What is Litecoin (LTC) and How Does It Work?
History of Litecoin
Litecoin (LTC), like many other altcoins, was developed to tackle the shortcomings of the first cryptocurrency, Bitcoin. It takes approximately 10 minutes to mine one new block of transactions on the Bitcoin network. Litecoin was proposed as a Bitcoin spinoff that would increase the transaction speed and solve the network’s scalability issue.
Charles Lee, a crypto pioneer and a former Google and Coinbase employee, launched Litecoin in 2011. Litecoin was able to reduce the block confirmation time from 10 minutes to only two and a half minutes.
Two years after launch, in 2013, one LTC coin was worth approximately US$4. Only five years later, LTC spiked unprecedentedly and reached its all-time high of US$348 per coin.
Soon, however, the price fell at an unexpected rate. In January 2020, one LTC was worth approximately US$44. As of December 2020, LTC is again on a bull run as its price has doubled to US$88 per coin.
My vision is people would use Litecoin every day to buy things. It would just be the payment method of choice.
Charlie Lee
What is LTC used for?
Litecoin (LTC) has the same use-cases as the first and the largest cryptocurrency, Bitcoin. It is a global peer-to-peer payment network that uses LTC as its native currency. Anyone on the internet can use Litecoin to make fast and secure payments without relying on a bank or financial service provider. Today, many online as well as brick and mortar stores accept Litecoin payments.
In addition, investors and traders consider Litecoin a high-potential investment asset. This is why Litecoin has maintained the fifth spot among the thousands of other cryptocurrencies.
How does Litecoin Work?
Similar to Bitcoin, Litecoin runs on the proof-of-work consensus protocol. But it uses the Scrypt hash algorithm instead of SHA-256 to increase the transaction speed of LTC.
Litecoin has a limited supply of 84 million LTC coins. New coins are mined with every new block of transactions that is added to the network. At launch, the Litecoin network offered 50 LTC to the miners who mined the blocks.
But the network automatically halves the mining rewards after every 840,000 new blocks, which happens approximately every four years. The network will continue to halve the rewards until all 84 million coins are mined.
As of December 2020, the network rewards 12.5 LTC for every new block. The next halving, expected to occur in August 2023, will further reduce the rewards to 6.25 LTC.
Advantages
- It is a peer-to-peer digital currency that does not rely on any central bank or government to settle transactions.
- It is a faster, cheaper, more secure, and transparent means of payment.
- End-users have complete control over their LTC funds instead of a central or commercial bank.
- It is a global currency and can be sent anywhere in the world almost instantly.
How can Canadians get Litecoin (LTC)?
- Buy: Set up an account on a cryptocurrency exchange like Ndax and buy Litecoin with the Canadian dollar
- Mining: Litcoin is a proof-of-work cryptocurrency. You can become a Litecoin miner to earn LTC by mining new blocks.