Litecoin (LTC) is a peer-to-peer cryptocurrency built on blockchain technology and often referred to as “silver to Bitcoin’s gold”.
Designed to complement Bitcoin, Litecoin focuses on processing smaller transactions quickly and efficiently, making it a practical digital payment option.
Released as a fork of Bitcoin in 2011, its primary difference is its decreased block processing time—2.5 minutes compared to Bitcoin’s 10 minutes—allowing for faster transaction confirmation. Litecoin also features improved storage efficiency and uses a slightly different Proof of Work (PoW) consensus mechanism.
Who created Litecoin?
Litecoin was developed in 2011 by Charlie Lee, a former Google and Coinbase engineer. Lee used Bitcoin Core client to create Litecoin.
In 2017, Lee became the Director of the Litecoin Foundation to focus entirely on the development and adoption of Litecoin. As a result, he sold his entire LTC holdings to avoid potential conflicts of interest. In 2024, he pledged up to $1.25 million in matching funds to the Litecoin Foundation over five years.
How does Litecoin work?
Litecoin is built using blockchain technology, and its transactions are validated and recorded in an immutable ledger.
Litecoin key features
Similar to payment cryptocurrencies like Bitcoin and Ripple, Litecoin’s main features are:
- Security: Its structure makes Litecoin highly resistant to hacks.
- Peer-to-peer: Transactions occur directly between users rather than through an intermediary.
- Immutable: Once confirmed, transactions cannot be altered or undone.
- Transparent: The entire transaction history is publicly accessible.
- Private: even though transactions are public, the actors remain pseudonymous.
Litecoin vs Bitcoin
Litecoin was created as a lighter, faster alternative to Bitcoin, targeting smaller and quicker transactions. Here’s how the two cryptocurrencies differ:
- Block Time
- Litecoin: 2.5 minutes
- Bitcoin: 10 minutes
- Minin algorithm:
- Litecoin: Scrypt algorithm.
- Bitcoin: SHA-256 algorithm.
- Total coin supply:
- Litecoin: Max supply of 84 million coins.
- Bitcoin: Max supply of 21 million coins.
- Scalability:
- Litecoin: 56 transactions per second
- Bitcoin: 7 transactions per second
What is Litecoin’s consensus mechanism?
As mentioned, Litecoin uses a PoW consensus mechanism with the Scrypt algorithm.
The algorithm is designed to be memory-intensive rather than computationally demanding (like Bitcoin’s SHA-256), which reduces the advantage of specialized hardware like ASICs. This helps make mining more accessible to individuals using general computers in an effort to increase the decentralization of the coin.
Further, Scrypt enables faster block creation, reduced energy consumptions and quicker transaction speed, which are all important features for Litecoin to work.
Halving and scarcity
Similar to Bitcoin, there is a Litecoin halving event approximately every four years that reduces the mining rewards by half to ensure a predictable decrease in new coin supply.
The most recent halving occurred in 2023, reducing the block reward to 6.25 LTC.
New Litecoin developments
In 2024, Litecoin made headlines by rebranding LTC as a memecoin and used a creative social media campaign aimed to capture the crypto community’s interest in the biggest crypto category topic of the 2024 bull run.
This change highlighted Litecoin’s adaptability and effort to stay relevant by positioning Litecoin as a playful yet reliable player in the space.
In addition to memecoins, developers have forked Bitcoin ordinals to give Litecoin their first set of NFTs. The development leverages Litecoin’s scalability and low fees to attract a diverse range of creators and developers.
Litecoin essentials
- Litecoin (LTC) is a peer-to-peer cryptocurrency created in 2011 as a faster and more efficient alternative to Bitcoin, featuring 2.5-minute block times, improved scalability, and the Scrypt PoW consensus mechanism.
- Litecoin is highly secure, transparent, and scalable, handling up to 56 transactions per second with halvings occurring every four years to maintain scarcity and control supply.
- In 2024, Litecoin embraced memecoins and NFTs to stay relevant, leveraging its low fees and scalability to attract developers and engage the crypto community.