Litecoin has quickly risen from obscurity to become one of the world’s most popular, well known and most valuable cryptocurrencies in the world.
According to Litecoin’s website, the currency is described as:
“A peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities.”
Simply put, Litecoin is a low cost, decentralized cryptocurrency used to pay for everyday items instantly.
Litecoin ranks as one of the top five most valuable cryptocurrency in the world by market cap, behind Bitcoin, Ethereum, Ripple and Bitcoin Cash. As of writing this article, Litecoin’s market cap is nearly 2.8 billion dollars, with over a 1100% year to date return on investment.
History of Litecoin
Litecoin was developed by Charlie Lee while he was still working for Google and went live on October 7th, 2011. This makes Litecoin one of the oldest cryptocurrencies.
The source code itself was a fork off of the Bitcoin Core Client with a few notable changes and improvements such as decreased block generation time, utilizing different hashing algorithms and decreasing the time needed to process payments.
More on the differences between Bitcoin and Litecoin can be found later in this article.
Charlie left Google in 2013 to work for Coinbase full-time. Coinbase now is one of the largest cryptocurrency exchanges in the world. Charlie has since left Coinbase and now works full-time on Litecoin. In September of 2017, Litecoin hit a record high of nearly $100USD, but has since dropped around 50% after China’s regulatory changes regarding cryptocurrencies.
For further reading on these topics see: “China Bans ICOs (Or Do They?)” for more information on China’s increased regulation and the September 2017 Cryptocurrency News Roundup to see what is happening in the world of cryptocurrencies as a whole.
The Litecoin Team
Litecoin was founded by Charlie Lee while he was still working for Google. During his time with Google, Charlie worked on some notable projects such as Google Play Games, Chrome OS, and YouTube. He has a BS and Masters from MIT in both Electrical Engineering and Computer Science.
Litecoin now has a full team of developers working on various aspects of the coin. A full list of the development team can be found here.
How to Buy and Store Litecoin: Exchanges and Wallets
For those of you interested in purchasing Litecoins, you’re in luck. Litecoin is one of the most popular cryptocurrencies out there and for that reason it is available on pretty much any crypto exchange.
Litecoins can be traded directly for your own fiat currencies (USD, Euro, etc…). This is in contrast with many currencies where the only way to buy is to first buy Bitcoin, and then exchange the Bitcoins to the coins you want. This makes it easier for the everyday person to buy.
If you’re new to cryptocurrency investment and want to learn more about how to buy coins refer to “Investing in Cryptocurrency: A Beginner’s Guide”.
There are various Litecoin wallets available, for free, for you to download to store your coins. Windows, Mac OS X, iOS, Linux, Android and Blackberry are all supported operating systems. In addition to these ‘standard’ wallets, Litecoin has a few other options such as Electrum LTC, LiteVault and LiteAddress.
Electrum LTC is a lightweight wallet that doesn’t require you to sync to the network to use. Instead, all you need is a 12 word security password and you’re good to go!
LiteVault is an online wallet which functions within your web browser utilizing in-browser cryptology. This allows you to access you coins from any computer. To protect your security, LiteVault never sees your private keys, keeping you safe from hackers.
LiteAddress enables you to generate your own paper, vanity and brain wallets.
Links to each wallet can be found on Litecoin’s website.
How is Litecoin different from Bitcoin?
Since (as of now) Bitcoin is the only household name in the world of cryptocurrencies, it is useful to compare Litecoin to Bitcoin to give you an idea of why you should even care about Litecoin in the first place.
Litecoin is nearly identical to Bitcoin as far as its original intended use, however there are some notable differences as far as functionality goes.
Quoting from Litecoin’s website, the differences between Litecoin and Bitcoin can be described as:
“The Litecoin blockchain is capable of handling higher transaction volume than its counterpart – Bitcoin. Due to more frequent block generation, the network supports more transactions without a need to modify the software in the future. As a result, merchants get faster confirmation times, while still having ability to wait for more confirmations when selling bigger ticket items.”
To summarize the differences/benefits Litecoin has over Bitcoin, Litecoin:
- Has much faster transaction times. Money sent via Litecoin generally will appear in your wallet within a few minutes, while with Bitcoin this can take 10-15min.
- Transaction fees are significantly lower. The longer the block, the more you have to pay the miners for the transactions. Litecoin has smaller blocks than Bitcoin, hence lower fees.
- Has some notable technical improvements as well, such as Segregated Witness (SegWit) and the Lightning Network.
- Is better at dealing with high transaction volume, this has been a major problem for Bitcoin and Ethereum recently.
- There will be a total of 84 million Litecoins mined. Four times that of Bitcoin
Right now Bitcoin has a huge scalability issue. Even with the recent changes Bitcoin introduced Aug 1st of this year, Bitcoin still will never be able to service every user in the world.
As Bitcoin’s popularity increases, so will its fees. This isn’t such a big deal for large infrequent purchases, like maybe buying a car or a house. But what about for buying a cup of coffee?
Litecoin offers a solution these problems by offering a low-cost instantaneous transaction with the ability to scale their network much larger than Bitcoin.
This is a problem Litecoin was able to solve by learning from Bitcoin’s mistakes.
To help people better understand the differences and similarities between the two coins, Bitcoin is commonly compared to gold, while Litecoin is compared to silver.
Traditionally gold has been used just to store and keep safe, while silver was made into coins and used for common purchases.
The analogy of gold and silver more refers to the usefulness of the coin, not the value itself. Since there will always be less Bitcoin available, (gold) it tends to get used less but is worth more.
However since there are more Litecoins (silver) available, it gets used more but is worth less. For this reason it is much more likely that Litecoin will be used for small everyday transactions in the future.
Think about it, would it make sense to pay for something small with gold? You would need to have very very small quantities broken up to pay for what you wanted to buy. Imagine trying to pay for your groceries with a bit of gold dust!
But since silver is less valuable by volume (Litecoin), it is much more useful to pay for certain things. Now you could pay for the same groceries with an entire silver coin vs a tiny amount of gold dust.
In theory you can use both the exact same. You could buy a house with a truckload of silver coins (Litecoin) or with a single bar of gold (Bitcoin). You get the same end result, a piece of value exchanged for something deemed to have a very similar value.
See: “To the Moon! What’s the Difference Between Bitcoin and Ethereum?” for a comparison of Bitcoin and Ethereum.
The Future for Litecoin
Litecoin has all of the functionality of Bitcoin with notable improvements.
It is likely that in time Bitcoin and Litecoin will become the gold and silver standards not just for purchases, but for all other coins and tokens.
When you need to purchase another type of coin or a physical product, you will just swap the coins you already have for what you need.
A good way to think about this is the way that you buy fuel for your car. Just because you have a car doesn’t mean that you need to buy crude oil barrels. You simply go to the gas station when you need to and exchange your standard currency (USD, Euro, etc…) for what you need as you need it.
Litecoin could become a standard currency used to for everyday purchases.
And while it hasn’t received all of the press and hype of Bitcoin or Ethereum, Litecoin has all of the ingredients to become one of the world’s standard currencies once cryptocurrencies become widely adopted in the future.