All about Litecoin and Its Mechanism
Key points
- Litecoin is a peer-to-peer, open sourced, decentralized blockchain.
- It is similar to Bitcoin but with some upgrades that makes it faster and lighter than Bitcoin.
- Litecoin has been accepted by PayPal and Venmo as a payment method on their platform.
Litecoin has been in the crypto space almost as long as Bitcoin. In 2011, Charlie Lee a software engineer at Google created Litecoin to counter some of the efficiencies of Bitcoin. Litecoin is quite similar to Bitcoin with some minor updates.
What is Litecoin
With its inception in 2011, Litecoin has been an open sourced decentralized blockchain that uses Proof-of-Work as a consensus mechanism for providing peer-to-peer cryptocurrency transactions. The native token of Litecoin is known as LTC. At the time of writing, Litecoin has a market cap of over $11 billion with a single LTC priced at $160. This ranks Litecoin at the 18th spot on the list of cryptocurrencies as per market cap.
How Does it Work?
Litecoin works according to the Proof-of-Work consensus mechanism in which the validators are required to solve the mathematical puzzles to mine the LTC and to validate and secure the blockchain network. Litecoin uses Scrypt Hashing Algorithm for mining making it more energy efficient to its counterpart Bitcoin.
How is it Different from Bitcoin?
Though there are similarities between Litecoin and Bitcoin, but Litecoin was created to address some of the problems associated with Bitcoin and thus the points or difference are highlighted below:
- Consensus Mechanism: Though both uses PoW consensus, Litecoin uses a more efficient hashing algorithm when compared to SHA-256 by Bitcoin. Scrypt uses both computational power as well as memory power to mine blocks making it a more energy efficient network.
- Block Confirmation Time: Bitcoin has a block confirmation time of 10 minutes making it a slower network for small transactions whereas Litecoin has a block confirmation time of 2.5 minutes making it 4 times faster as compared to Bitcoin.
- Total Coin Supply: The total coin supply of Litecoin is 84 Million as compared to Bitcoin’s total supply of 21 Million.
- Halving Mechanism: Halving in Litecoin occurs after every 840,000 blocks as compared to Bitcoin halving that occurs every 210,000 blocks reducing the mining rewards by 50% every time.
Future Roadmap
Litecoin now fully supports Lightning Network, which is a Layer 2 protocol that runs over its underlying protocol to make blazing fast transactions with further decrease in fees for transactions. PayPal and Venmo, the two largest payment aggregators in the world, have accepted LTC as a payment method on their platform paving the path for its future and good news for its holders.
Disclaimer: The article is just to provide information and shouldn’t be considered as any financial advice. It is advisable to conduct thorough research before investing in any cryptocurrency.
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