Litecoin and Bitcoin are among the top cryptocurrency out now, and in this guide we will show you how they both differ in their respective ways.
Litecoin has embraced its origins as a Bitcoin fork and, rather than seeking to replace Bitcoin, is often marketed as “silver to Bitcoin’s gold.” This has led to a friendly and cooperative relationship between the Bitcoin and Litecoin communities, to the benefit of both.
Litecoin’s code remains closely synced to Bitcoin, although it differs significantly across three fundamental properties:
- Mining Algorithm
- Issuance Limit
- Faster Block Times
Litecoin mining uses the scrypt (pronounced “ess crypt”) algorithm rather than the SHA-256 used by Bitcoin or its forks. It’s debatable whether this has led to a more fair early distribution of coins than Bitcoin, but one definite advantage is that the world’s enormous SHA-256 hashrate is unable to be used maliciously against Litecoin.
A maximum of 84 million LTC will be created, four times more than the 21 million BTC limit. For economic reasons discussed in our recent article of Bitcoin’s supply limit, this helps to keep full LTC units more affordable than Bitcoin.
Faster Block Times
A new Litecoin block is mined every 2.5 minute on average. This is four times quicker than Bitcoin’s 10 minute average block time. Although faster block times don’t improve security, they do serve to ensure faster initial confirmation times and to keep transaction fees down. Another feature of quicker block times is that Litecoin’s mining Difficulty adjusts more rapidly.
A Brief Litecoin’s History
Litecoin was created by former Google and Coinbase developer, Charlie Lee. Lee implemented the scrypt algorithm in Litecoin to allow for mining Bitcoin and Litecoin simultaneously, although this is no longer possible. Litecoin had a fair launch, with only a tiny pre-mine of 150 LTC.
Litecoin became popular among amateur miners, who were being displaced from Bitcoin mining by the rising dominance of ASIC mining hardware. Litecoin’s ASIC-resistant scrypt algorithm initially restricted profitable mining to high-end graphic cards. However, in mid-2014 ASIC scrypt Litecoin mining hardware was released and has since become standard.
Although not nearly as well-known or widely-used as Bitcoin, Litecoin’s long history has made it a staple of the cryptocurrency world with considerable merchant adoption. Litecoin regularly achieves higher trading volumes and more transactions than coins with larger market caps, such as Bitcoin Cash.
In an August 2018 interview on the CNBC Fast Money show, Charlie Lee claimed that adoption is “surging” despite bearish market conditions. This was borne out by Litecoin’s eventual price recovery and continued relevance as a cryptocurrency.
In mid-2018, the Litecoin Foundation acquired a 9.9% stake in Germany’s WEG Bank AG. This partnership may pave the way to mainstream financial services for Litecoin.
One surprising aspect of Litecoin adoption was published in a February 2018 report by Recorded Future. Their research found that Litecoin is the most popular currency after Bitcoin for darknet market transactions. This is despite Litecoin having little in the way of privacy features.
In late October of 2020, it was announced that PayPal would integrate Litecoin as a payment option alongside Bitcoin, confirming LTC’s status as a mainstream cryptocurrency.
Litecoin’s development process is considerably more nimble than that of Bitcoin. This was demonstrated when Litecoin successfully implemented the Segregated Witness (SegWit) upgrade in May of 2017. SegWit was originally proposed for Bitcoin but its implementation was stalled due to political wrangling, only activating 4 months after its Litecoin integration.
As a result of SegWit integration, Litecoin is able to implement Bitcoin’s exciting new Lightning Network technology, in a manner which is cross-compatible with Bitcoin. This ensures that Litecoin will remain on the cutting edge of cryptocurrency innovation.
Litecoin’s reliance on Bitcoin’s codebase does have a downside, that being the duplication of vulnerabilities. For example, Litecoin was also exposed to a serious bug recently discovered in Bitcoin’s code.
In December of 2017, Charlie Lee sold all his LTC. In so doing, Lee sought to avoid any conflict of interest between his leading role in Litecoin (specifically as the Managing Director of the Litecoin Foundation and Litecoin code contributor) and his personal financial holdings.
Lee remains highly influential in Litecoin and the crypto space, with regular media appearances and over 840,000 Twitter followers. Lee comments regularly on the state of the crypto space as part of the Magical Crypto Friends talk show.
According to the current stats on Litecoinpool.org, Litecoin’s hashrate is very well distributed among 7 major Litecoin mining pools:
Choosing a Litecoin Wallet
If you already have a good Litecoin wallet you can skip this section.
Otherwise, you might be wondering why you even need a Litecoin wallet? Well, using our service is a bit like using a vending machine. You put your money in and Litecoin comes out – but you first need a way to receive your dispensed litecoins. This is what a Litecoin wallet does – lets you receive and store LTC, as well as spend it.
There are 4 types of wallet to choose between, listed in order of decreasing security:
1) Hardware Wallets
This is a specialized electronic device you plug into your computer or phone. Hardware wallets greatly improve the security of your Litecoin storage but cost around $100, whereas other wallet types are free. Hardware wallets, like the Trezor, Ledger, or KeepKey all support Litecoin, Bitcoin, and other cryptos. They can be combined with compatible models from the other wallet types listed below.
2) Software Wallets
Also known as desktop wallets, these run on your laptop or desktop computer. With proper computer security practices and a good password, they’re quite secure. There are two main varieties of software wallet; full or light.
Full software wallets download and sync the entire blockchain, which takes some time and hard drive space but requires less trust. Litecoin Core is the closest thing to an “official” wallet.
Light software wallets require no extra space or delays but rely on third-party servers for information. The Electrum Litecoin wallet is a good choice.
3) Mobile Wallets
This kind of wallet runs on your smartphone or tablet. Such wallets are convenient for making in-person transactions but not very secure, due to the low-security nature of mobile operating environment. LoafWallet is a good option for Android or iOS.
4) Web wallets
Web wallets run on a third-party websites, which you log into for access. Web wallets are the riskiest type of wallet, as they depend on the site staying online and resisting the efforts of hackers or evil insiders to steal your coins. The better ones allow shared control over your coins.
Tip: choose your wallet type according to the level of security which you feel is appropriate to the amount of Litecoin you intend to purchase.
Once you’ve decided on your wallet type, it’s very important to choose a trustworthy wallet from that category. Any wallet listed on the Litecoin.org site should be safe. Some research conducted into the proper use of your wallet would be a wise investment of your time.
Using Your Wallet to Receive LTC
Once your Litecoin wallet is running, it will generate a list of receiving addresses. These are long, random strings of characters which begin with an “M.” Here’s an example of a Litecoin address: MTvnA4CN73ry7c65wEuTSaKzb2pNKHB4n1.
Old Litecoin addresses began with a “3” but this format is discouraged as it leads to confusion with Bitcoin “3” addresses.
You should select any address from your personal Litecoin wallet to receive any LTC you purchase from Coinmama.
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