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

In 2011 a former Google engineer Charles Lee created Litecoin. 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 implication is that transactions are confirmed and processed more speedily.

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 the speed of transactions is inherently limited. 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 (SegWit) by hiding the size of the block. The Segregated Witness code measures blocks in units and not bytes. The effect is to increase the effective block size to 1.8MB doubling the number of transactions processed.

The Lightning Network was Litecoin’s second major transaction speed development. 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 must occur within a time limit. The result is that wider blockchain confirmation is not required. 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

New blocks of transactions are processed four times faster than Bitcoin due to the SegWit and the Lightning Network. This minimises the threat of the double spending by unscrupulous users.  As such, in my opinion Litecoin is a superior cryptocurrency. Mainstream retailers will likely use a cryptocurrency that can process transactions quickest. Litecoin is the answer.

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