What is litecoin?
Litecoin is a p2p online currency that allows users to make payments with a minimum fee anywhere in the world. It is a global, decentralized, open-source payment network, released under the MIT/X11 licenses. Appearing at the beginning of the cryptocurrency industry, Litecoin was a fork of Bitcoin with a slightly modernized blockchain code. However, it has gone from a practically unknown coin to being the holder of the “Digital Silver” title in just two years of life. Litecoin went "to the moon" - becoming the first altcoin with a capitalization of $1 billion.
Litecoin (LTC) is a decentralized payment system with no smart contract function, unlike Ethereum. Litecoin is a digital currency for making secure payments without the participation of intermediaries (for example, banks).
Litecoin was created by former Google developer Charlie Lee. The release of the first Litecoin client (ver.0.8.5.1) took place on 07/10/2011, that day the project code was published on GitHub. However, Charlie Lee considers Litecoin's official birthday as 13/10/2011. LTC remained unknown until 2013 when, in January, it showed a phenomenal growth of 2000%. By the end of November 2013, the market capitalization of Litecoin was $1 billion, with the crypto community beginning to consider Litecoin as a cryptocurrency that could perhaps replace Bitcoin in the future.
LTC tokens have not been issued through ICO. Moreover, at the beginning of development, Litecoin had neither a company nor even a team - Charlie Lee was engaged in everything.
The Litecoin crypto is also supported and developed by Litecoin Core, which includes the Litecoin developers team and other specialists from the Litecoin Foundation. They work together on the technical development of the project, as well as advertising, marketing, and the popularization of Litecoin.
The Litecoin blockchain is four times faster than the Bitcoin network, able to generate 1 block in 2.5 minutes with a network speed of about 56 transactions per second. The Litecoin network added support for the Lightning Network technology in September 2017. The Lighting Network was implemented to increase scalability and user privacy and is an add-on to the main blockchain that can fully interact with it. The Lightning Network does not allow the registration of any transactions between users on the blockchain. The partners that regularly interact in the network open so-called "payment channels", where all intermediate transactions are stored inside the channel, and only the opening and closing dates are recorded in the main blockchain. All intermediate transactions are conducted outside the main chain. The introduction of this technology has improved the scalability of the Litecoin network and made it possible to send LTC without fees.
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Another soft fork in the Litecoin network was Segregated Witness (SegWit). The block size in Litecoin was restricted by 1 MB, impacting the network speed. SegWit takes a section of the code with a digital signature and puts it in the sidechain (with 4 MB blocks), beyond the basic structure of the blockchain. It increases the efficiency of the usage of the main blocks and makes possible the inclusion of more transactions inside one block. Segwit also allowed the doubling of block size in the Litecoin network.
However, there was a problem with the digital signature, which could be corrected after a transaction appeared in the block. This situation provided a chance to change the transaction identifier (hash). Plasticity disappears in SegWit, as making changes to the digital signatures no longer leads to transaction hash replacement. All transactions are confirmed faster with no more obstacles to prevent high-speed payment channels. It also reduces transaction fees.
Another relevant technology that was introduced in Litecoin is atomic swaps. Litecoin creator Charlie Lee announced the successful conduct of three cross-chain transactions at once: with Decred (DCR), Vertcoin (VTC), and Bitcoin (BTC) at the end of September 2017. The Litecoin developers managed to combine the capabilities of atomic swaps and smart contracts that laid down certain conditions. For example, Charlie Lee sent 10 LTCs to his partner and he received them only after sending 0.1137 BTCs in return.
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How to mine Litecoin?
Litecoin is a fork of Bitcoin, but Charlie Lee made some changes to the source code, allowing faster, cheaper, and more secure transactions. Unlike Bitcoin, which uses the SHA-256 hash algorithm, Litecoin uses a different encryption algorithm called Scrypt. The key task of Scrypt is to complicate the process of block generation by increasing the resource requirements used for computing operations. The main difference is that it is more demanding on RAM, but the requirements for power consumption are much lower than SHA-256. The speed of generating blocks in a Scrypt-based blockchain is about 30 seconds. Its hashrate is measured in Megahash per second (MH/s). The key aim of the algorithm is to make it more difficult to monopolize mining. At the initial stages of Litecoin development, the Scrypt feature made it possible to make LTC mining “ASIC-resistant”. The early miners produced LTC coins using CPU and GPU. However, everything changed after the mining giant Bitmain developed the ASIC miner for Scrypt in 2014.
Consensus in the Litecoin network is achieved through the Proof-of-Work algorithm, i.e., miners solve a complex mathematical problem for block generation and receive a reward. The Litecoin code indicates the maximum number of issued coins - 84 million LTC in total. The blocks are created every 2.5 minutes, which is 4 times faster than on a Bitcoin network. The amount of coins received as a reward is reduced every 840,000 blocks. This process is called Litecoin Halving.
Litecoin Halving History:
- The first Halving was on 08/08/2015, reducing the size of the reward from 50 to 25 LTC. At the time of the first halving, 840,000 blocks were generated and 50% of LTC (42 million LTC) was mined.
- The second Halving was on 05/08/2019, reducing the size of the reward from 25 to 12.5 LTC. At the time of the second halving, 1,680,000 blocks were generated and 75% of LTC (63 million LTC) was mined.
- The next (third) Litecoin Halving is expected on approximately 03/08/2023. 2,520,000 blocks and 73.5 million LTC will be mined. This time, the reward will drop from 12.5 to 6.25 LTC coins.
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