Litecoin (LTC) is a long-standing digital asset that has been around on the crypto market since 2011. In fact, Litecoin is one of the first digital currencies in existence, as it is the first successful altcoin launched after Bitcoin.
Litecoin became quite popular in the cryptocurrency circles after its launch, and enjoyed its place as the second-largest cryptocurrency by market cap for a long time, at least until the launch of Ethereum (ETH). Despite the growing popularity of alternative blockchain-based projects like Ripple (XRP) and stablecoins like Tether (USDT), Litecoin still remains one of the largest cryptocurrency projects in a market saturated by thousands of crypto coins.
In this article, we will explore how Litecoin differs from Bitcoin and how its fractions called litoshis work.
What Is Litecoin?
Litecoin was founded by Charlie Lee, who, in his own words, wanted to build a digital currency that functioned as a “lite version of Bitcoin”, hence the name “Litecoin”. Although there were previous attempts to use Bitcoin’s open-source code to create a different version of the digital currency, Litecoin was the first successful altcoin, both from a commercial and programming point of view.
While newer altcoins are often used as utility tokens for various blockchain-based projects, Litecoin was launched with a simple goal in mind: to become a payment system that could function faster than Bitcoin with fewer resources. Litecoin aims to provide people with a payment system that doesn’t rely on centralized services such as credit card companies or banks.
The project started with only 150 pre-mined coins in order to allow early adopters to invest in the currency. Even Charlie Lee didn’t have a Litecoin stash at the beginning. Soon enough, Litecoin grabbed the attention of the cryptocurrency community, and the Litecoin market cap grew steadily over time. The Litecoin Foundation, a non-profit organization, was founded to manage and advance the project and work in tandem with the core developer team.
Charlie Lee was also a member of the Coinbase exchange team between 2013 and 2017. Litecoin itself became available on the platform in 2017. Charlie Lee remains the director of the Litecoin Foundation, despite selling all his Litecoin back in 2017.
How Does Litecoin Work?
Litecoin is a blockchain-based, peer-to-peer payment system for fast and cheap transactions. As a lighter version of Bitcoin, it sought to become an alternative digital payment method.
Litecoin works very similarly to Bitcoin. It is a digital currency you can use to send money, make purchases, and pay bills online. Since it is blockchain-based, all Litecoin transactions are recorded and confirmed on the Litecoin blockchain, preventing people from double-spending their digital assets.
Litecoin functions thanks to three intertwined mechanisms: (1) the Litecoin blockchain ledger that keeps all the transaction information; (2) the decentralized Litecoin network that stores and keeps the ledger online; and (3) the Litecoin miners who confirm new transactions by cross-checking versions of Litecoin ledger on the Litecoin network. In exchange for their work, miners are rewarded with LTC.
Litecoin is a pseudonymous digital currency. While the wallet addresses of Litecoin users are anonymous, transactions can be traced back to individuals in different ways.
Another revolutionary thing about Litecoin is that it was the first cryptocurrency to try out various layer-two solutions for scaling and faster transactions. The coin was one of the first to implement the SegWit (Segregated Witness) protocol that increases blockchain block size limits by getting rid of excess signature data. In 2017, Litecoin also became the first digital currency to make a transaction on the Lightning Network to increase its transaction speed. Both protocols were later implemented by Bitcoin as well.
How Does Litecoin Differ From Bitcoin?
Even though Litecoin was developed from Bitcoin’s open-source code, there are important differences between the two projects.
Both digital currencies rely on the Proof of Work protocol as their consensus mechanism, in order to prevent double-spending. However, Litecoin uses the scrypt hashing algorithm to validate transactions, whereas Bitcoin uses the more cumbersome SHA-256 algorithm. While this may seem like a minute detail, scrypt actually allows Litecoin transactions to be confirmed with less computing power and miners to mine LTC with CPUs and GPUs instead of using expensive ASIC miners.
