What is Litecoin?

Litecoin: A Solid, Stable Cryptocurrency

Per their website: “Litecoin can be readily purchased and sold on several exchanges using all types of currencies. Find the one that’s right for you and get coins in minutes. Litecoin can be identified on exchanges under currency symbols LTC or XLT.” Litecoin is the underdog currency, incredibly stable as far as crypto currencies go, and one of the least affected by the upward and downward spikes that have run rampant across all currencies through the boom and crash of 2017.

The Story of How Litecoin Came to be

Litecoin acts in a similar cryptocurrency fashion to Bitcoin. In some ideologies, Litecoin is a direct Bitcoin competitor on various exchanges. Much like Bitcoin, Litecoin exists on a blockchain, where participating nodes work to process individual, anonymously hashed transactions. Also like Bitcoin, miners provide the security aspect, working to very all sales across the block chain.

Originally thought of by Charlie Lee in 2011, Litecoin has experienced slow but steady increases in popularity. Since its launch, Litecoin has experienced consistent adoption, owed to an incredible active network and community of traders, providers, and developers. After Bitcoin and Ethereum, Litecoin is the third most well-known and widely-used crypto currency.

Litecoin Mining: Less Dirty Work Than Anticipated

Litecoin availability is due to the mining process, much like all other cryptocurrencies. This Litecoin mining process serves a dual purpose not only to add transactions to the Litecoin blockchain but also to release new Litecoins into the crypto market. Litecoin mining consists of transaction compiling into blocks, decoded and placed into the blockchain by miners in return for a reward.

While Litecoin mining is an entirely decentralized process, it is a task that is capable of being performed by anyone who has a fast internet connection and the appropriate hardware to mine. Network security is dependent on this Litecoin mining decentralization. Mining power in the Litecoin network is reliant on the miner incentive (block reward and transaction fees). Block rewards currently provide most of the Litecoin miner incentives. Now, transaction costs represent less than one percent of all Litecoin mining revenues.

The inherent difficulty of Litecoin mining is correlated directly with efforts being put into the Litecoin mining process across the network. The Litecoin blockchain network automatically adjusts mining difficulty every so often, with the aim to keep block discovery rate consistent. More needed computing power means the challenge to mine Litecoin and other cryptocurrencies is far more difficult, maintaining barriers of entry, as well as ensuring Litecoin mining doesn’t become saturated. Most of the operational costs for these miners come from hardware and electricity.

Finding The Best Exchanges For Trading Litecoin

Litecoin exchanges are secure, digital marketplaces, inside which crypto trading can take place, and traders can purchase and sell Litecoin for other crypto-currencies or fiat currencies (also known as legal tender, such as the dollar and yen). Litecoin, traded actively under the currency ticker symbol LTC, is traded on most major exchanges and is one of the most stable currencies under trade today.

Litecoin exchanges work to match cryptocurrency buyers with Litecoin sellers. Very much like a standard stock exchange, cryptocurrency traders have the option purchase and sell Litecoin by either inputting a limit or market order.

  • If an operator decides to place a limit order, the cryptocurrency trader is directing the Litecoin exchange to trade Litecoin for a price below the current asking price (if buying), or above the current bid price (if they are selling).
  • If that same trader decides to place a market order, they are authorizing the Litecoin exchange to trade their currently-owned Litecoins or other cryptocurrencies at the most suitable price point available on that particular exchange over a period.

Two of the best, most reliable exchanges for the purchase and sale of Litecoin cryptocurrencies are Gemini and Bitsquare. More information on these two exchanges can be found in the Litecoin Exchanges section of the List of The Most Reliable and Highest Quality Exchanges article.

Selecting A Proper, High-Quality Litecoin Wallet

Like its precursor, the physical wallet, a Litecoin wallet is used to store various quantities of Litecoin. The difference between the two portfolios comes from the concept of a Litecoin crypto currency wallet storing collections of private and secure transaction keys. Typically, a Litecoin wallet is heavily encrypted and password protected to prevent unauthorized access to the portfolio for malicious purposes.

In comparison to the actual Litecoin network or the blockchain, the Litecoin wallet is controlled by just its owner. This is instead of the fully distributed and shared blockchain. It is of vital importance to keep tabs on your Litecoin wallet and keep it safe if you choose a physical form of a wallet such as a USB drive.

