What is Litecoin?

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What is Litecoin?

So, what exactly is Litecoin?

Litecoin is a distributed, decentralized, peer to peer cryptocurrency and blockchain infrastructure. Litecoin is currently the 7th largest cryptocurrency with a current market capitalization of $2.8 billion. Similarly to Bitcoin, and as one of the largest and most legitimate competitors, Litecoin is a store of value and digital payment ecosystem with the goal of being able to quickly and cheaply transfer value without the use of an intermediary or third party.

Litecoin is not issued by any central authority and has no single point of failure, making it a decentralized protocol where each transaction is verified by miners. Miners, or people who mine cryptocurrency, are people or entities using computing power to solve complex equations and validate the legitimacy of each transaction. The total supply of Litecoin that will be produced is fixed at 84 million litecoins, with a new block being generated every two and a half minutes until the entire currency supply has been rewarded to miners.

Who invented Litecoin?

Former Google employee Charlie Lee created Litecoin in 2011 as a spinoff and alternative to Bitcoin. Lee saw what he perceived as flaws in Bitcoin’s blockchain that he sought to fix, such as Bitcoin’s high fees and transaction times. Lee wanted the ability for the blockchain to confirm more transactions at a quicker pace, so he reduced the block confirmation timing from Bitcoin’s 10 minutes down to 2.5 minutes. This means that Litecoin has the ability to be 4 times faster than Bitcoin because it can process transactions 4 times faster. Every 2.5 minutes a new Litecoin block is mined and the validator receives 12.5 LTC for validating the transactions of the block.

Why was Litecoin invented?

Although Bitcoin is the first and preeminent cryptocurrency, Charlie Lee wanted to create an alternative fit to differing specifications. If the specifications added value to users that they did not feel they received from Bitcoin than some users would migrate to the Litecoin network, which they did. Litecoin is one of the first and still one of the most popular ‘altcoins’ or alternative cryptocurrencies to Bitcoin.

How does Litecoin differ from traditional currencies?

Litecoin vs. fiat currency

Like every native currency for a blockchain platform, Litecoin is a decentralized, distributed currency with no central governing authority that decides its future and no single point of control or failure. All fiat based currencies have different sums printed every year depending on what the governing banking authority deems necessary and most useful to their future outlook on the economy; this is very different than Litecoin’s fiscal policy. The amount of litecoin mined, the cryptocurrency equivalent of printing money, is not influenced or regulated by a central authority, in fact, it doesn’t have to be regulated by anyone.

The total amount of LTC that will ever be produced is predetermined and follows a strict schedule where the mining reward drops after a certain number of blocks have been verified. This predetermined monetary supply makes Litecoin extremely different from traditional currencies, as it is deflationary in nature. The Litecoin network block reward has dropped from the initial payment of 50 LTC per block mined down to the current reward of 12.5 LTC. The next halving event will occur after an additional 840,000 blocks are mined and will be around early August 2023 when the mining reward will drop to 6.25 LTC per block mined.

The birth of ‘Altcoins’

Although Litecoin was not the first alternative cryptocurrency to Bitcoin (that honor belongs to the now largely unfollowed Namecoin), it helped pave the wave for cryptocurrency alternatives and the continued growth and experimentation of cryptocurrency networks. Having the ability to show the entire monetary network how the fiscal policy will function is not a luxury that citizens receive from fiat regulated currencies. These types of projects redefine transparency in monetary supply by showing users exactly what will happen to their coins and when, allowing users ease of mine when it comes to arbitrary inflation.

Litecoin and blockchain

Since Charlie Lee created Litecoin in 2011, it was one of the first blockchain based currencies and Bitcoin alternatives, but Litecoin only utilizes blockchain infrastructure and is a blockchain based product, it is not the entirety of blockchain. Blockchain is an infrastructure to set up a distributed database; there is no one blockchain product that encompasses blockchain, but all cryptocurrencies use blockchain to achieve their decentralized and distributed abilities. Blockchain is a distributed ledger protocol, and Litecoin uses the protocol as a basis for their network.

Litecoin and Bitcoin

A lot of people first hear about Bitcoin and then eventually discover Litecoin; this is a natural progression and usually the way most people are exposed. As a possible alternative to Bitcoin, many people view Litecoin as the ‘digital silver’ compared to Bitcoin as the ‘digital gold’. Litecoin operates with a different hashing algorithm, meaning the speed of verifying each block by miners differs for the different blockchains. The two cryptocurrencies also have a different number of coins that are in supply and that will be produced, with Litecoin at 64.8 million of its total 84 million that will be produced and Bitcoin’s 18.4 million out of a total of 21 million BTC that will ever be produced.

Is Litecoin legal?

Yes, Litecoin – being a blockchain based product – is legal all over the world as a store and means of transferring value. Like all cryptocurrencies, the laws towards Litecoin and how it is viewed and taxed will be different depending on where you live, but in general, Litecoin is treated as any other cryptocurrency or asset. Depending on where you live, Litecoin may be viewed and regarded as a regular currency, or it may be regarded as an asset (for taxation purposes), so make sure you know and understand all your local relevant laws.

Where can you buy Litecoin?

Since Litecoin is one of the oldest, largest, and most established cryptocurrencies in the blockchain space, there are many ways you can purchase litecoin. The easiest and most traditional way to purchase Litecoin would be by using a cryptocurrency exchange. Depending on the cryptocurrency exchange you are using, you will be able to purchase Litecoin with fiat currency using your bank account, credit card, or debit card, or you can purchase it using a different cryptocurrency. Most exchanges offer the ability to buy litecoin, so if you are not already registered with an exchange, you can check out some of the exchanges that offer LTC for sale, such as Coinbase, Binance, or Kraken.