Another important difference between the two digital currencies is their transaction confirmation speed. It takes 10 minutes on average to confirm a block of Bitcoin transactions, while it takes only 2.5 minutes to confirm a Litecoin block. This means that Litecoin transactions are confirmed four times faster than Bitcoin transactions.
Litecoin miners earn a small portion of Litecoin for every block they confirm. These rewards are halved every 840,000 blocks. Litecoin halving actually mimics Bitcoin halving, as both occur every four years. Finally, Litecoin has a larger total supply of 89 million LTC, as opposed to Bitcoin’s 21 million coins.
Is Litecoin a Better Payment Method Than Bitcoin?
Perhaps the most important difference between Bitcoin and Litecoin is their present function. While they were both designed as digital payment methods in the beginning, the increasing value of Bitcoin and the increasing costs for making Bitcoin transactions have made the digital currency somewhat unsuitable for small-scale purchases and payments. In order to buy a cup of coffee with Bitcoin, you’d have to pay more in networks fees than what the cup is worth and wait for hours before the transaction is confirmed. Not to mention that there’s a chance that the BTC price will increase in the meantime! Bitcoin is known as digital gold, meaning it’s better HODLed or traded than spent.
But does this mean that Litecoin is a better payment method? Well, yes and no. In theory, Litecoin allows faster and cheaper transactions than Bitcoin and is better suited at becoming a payment method. However, at the moment, Litecoin is more volatile than Bitcoin, and many Litecoin holders invest in the digital currency as a way of building long-term wealth. That means that even though Litecoin has more potential to become a digital payment currency in the future, it is mainly regarded as an investment asset at the time, like most cryptocurrencies. This is why Litecoin is sometimes referred to as digital silver, in reference to Bitcoin being the digital gold.
On top of that, even though Litecoin transactions are faster and cheaper than Bitcoin transactions, there are less retailers around the globe that accept Litecoin payments, compared to Bitcoin payments. That said, Litecoin has the potential to become a major payment method, when or if the cryptocurrency market gains more stability.
How Many Litoshi Make One Litecoin?
Divisibility is an important feature of digital currencies. Many cryptocurrencies can be divided into infinitesimally small units and these units can be bought and sold for a fraction of the currency’s unit price. That means you don’t have to pay thousands of dollars to invest in a single Bitcoin or Litecoin. Instead, you can simply purchase smaller units of each cryptocurrency according to your budget. In other words, you can easily buy 50 USD worth of Litecoin, or 100 USD worth of Bitcoin.
As you may already know, Bitcoin can be divided into 100 million satoshis, its smallest unit. Similarly, one Litecoin can be divided into 100 million litoshis. That makes litoshi the smallest unit of Litecoin.
You can buy fractions of Litecoin on exchange platforms like Binance or Coinbase.
LTC Exchange Rate
Since Litecoin is a decentralized asset, it doesn’t have a uniform price. Instead, every crypto exchange has its own Litecoin market, and the price of Litecoin varies depending on the market conditions of each platform. That said, Litecoin prices at different exchanges are usually similar, as the coin is one of the most popular digital currencies in the world. Still, it is a good idea to compare the Litecoin exchange rates on different cryptocurrency exchanges before you buy, sell or trade LTC.
Litecoin can be exchanged for other digital currencies such as Bitcoin (BTC), Ethereum (ETH), or Bitcoin Cash (BCH). You can also buy and sell Litecoin for fiat currencies like US dollars (USD), Australian dollars (AUD), or Euros (EUR).
A Few Words Before You Go…
Litecoin is one of the oldest and most popular digital currencies in the market. While it isn’t as popular as Bitcoin and other trending altcoins at the moment, it still has many features that make it a viable payment method and a valuable digital asset. While other Bitcoin alternatives slowly disappeared from the crypto coin market over the years, Litecoin is still going strong and remains one of the top cryptocurrencies by market cap. You can easily invest in Litecoin through cryptocurrency exchanges and buy fractions of Litecoin – litoshis – at low prices.