What is Litecoin – A Simple Guide on LTC

litecoin logo

At a glance

 
IndustryPayments
Ticker SymbolLTC
MineableYes. Proof of Work.
Programming languageC++
Hash typeScrypt
WebsiteLitecoin
White PaperNone
TwitterLink

Introduction

What if I told you that you could easily move $99 million in a single, secure transaction in less than 2.5 seconds? And you would only pay a transaction fee of 40 cents! Recently, someone did just that and they used a cryptocurrency called Litecoin.

In this guide we will cover what Litecoin is, how it works, why people use it, its competitors and its future plans.

What is Litecoin?

Litecoin is a fork of the Bitcoin Core client. So fundamentally, Litecoin’s design is very similar to Bitcoin, but with some changes to increase speed and lower transactions costs. Even though it lags behind Bitcoin in valuation, many describe it as the perfect peer to peer payment system with nearly instant transactions and extremely low transaction fees (among the cheapest).

Litecoin, like Bitcoin, uses a technology called blockchain that is purely digital, public and secured by cryptography. All payment records within the blockchain are immutable meaning once they are entered, they cannot be changed.

Diagram of traditional banking system

To simplify, think about opening an online bank account. There you can deposit cash and transfer that value from one person to another anywhere in the world. The bank tracks these transactions for you. The bank is the single point of authority that everyone relies on to move and protect their money.

Diagram of banking on blockchain

Cryptocurrencies including Litecoin work using the same principle only the transactions are not controlled or recorded by a central entity but by a peer to peer network. All transactions are handled on a decentralized network in which there is no single point of failure.

In 2017, Litecoin’s popularity exploded. During that period, its price increased by a factor of 70.45 times! Starting at $4.47 early in 2017 and reaching an all-time high of $315.13 by December 18, 2017.

Who created Litecoin?

The brains behind Litecoin is Charlie Lee, a former Google employee and crypto visionary. LTC was launched in October 2011, making it only seven years old, and it is open source.

photo of charlie lee the found of litecoin

Charlie Lee, better known as Satoshi Lite, had clear intentions: create a flawless, viable alternative to Bitcoin. In essence, he wanted to create a coin that would allow faster settlements.

If Bitcoin is considered the gold of cryptocurrencies, then Litecoin is considered the silver. A moniker Litecoin has grown accustomed to. It’s worth noting that LTC was not created to replace Bitcoin but rather it complements it.

It is also worth noting that Charlie Lee, the founder, doesn’t own any LTC. Citing conflict of interest after recognizing how influential his comments about Litecoin were becoming on the market, he liquidated all his coins in February 2018. However, he is still the Managing Director of the Litecoin Foundation, an NGO registered in Singapore.

What does Litecoin do?

Litecoin was designed to do exactly what Bitcoin does, and that’s to transfer value from one place to another digitally. Litecoin embraces the same decentralized aspects as Bitcoin, but with some subtle differences in its core architecture.

While Bitcoin is great at storing value, it’s not so great at transmitting that value between parties when the network is experiencing high traffic. Litecoin is meant to fix that problem.

Not only can it store value, it can transact it at incredibly fast speeds. Litecoin’s main goal is to create a cheap method of moving value between parties and across border, using the power of peer to peer networks. And it does just that.

graphic explaining the transfer of value using cryptocurrencies

Due to its speed, many believe Litecoin could eventually be used by merchants for commercial transactions. It is a much better choice than Bitcoin due to its speed and cheap transaction fees. A Bitcoin transaction can take up to 6 hours to go through while a Litecoin transaction typically goes through in a few seconds.

LTC could become the go to option for merchants, payment providers or small businesses looking for fast transactions. In fact, 4,000 Litecoin ATMs are set to be rolled out in Argentina already. Hopefully, with supportive legislation going forward, more and more countries shall follow suit and allow citizens to enjoy the benefits of LTC and blockchain in their respective jurisdiction.

