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Cryptocurrency of the Week: Litecoin

 

Litcoin has often been compared as the silver to Bitcoin’s gold. In this article, we take a closer look at this cryptocurrency which has been making larger and larger waves in the growing community of cryptocurrency investors and traders.

 


What is Litecoin?

Litecoin (price as of writing, LTC $313.42) is a digital currency that was founded in October of 2011 by former Google engineer, Charlie Lee. It was designed as a solution to the scalability and bottleneck issue of Bitcoin, and act as a complementary currency to Bitcoin.

“...I wanted Litecoin to complement bitcoin — not compete … Bitcoin can be used for moving millions of dollars between banks, buying houses, buying cars. It’s really secure… Litecoin can be used for cheaper things.” Charlie Lee

Often benched marked against Bitcoin (price as of writing, BTC $19,046.80) , here are some comparison between LTC and BTC.

 

Maximum Total Coins

Much of what gives cryptocurrency its value is the hard cap: with a limited amount, the currency gains its value from the market forces of supply and demand. While BTC has a cap of 21 Million, LTC has about 4 times that amount, with a market cap of 84 million. LTC’s block halving is also done every 840,000 blocks, four times more than BTC’s 210,000.

While the market cap of the tokens is important, it is equally important to note that BTC and LTC can be divided into tiny fractions of a full coin. The current minimum transaction amount for BTC is 0.00000547 BTC.

 

Speed of Transactions

Possibly the greatest draw to LTC would be the speed of its transactions. BTC has a transaction confirmation time of about 10 minutes per transaction, while LTC does it in a quarter of the time at 2.5 minutes per transaction.

Moreover, LTC has Segregated Witness (SegWit) activated, meaning that about 3MB of space is freed up per block, making its blockspace 4 times larger than that of BTC. While BTC has attempted to integrate SegWit, it has thus far not been successful.

Another factor that contributes to speed thus far has been the smaller levels of transactions going on in LTC. The demand for BTC transactions has swelled rapidly in the past year, resulting in higher transaction fees as supply is constantly having to keep up. On the other hand, LTC has yet to see such a level of transaction.

 

Mining Process

While not that important for consumers looking to trade LTC, it is still useful to know that LTC and BTC use different cryptographic algorithms. BTC uses the SHA-256 algorithm, which to date has not been compromised. BTC mining today requires the use of Application-Specific Integrated Circuits (ASICs), which are designed for the sole purpose of mining Bitcoins. This makes mining largely inaccessible to the average person on the street.

On the other hand, LTC uses Scrypt, a memory hard key-derivation function. In layman’s terms, it makes it more accessible to newcomers. The memory hard function means that it requires RAM to be solved, and is less condusicve to ASIC-based mining; this levels out the playing field for miners. It also uses less energy to run, which is an important aspect when newcomers join the market.

That being said, there are currently Scrypt ASICs in the market now, which might once again raise the barrier to entry for mining LTC.

 

Exchanges

LTC has recently been included to Coinbase, making it easy to purchase LTC with fiat. This is a large obstacle crossed for acceptance into the mainstream market.

For an ordinary person on the street, it can be very confusing to convert fiat into BTC or ETH, and from there use a cryptocurrency exchange to hedge it into LTC. With the acceptance of over the counter purchase of LTC, it now gains increased prominence to the mass market.

LTC is still lagging far behind BTC in terms of popularity, and there are more exchanges that accept fiat for BTC. While it still has some ways to go, there is a good chance that LTC over the counter purchases will be more and more adopted by exchanges.

 

Conclusion

All in all, LTC is basically what its founder intended for it to be: a cheaper, faster currency for purchases of smaller items. It is also more accessible to the masses, both because each individual coin is cheaper, as well as due to easier entry into LTC mining.

All in all, LTC is basically what its founder intended for it to be: a cheaper, faster currency for purchases of smaller items. It is also more accessible to the masses, both because each individual coin is cheaper, as well as due to easier entry into LTC mining.

 

 

Safe Investing!

Mike