What is Litecoin?

Have you heard of Bitcoin? You have? Well, then have you heard of Litecoin? If not, then you should have done. At the time of writing it is in the top five largest cryptocurrency in terms of market capitalisation. Furthermore, out of all cryptocurrencies Litecoin has the most coins in supply. Currently there are 38 billion coins in supply.

Why Litecoin and not Bitcoin?

The main benefit of Litecoin over Bitcoin is that transactions are confirmed faster. Whereas Bitcoin and take hours to be processed, Litecoin can take minutes. Furthermore, Litecoin does not require as sophisticated technology in order to mine. Finally, Litecoin has a maximum supply of 84 million coins whereas Bitcoin has 21 million.

Litecoin creation

Litecoin was created by Charles Lee a Google engineer back in 2011. Charles took the original Bitcoin code and modified it in order to speed up the creation time of each block by using different crypting technology. The simple implication of this is that buyers and vendors don’t have to wait as long in order to get transactions confirmed and processed.

Charles did this through the introduction of Segregated Witness and the Lightning Network. Simple right?

Litecoin
By Losh1212 – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=46043259

 

Segregated Witness and the Lightening Network

I realise, that the names sound like a superhero league. However, the main problem with Bitcoin is that it is inherently limited in the speed of transactions. Each block added to the blockchain has a limit of 1MB in order to prevent denial of service (DoS) attacks. This involved a hack to the blockchain by flooding the block with enough irrelevant memory to slow the system. A limit in the block size prevents such an attack. However, it also means that there isi a limit to the number of transactions processed in any one block.

Segregated Witness by hiding the size of the block. With Segregated Witness blocks are measured in units and not in terms of bytes. The effect is to increase the effective block size to 1.8MB. This change virtually doubles the number of transactions that can be processed in each block.

The Lightning Network was the second major development in Litecoin’s improved transaction speed. Essentially, along with the commitment transaction is a second confirmation transaction. As long as the two parties confirm the confirmation transactions then the transaction goes ahead as agreed in the confirmation transaction. Transaction confirmations are have aa time limit. As such, transactions need to be confirmed within the time period in order to be processed. Therefore, confirmation from the rest of the blockchain is not required in order process the transaction. This minimises irrelevant or unjustified transactions on the blockchain. As a result, the blockchain only contains valid transactions and therefore more efficient.

Litecoin versus Bitcoin

The updates to Litecoin mean that new blocks can be processed four times faster than Bitcoin. This minimises the threat of the double spending by unscrupulous users.  As such, in my opinion Litecoin is a superior cryptocurrency. It is more likely to be the cryptocurrency that will be used by mainstream retailers. Retailers need transactions to be confirmed quickly. Litecoin is the answer.

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