA-256 is the following: “using Scrypt allows one to mine Litecoin while also mining Bitcoin,” meaning that “Litecoin will not compete with Bitcoin for miners.”

Conclusion

Litecoin is closely connected to Bitcoin from the beginning of its existence. However, it turned out to be its complement rather than a competitor. Even without public support like Dogecoin had and without the uniqueness of Ethereum, Litecoin remains one of the most important cryptocurrencies thanks to higher transaction volumes and greater accessibility. Litecoin’s position likely won’t change shortly.

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