How does Litecoin work?

Like Bitcoin, Litecoin uses the power of blockchain to offer a super secure, semi-anonymous and cheap method to transfer value between parties.

Infographic explaining what the blockchain is

Every transaction is stored in the blockchain on multiple “nodes” on the network. These transactions are public and impossible to change once they’ve been confirmed, making Litecoin transactions highly reliable.

Litecoin is based on the same code as Bitcoin with a few key differences.

Transaction Speed

Litecoin creates a “block” every 2.5 minutes while Bitcoin creates blocks every 10 minutes. Transactions are gathered into blocks, which are then confirmed by miners and added to the blockchain. Because Litecoin blocks are created in a shorter amount of time than Bitcoin, transaction speed is greatly increased.

LTC was also one of the first cryptocurrencies to adopt Segregated Witness and the Lightning Network. Segregated Witness (aka Segwit) was created to mitigate blockchain size limitations by splitting every transaction into 2 segments. This reduced the transaction size by 65%, thereby increasing transaction speeds even more.

By adopting Segwit, LTC also began utilizing the Lightning Network which basically creates a layer on top of the blockchain. This layer is made up of user-generated channels that allow parties to send micro-payments back and forth incredibly fast and for nearly zero fees.

While Litecoin is considered extremely fast, especially compared to Bitcoin, there are times when the network has experience such high traffic that transactions took upwards of 30 mins to process. But this does not happen often.

What is Scrypt

Like Bitcoin, Litecoin use a proof of work algorithm. But Litecoin utilizes Scrypt as its hashing algorithm while Bitcoin uses SHA-256. Scrypt serializes calculations unlike SHA-256 which allow for parallelization of calculations.

What does that mean? It means Scrypt requires miners to solve problems in linear manner, solving one problem to get to another, while SHA-256 allows miners to solve each problem simultaneously. This makes if more difficult for FPGA and ASIC mining devices to mine Litecoin since calculations are less CPU intensive and more memory intensive.

Utilizing Scrypt was meant to democratize mining, opening it up everyone, not just those that could afford expensive mining rigs. That was short lived however as several companies were able to build /Scrypt ASIC/ devices that were more effective at mining.

Large Supply of Coins

Litecoin has a total supply of 84,000,000 coins while Bitcoin has a total supply of 21,000,000 coins. The large difference in coins is not thought to have much of a positive effect. Both Bitcoin and Litecoin coins can be split up into tiny fractional amounts (down to 100 millionths). So there will always be enough coins to transact, whether there are 84,000,000 or 21,000,000.

Who uses Litecoin?

Given the benefits, it’s easy to envision more and more small businesses, ecommerce sites and gaming companies, especially in those in Asia, using Litecoin to settle payments. And while owning or using cryptocurrencies is illegal in some Asian countries, encouraging statistics shows that global adoption is on the rise.

There are many merchants who already accept Litecoin as a payment method. Some of them include: Overstock, eGifter, KnCMiner and Australia’s ElleNet.

Due to its low fees, Litecoin has proven to be a great way for regular people or friends to transfer money between one another.

LTC is also a popular method for traders to transfer funds from one exchange to another to take advantage of arbitrage opportunities. Transferring bitcoin between exchanges can take long times to process, which can lead to trading losses if the market is highly volatile. Wallet to wallet transfers is also extremely fast.

Litecoin registers an average of 30,000 daily transactions, surpassing that of Bitcoin Cash.

Competitors

Bitcoin will always be its largest competitor, which still accounts for 35% of all cryptocurrency transactions. And like Litecoin, developers are working on several Lightning Network apps to improve Bitcoin’s speed.

Other worthy competitors include: Monero, ZCash, Dash, DogeCoin, Ripple and Stellar Lumens.

