Litecoin (LTC) is one of the leading alternatives to the still inviolable Bitcoin.
It is the second currency ever created, back in 2011. The market capitalization (quantity in circulation) is 65 million, which currently puts it on the 7th place in the list of the largest cryptocurrencies.
Like other currencies on that list, LTC is a decentralized digital network through which users perform transactions without intermediaries. Therefore, this currency is not issued by the government or the central bank of any country.
Instead, it is powered by blockchain technology, which on paper guarantees a high level of security and efficiency. The concrete outcomes, however, depend on the quality of the LTC implementation on the concrete blockchain.
In addition to these features, it should be immediately noted that Litecoin has features, functions and benefits that set it apart from other currencies. In this text, we will explain them in an easy to understand way.
Basic Features and Functions of Litecoin
Litecoin is a peer-to-peer system for paying and performing LTC transactions between users.
It was created in 2011 by separating from the Bitcoin Core protocol. The founder is Charlie Lee, a former Google employee, who developed a scripting-based algorithm.
Like Bitcoin, LTC is created with the help of mining.
This process is based on computer records and processing of online transactions, as well as storing the corresponding data in blocks. Namely, before it becomes part of the blockchain, each transaction must be verified by users who fulfill the role of a miner. This is done through special hardware and mining programs, products that are available to everyone (the program is open-source).
Mining can be easily reported via ordinary computers and laptops, but in that case the process is much less cost-effective. Simply put, the devices on which we consume daily digital content lack the processing power to efficiently solve complex mathematical equations during transaction verification.
Practical Application and LTC Value
Any miner can access detailed block transaction data at any time.
What cannot be done is to check who owns the wallet. Thanks to the blockchain and the encryption system, private data is protected, so you don’t have to worry about your privacy. Encryption also regulates the process of creating new LTCs.
Miners cannot make LTC blocks at will, but only strictly respecting the cryptographic hash concept and other criteria. Those who manage to be the first to verify a new block in the network are rewarded with 25 Litecoins. At current exchange rates, that is about $ 1,087.
Note that there is a final limit to Litecoin’s offer. There will be a maximum of 84 million in circulation. That’s a hefty sum, four times the planned amount of Bitcoin. When this limit is reached, mining will no longer be possible.
This has a couple of important implications.
First, the reward in the form of new LTCs for miners will decrease over time. It was already halved in 2015, and the same will be repeated at regular intervals until the mining is completed and 84 million LTCs are in circulation.
Second, the Litecoin value does not depend on the decisions of institutions or central entities. The mentioned scarcity is what can preserve its value and precisely because of that scarcity it is not subject to the risk of hyperproduction. Inflation also does not affect it as in the case of all conventional currencies.
Benefits of Using Litecoin
LTC is a very secure payment and exchange system.
Any attempt at manipulation is easily detected by the miners. It is theoretically possible to commit fraud, but the chances of that are negligible, since the consent of the majority of miners would have to be obtained to confirm the fraudulent transaction. Of course, they have no interest in doing so because it would increase the risk of fraud in the entire system and reduce the value of the entire network.
Furthermore, the block creation time is shorter than that of the main competitors. The verification speed is excellent compared to BTC. The LTC network strives to process each block within 2.5 minutes, which is significantly faster than the 10 minutes Bitcoin users wait. This reduces the risk of delays in the execution of transactions.
Finally, the fees for performing the transaction itself are low. Regardless of its size, one thousandth of Litecoin is always paid. Compare that to bank transfers, credit cards, or the popular PayPal service, which for example takes a 3% commission on each transaction.
How to Buy and Use LTC?
If you are not able to do mining, you can get Litecoin in other ways.
One of them is to buy Litcoin using other crypto or fiat currencies. This is exactly what various stock exchanges are in charge of. All you have to do is select the stock exchange, open an account and the LTC wallet.
When you come into possession of LTC, you can spend it in various ways. There is a long list of sellers willing to accept this currency for products and services. Slowly, larger online stores are beginning to realize its potential.
There are risks when investing in this currency similar to those associated with most cryptocurrencies. These are sudden declines in value. Today’s price of Litecoin ($ 54.73) is still far from the historical heights reached in 2017 ($ 360.93).