If you do not want to use a cryptocurrency exchange there are other ways to purchase Bitcoin, such as through a cryptocurrency ATM that sells Litecoin or through a peer to peer exchange. With cryptocurrency ATMs, you have the opportunity to purchase cryptocurrencies anonymously (as long as you purchase under a certain limit) and with cash, although ATMs tend to charge much higher transaction fees that an online cryptocurrency exchange would. You can also purchase Litecoin directly from another person in a peer to peer transaction. If you are purchasing Litecoin, make sure that the Litecoin has been sent and is confirmed to be in your digital wallet before you hand over any money, as there is less protection and regulation in peer to peer transactions so they can be prone to scammers.

How much is LTC worth?

As of this exact time, one Litecoin is worth $43.32. Since there are currently 64,860,858 LTC in existence, the total market cap of the coin is approximately 2.8 billion dollars. Litecoin has previously had an all time high of $353.98 when all cryptocurrencies where at their price peaks in late 2017, but has since fallen drastically along with all other cryptocurrencies.

What can you buy with LTC?

Litecoin, like most other cryptocurrencies, is digital, decentralized, and distributed, meaning that technically you can buy anything you want from someone as long as they accept Litecoin as a payment level. On a more pragmatic level, since Litecoin is one of the most popular cryptocurrencies used in the world, there are a lot of options when it comes to spending your Litecoin.

Currently, there are thousands of businesses across the world and online that accept Litecoin as a payment method. These include businesses from all different types of fields and industries, ranging from hotels, real estate brokers, and electronic stores to restaurants, online shops, accounting firms, and everything in between. If you have Litecoin and you would like to physically spend it, there are many different resources online that will tell exactly which establishments accept it as a payment method. Litecoin has even sponsored the UFC and appears on fights on international TV to try to continue to expand its user base and who is willing to accept it as a currency.

If you want to know if you can pay with something with Litecoin, it will usually say at the store or place of business, but it never hurts to ask. Since Litecoin is very fast and easy to send, there are many different options you have when you want to spend your Litecoin, and that list continues to grow every day that Litecoin survives and grows as a platform.

Selling your LTC

Just like purchasing Litecoin, you have 3 general options when it comes to selling your Litecoin:

• cryptocurrency exchanges

• cryptocurrency ATMs

peer to peer exchanges

Each method has its pros and cons, but the easiest way to sell your Litecoin is generally through the same cryptocurrency exchange you used to buy it. This exchange should allow you to sell the Litecoin for the original fiat currency or cryptocurrency you used to purchase it, giving you liquidity back into your initial form of value.

If your goal when selling Litecoin is avoiding high fees, your best chance for exchanging is through a cryptocurrency exchange, as they are reliable and are usually the most competitive with pricing. If you would like to sell your Litecoin using the other two options, cryptocurrency ATMs or peer to peer exchanges, you will get cash directly for your Litecoin, but you will have higher fees for both options and have a higher likelihood of fraud with a peer to peer exchange. That being said, it is very easily possible to be successful using any of these 3 methods depending on your priorities.

Is Litecoin available worldwide?

Yes, since Litecoin is a cryptocurrency, the whole point of this type of platform is to make it accessible to anyone that wants to use it regardless of their circumstances. As long as you have access to a Litecoin wallet and internet connection, you can transaction with and use Litecoin anywhere online. Since Litecoin is traded on digital exchanges, it does not have any boundaries or restrictions on who is allowed to use it or trade it. This is one of the most important aspects of cryptocurrencies, and one of the reasons Litecoin thrives as an alternative to Bitcoin is because it is accessible anywhere and to anyone at a higher rate of transacting speed than Bitcoin.

Is Litecoin safe?

Yes, Litecoin is very safe, and in terms of the inflation rate, it can be much safer than traditional fiat currencies. Since Litecoin is secured using blockchain technology, it is extremely hard and almost impossible to take advantage of the network and compromise it. As a user, as long as you have control over your blockchain digital wallet you have full control over your currency without having to worry that it will be manipulated.

The advantages and disadvantages of Litecoin

Since Litecoin is an alternative to Bitcoin and is not nearly as well known, it has a lot less acceptance as a mainstream store of value or transfer of value when compared to Bitcoin. However, since Litecoin was created after Bitcoin, it was designed to be a more efficient version of an already established system. It has continued to gain traction, has a large community following it, and maintains its spot as one of the largest cryptocurrencies in the world, but still has a long way to go until it is accepted anywhere near to the rate that Bitcoin is.

Concluding Thoughts

Litecoin is an interesting alternative to Bitcoin, but it is up to you to decide if you would like to use it or invest in it as an alternative to Bitcoin. It has a much smaller community and smaller market capitalization, but that also means that it has room to grow as the cryptocurrency space continues to evolve in the world. Maybe Litecoin is the silver to Bitcoin’s gold, but with all the altcoins available to use, you have to decide if it is the right one for you.

Are there any restrictions I should be aware of when I buy and sell Litecoin?

No, as a decentralized cryptocurrency, there are no restrictions on your abilities.

Can Charlie Lee directly affect the price or future outcome of Litecoin?

As a distributed and decentralized currency, even though Charlie Lee is the creator, he only has proportional decision making rights based on his stake in the network (just like everyone else).

Is Litecoin better than Bitcoin?

It depends how you define ‘better’. Litecoin is able to complete faster transactions than Bitcoin but also has a lot less mainstream acceptance as a transfer of value.

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