Common Questions

  • What is Litecoin? Litecoin is a cryptocurrency that uses blockchain technology to create a peer to peer payment system that is secure and instant.
  • Is Litecoin better than Bitcoin? It depends on what you’re using it for. Litecoin has proven to be faster and cheaper to transfer value, but Bitcoin seems to be a better way to store value since Bitcoin appreciates faster.

The future of Litecoin (Roadmap)

Litecoin has an ambitious road map. They plan to expand their user base by creating tools that make it easily accessible to newcomers while also boosting its development community. In the long run, they plan to implement several exciting technologies that make their network robust and efficient.

Below are a few upgrades they plan to make to their network and community:

  • Core Updates – In the coming days Litecoin shall release Litecoin Core 0.13.3. Later they shall rebase Litecoin Core to Bitcoin Core 0.14.1 before implementing Bech32 address, formerly BIP173 following Segwit.
  • Smart Contracts – With Segwit, scripts are more complex than before. This is why Litecoin make use of smart crypt vault that fuses the benefits of MAST and Covenants. Both shall control how Litecoin is spent.
  • Lightning Network (LLN) – Speed and network scalability matters. LLN guarantees a flawless system and this is what excites Charlie Lee. He’s spearheading this off-chain solution which will later form the building blocks for cross chain atomic swaps. These Atomic Swaps use what we call Hashed Timelock Contracts (HTLC).
  • Wallet Support – Provide support for Electrum-LTC, Loaf Wallet and Android Wallet.
  • Future Plans – Other plans include deployment of Schnorr signatures, confidential transactions and introducing flexible block size caps.

How to buy Litecoin

There are several ways to easily buy Litecoin. You can buy LTC with fiat currency on exchanges like Coinbase or trade it using Bitcoin or Ethereum on exchanges like Binance. LTC can also be mined. Please check out our Litecoin Mining Guide for more info.

Here are the exchanges we recommend for buying LTC:

etoro exchange logo

Fees:

Up to 5%

KYC : Yes

Ease of use : Hard

Speed : Fast

Privacy : Medium

Reputation : Trusted

Payment methods :

  • Bank Account
  • Credit Card
  • Debit Card
  • Giropay
  • Neteller
  • Paypal
  • And more...

A “social” exchange offering CFD trading, allowing users to long or short positions. You can invest in cryptocurrencies based on opinions of others in the community. It’s a different and fun way to approach trading. You can also trade stocks, commodities and forex. There are not many platforms that offer those markets together. You can’t transfer the coins you purchase off the etoro exchange though. You would have to convert it back to fiat to withdrawal your funds. So they don’t actually offer wallet services.

  • Social trading platform
  • Trading with the community
  • Buy more than just crypto
  • Good development team
  • Price spreads are high
  • Not available in the US
  • Can't trade crypto to crypto
  • CFD trading confusing for beginners

Theycallitcrypto Rating

Coinspot logo

Fees:

Up to 2%

KYC : Yes

Ease of use : Easy

Speed : Fast

Privacy : Low

Reputation : Trusted

Payment methods :

  • Bank Account
  • Cash
  • Cryptocurrency

Founded in Melbourne in 2013. Coinspot offers an easy way for Australians to purchase a large variety of coins with cash. They also support BPAY and POLi payment deposits. The have a clean and easy to use interface. With no history of major hacks, Coinspot seems to be a well run cryptocurrency exchange. Their fees are competitive and they have one of the largest choice of coins among fiat to crypto exchanges.

  • Lots of coins
  • Easy to use
  • Founded in 2013
  • Transparent fees
  • Lengthy verification process
  • Deposits can be slow

Theycallitcrypto Rating

Kraken logo

Fees:

0.25%

KYC : Yes

Ease of use : Hard

Speed : Medium

Privacy : Low

Reputation : Trusted

Payment methods :

  • Bank Account
  • Cryptocurrency
  • Savings Account
  • SEPA
  • Swift
  • Wire Transfer

Kraken is one of the world’s largest cryptocurrency exchanges and one of the few that allow users to deposit fiat money into their account. Most crypto brokers charge high commissions and fees for this service, but Kraken does not. We really like their platform and their choice of coins.

