What is Litecoin?
Litecoin (LTC), conceived by former Google engineer Charlie Lee, emerged as one of the pioneering “altcoins,” referring to cryptocurrencies beyond Bitcoin (and sometimes Ethereum).
According to Jay Blaskey, a digital currency specialist at BitIRA, “Litecoin, originating from the Bitcoin protocol in 2011, stands as the second-oldest cryptocurrency.” It was designed to facilitate swift, secure, and cost-effective transactions, essentially serving as a derivative of Bitcoin.
The primary aim behind Litecoin’s launch was to enhance certain aspects of Bitcoin. Charlie Lee introduced a novel hashing algorithm for Litecoin known as Scrypt, pronounced as “S-crypt.” This simplified algorithm facilitated faster transaction speeds for Litecoin. Unlike Bitcoin, which processes transactions at a sluggish pace of around five transactions per second and takes approximately 10 minutes to generate new blocks on its blockchain.
The sluggish transaction speed of Bitcoin often poses frustration for merchants seeking to accept it as a form of payment. Waiting for the six confirmations required for a Bitcoin transaction can typically take up to an hour on average, akin to being stuck on the “transaction processing” screen for an extended period when making an online purchase with a credit card.
In contrast, LTC boasts a transaction processing speed of 54 transactions per second, with new blocks on its blockchain being created approximately every 2.5 minutes. Although most exchanges require a minimum of six confirmations for LTC transactions to be irreversible, peer-to-peer (P2P) crypto payment networks can often settle Litecoin transactions nearly instantaneously.
This enhanced transaction speed aimed to alleviate merchants’ frustration with Bitcoin’s prolonged settlement times. Instead, by embracing LTC, merchants could expedite payments and conduct business more efficiently, aligning with the swiftness observed in other digital payment methods.
How does Litecoin work?
LTC operates on a decentralized network akin to Bitcoin, employing blockchain technology to document and authenticate transactions via a Proof of Work (PoW) consensus mechanism. Within the LTC network, nodes uphold a copy of the blockchain and partake in the validation of transactions.
Transactions conducted on the LTC network are organized into blocks, which are appended to the blockchain through the process of mining. Miners utilize computational power to solve intricate mathematical puzzles, with the initial miner solving the puzzle being entitled to add a new block to the blockchain. As a reward for their efforts, miners receive newly generated Litecoins.
A notable point of differentiation between Litecoin and Bitcoin lies in the hashing algorithm employed for mining. Litecoin utilizes Scrypt, a memory-intensive algorithm, which serves to deter the dominance of large-scale mining operations over the network.
Furthermore, Litecoin boasts a swifter block generation interval of 2.5 minutes compared to Bitcoin’s 10 minutes. Consequently, this facilitates expedited transaction confirmations. Additionally, LTC’s maximum coin supply stands at 84 million, four times higher than Bitcoin’s capped supply of 21 million.
In essence, LTC endeavors to present a prompt and more effective substitute to Bitcoin for everyday transactions, all while upholding the fundamental tenets of decentralization and security.
How to mine Litecoin?
ASIC mining machines come pre-installed with mining software, making them suitable for Litecoin mining. Conversely, if you opt to mine using a central processing unit (CPU) or graphical processing unit (GPU), you’ll need to select your own mining software while prioritizing security.
It’s important to be vigilant against malware that may be embedded in mining software, as well as other potentially nefarious activities. Once you’ve acquired your mining equipment, you must decide whether to mine independently or join a mining pool.
Mining solo carries the risk of long periods without discovering a block. However, if you do find a block while mining solo, you retain the entire reward of 25 Litecoin plus transaction fees, provided you possess a significant amount of hash power, typically from multiple ASICs.
