Bitcoin isn’t the only cryptocurrency out there. There are literally thousands of them. Most of them have no value and are little more than experiments or scams. But some of the cream has risen to the top and one of the first successful altcoins still consistently sits near the top and that is Litecoin. Find out how it works in our Litecoin guide.
What Is Litecoin?
Litecoin is often called the silver to Bitcoin’s gold. It doesn’t try to do too much but just acts as a stable, faster alternative to bitcoin. As you may already know, cryptocurrency transactions are processed in groups called “blocks”. Every cryptocurrency has their own “block time” that is, the amount of time it is estimated that it will take for a block to be processed by the miners. Bitcoin has a 10-minute block time while Litecoin has a 2.5-minute block time. Meaning that in theory and so far in practice, Litecoin transactions are processed much quicker than Bitcoin transactions.
Just like silver compared to gold, there are also a lot more Litecoins in existence than Bitcoins. While Bitcoin is limited to 21 million total coins, Litecoin will have 81 million coins when it is fully mined. Another difference is its mining algorithm. Bitcoin uses SHA-256 while Litecoin uses Scrypt. Scrypt uses less computational power than SHA256.
In theory, this makes mining Litecoin more accessible for the average person than mining Bitcoin. However, it still requires expensive hardware (though not nearly as expensive as Bitcoin) and some technical know-how. In absolute numbers, the Litecoin blockchain is not as secure as bitcoin’s because it would take less computational “work” to forge it. However, the network has grown large enough that it would still take an almost inconceivable amount of computational power to overtake it.
Litecoin’s founder is a known entity. Charlie Lee is the founder of Litecoin and while he sold off his Litecoin holdings to avoid conflicts of interests, he is still considered the spiritual leader of the community. Bitcoin, on the other hand, was invented by an anonymous developer using the pseudonym Satoshi Nakamoto, who has since left the community and spotlight.
There are advantages and drawbacks to having a known creator. But his leadership role is more defined than the various large actors in Bitcoin. This has led to a less dramatic development schedule. Litecoin has consistently been able to add more scaling technologies with less community fighting and has not had a contentious fork, like the Bitcoin Cash and Bitcoin Gold forks.
For these reasons, more so than its faster speed, Litecoin is considered a good hedge against Bitcoin. While many investors look for alternative coins that have features bitcoin doesn’t or can’t have, Litecoin is just a slightly more effective and less dramatic version of bitcoin.