  • Highly reputable exchange
  • Very low fees
  • High liquidity
  • Great choice of coins
  • Site has been known to crash
  • Not great for beginners
  • No credit card option
  • ID verification required

Theycallitcrypto Rating

Coincorner logo

Fees:

4%

KYC : Yes

Ease of use : Easy

Speed : Fast

Privacy : Medium

Reputation : Trusted

Payment methods :

  • Bank Account
  • Credit Card
  • Cryptocurrency
  • Debit Card
  • Neteller
  • Savings Account
  • And more...

Based on the Isle of Man, this is a great choice for beginners in Europe. They have transparent pricing and the purchase process is very easy. Their site design is clean, modern and well thought out. They offer a decent mobile app as well.

  • Regulated by the UK
  • Competitive fees
  • Exchange rate is lower than most brokers
  • Lots of payment options
  • Identity and address verification required
  • Supports only 4 coins
  • Not available in US

Theycallitcrypto Rating

Canadian Bitcoins logo

Fees:

Up to 30%

KYC : Yes

Ease of use : Easy

Speed : Medium

Privacy : Medium

Reputation : Trusted

Payment methods :

  • Bank Account
  • Cash
  • Debit Card
  • Flexespin
  • Interac Online
  • Savings Account

An older and trusted exchange that’s based in Canada. They act as a broker between buyers and sellers. They charge a very high margin on coin prices, upwards of 30%. But they are on of the few that allow cash purchases. You can even mail or drop off cash at their office! Because of their high prices, we recommend them for selling your coins rather than purchasing.

  • Buy with cash
  • Easy to use for beginners
  • Can deliver payments in person
  • Fast cryptocurrency transfers
  • Very high margin fees
  • Antiquated site design
  • Only available to Canadians

Theycallitcrypto Rating

bitstamp logo

Fees:

Up to 5%

KYC : Yes

Ease of use : Medium

Speed : Fast

Privacy : Medium

Reputation : Trusted

Payment methods :

  • ACH
  • Astropay
  • Bank Account
  • Credit Card
  • Cryptocurrency
  • Debit Card
  • And more...

Bitstamp is a well known exchange where you can buy and sell major cryptocurrencies with a checking account or credit card. You can also trade major crypto pairs. It is easy to use and has an advanced trading platform for more experienced traders.

  • One of the oldest exchanges
  • Low fees for bank transfers
  • Very low trading fees
  • Fast ID verification
  • Credit card fees are 5%
  • Limited coins supported
  • Slow customer service

Theycallitcrypto Rating

changelly logo

Fees:

10%

KYC : Yes

Ease of use : Easy

Speed : Medium

Privacy : Medium

Reputation : Trusted

Payment methods :

  • Credit Card
  • Debit Card

Changelly is an exchange only and offers no wallet sevice. They offer a very simple way to exchange crypto for crypto. You can also buy coins with credit or debit cards but they are deposited direcly into your own wallet. Theyir trading fee is higher than most crypto trading services but you are paying for ease of use and convenience.

  • Easy & convenient
  • Great for rookies
  • Lots of coins to trade
  • Strong team behind it
  • Can't sell coins back for fiat
  • Just an exchange. No Wallet.
  • High fees
  • Not great exchange rates

Theycallitcrypto Rating

bitpanda logo

Fees:

1.49%

KYC : Yes

Ease of use : Easy

Speed : Fast

Privacy : Low

Reputation : Trusted

Payment methods :

  • ACH
  • Bank Account
  • Checking Account
  • Credit Card
  • Debit Card
  • Giropay
  • And more...

Extemely simple and clean interface. Well established. Great for rookie investors and EU customers. Among the cheaper exchanges with easy buy and sell functionality. Lots of payment options. No way to trade cryptocurrency pairs and lacking more advanced trading options. US customers are not allowed.

  • Very easy to use
  • Many payment options
  • Fairly low fees
  • Constantly improving development
  • Lack of crypto trading pairs
  • Some fees are baked into crpyto price
  • ID verification is a pain
  • USA not allowed

Theycallitcrypto Rating

Coinbase Pro logo

Fees:

0.30%

KYC : Yes

Ease of use : Easy

Speed : Fast

Privacy : Low

Reputation : Trusted

Payment methods :

  • ACH
  • Bank Account
  • Checking Account
  • Cryptocurrency
  • Savings Account
  • SEPA
  • And more...

Formely known as GDAX, Coinbase Pro is the trading platform ran by Coinbase. While Coinbase targets regular consumers wanting to buy and hold crypto, Coinbase Pro targets more experienced investors that trade more often. Fees for trading are much lower on Coinbase Pro than on Coinbase.

  • Well established
  • Easy trading platform
  • Cash is FDIC insured
  • High trading volume
  • High trading fees
  • Supports only major coins
  • KYC is required
  • Charts need improvement

Theycallitcrypto Rating

Coinmama logo

Fees:

5.5%

KYC : Yes

Ease of use : Easy

Speed : Fast

Privacy : Medium

Reputation : Trusted

Payment methods :

  • Credit Card
  • Debit Card
  • Western Union

A trusted fiat-only exchange. They operate as a broker selling their own coins. They do not provide a wallet service. It’s great if you need to buy some of the more popular coins quickly. It is considered one of the more expensive exchanges to buy on, but it makes up for it with ease of use and trust. You cannot trade coins on their exchange, only purchase.

  • Well established
  • Great reputation
  • Available in many countries
  • Good customer service
  • Very high fees
  • Not many payment methods
  • KYC required to purchase
  • No option to sell cryptocurrency

Theycallitcrypto Rating

Coinbase logo

Fees:

4%

KYC : Yes

Ease of use : Easy

Speed : Fast

Privacy : Low

Reputation : Trusted

Payment methods :

  • ACH
  • Bank Account
  • Chase Quickpay
  • Checking Account
  • Credit Card
  • Debit Card
  • And more...

Coinbase is one of the largest and oldest crypto exchanges. Customers can purchase cryptocurrency with regular fiat money using credit and debit cards as well as their bank account. Coinbase is good for new investors or those wanting to quickly buy coins with US Dollars or Euros. That being said, it’s not our favorite due to the high fees.

  • Easy sign-up
  • Cash is FDIC insured
  • Highly trusted
  • Great for beginners
  • Very high fees
  • Low privacy
  • Not great for trading
  • ID verification is slow

Theycallitcrypto Rating

 

How to store Litecoin

After purchasing LTC, the next course of action is looking for a suitable wallet. There are various types of cryptocurrency wallets. Cold wallets (aka hardware wallets) are off the grid and secure. Anyone can purchase them one or even make one. KeepKey, Trezor, Ledger and paper wallets are good examples.

There are also many online wallets or hot wallets, meaning they need an internet connection to function. These include Electrum, Coinomi and Litecoin Core. There are many more.

Note that wallets simply store your coin’s private keys. Those are your coins. Lose them and your Litecoin, irrespective of the amount, is gone. Forever!

Conclusion

We give Litecoin a thumbs up. It was created with a clear purpose and it is fulfilling that purpose. LTC owners can transfer their coins quickly and affordably without fear of a network slow down.

Litecoin has a strong foundation supporting it as well and its development community is enthusiastic, so we see big things in their future.

Summary
What is Litecoin - A Simple Guide on LTC
Article Name
What is Litecoin - A Simple Guide on LTC
Description
In this guide we will cover what Litecoin is, how it works, why people use it, its competitors and its future plans.
Author
Publisher
Theycallitcrypto.com

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