The most efficient type of wallet for those who are not concerned with having high levels of expensive security or do limited trading is an online version, for example, Coinbase’s wallet. If you’d like to step up, the next level would be a mobile Litecoin wallet where the transactions are stored offline on your phone. The hardcore option is a desktop or hardware wallet, but these run the risk of being destroyed and lost forever without a proper and frequent backup.

The Choosing the Correct Type of Wallet for your Coins article has far more information on the various types of crypto currency wallets available, as well as which work best for which situation, including Litecoin.

More Information about Litecoin

Litecoin is billed as an alternative to Bitcoin, and the value rose for this cryptocurrency in recent months. Here’s more what you need to know about LTC. You might have heard about the Bitcoin (BTC), but what is Litecoin (LTC)? In some ways, it is a direct rival. Just like the bitcoin, it is open-sourced so anybody can access the code and modify it to fit their own requirements. It is decentralized, so there’s no mechanism to regulate the transactions or value. The Litecoin is fully dependent on algorithms and the supply and demand.

History of the Litecoin

The Litecoin digital currency was conceived by Charlie Lee back in 2011. Just for comparison’s sake, the Bitcoin was developed by Satoshi Nakamoto two years previously. To date, the identity of Nakamoto is unknown. It’s not even certain whether it’s an individual or a group using the moniker.

But back to the Litecoin. In the community forum Bitcointalk.org, Lee explained that the cryptocurrency was invented to serve as an alternative to Bitcoins. He called it the “silver” if the Bitcoin is the “gold” standard. Basically, Lee and his group took the best practices by previous alternative currency blockchains and used them to improve the Litecoin.

For instance, it uses scrypt, which was used by Tenebrix, as the algorithm because it allows parallel mining between the Litecoin and the Bitcoin. Secondly, it borrowed from SolidCoin’s ability for fast transactions. To compare, the Bitcoin has the average block time of 10 minutes. For the Litecoin, it’s 2.5 minutes.

It also has a higher coin limit due to the faster block time. Whereas the Bitcoin has 21 million, Litecoin has 84 million, which is the anticipated trajectory considering that the block reward for this currency is halved every 840,000 blocks (compared to bitcoin’s 210,000 blocks).

There’s no way the Bitcoin can match Litecoin’s transaction speed. To do that, it would have to upend a whole industry, which means anyone using this currency will have to upgrade their codes. Although to be fair, the speed is not as significant considering that sellers approve of bitcoin transactions even with zero confirmation in nearly all purchases. In that sense, it doesn’t matter that the merchant will wait for 10 minutes before the confirmation.

Litecoin’s Scrypt Algorithm

As already stated, the Litecoin utilizes scrypt as an algorithm, which is supposed to be an improvement of the Bitcoin’s SHA-256. The faster transaction apparently prevents double spending attacks. For instance, one of the initial complaints about the Bitcoin is that it’s vulnerable to a 51% attack in mining.

BTC is also supposedly very complicated, especially for the average user. On the other hand, scrypt was designed to make transactions more accessible to any user without necessarily customizing mining protocols using Application-Specific Integrated Circuits (ASICs). These are the technology used to compute the proof-of-work for the BTC.

However, the release of the scrypt-specific ASICs in recent years by companies such as Flower Technology and Zeus theoretically puts the average user at the disadvantage compared to the more sophisticated merchants in a large mining pool.

What is Litecoin Mining and How Does it Work?

ASICs for the Litecoin are already available, but they are not only expensive, they are also a pain to acquire. For instance, you can buy ASICs for under $1,000 for BTC, and you can already start mining. For LTC, well, you really have to spend serious money.

An Antminer, which is the hardware option for Litecoin mining, will set you back between $5,000 and $6,000 on eBay. The Antminer is introduced by Bitmain, which came under fire for the Antbleed Backdoor script, which can suddenly prevent the user from mining. One way to save money is to just convert the BTC to LTC using the Antminer S7, which sells for around $500.

But why do you need proof of work anyway? Just like the name suggests, you need the protocol to determine if the transaction is legitimate. Remember that everybody has access to the same source code, so how do you know that the block’s value is really what it claims it is? It’s not the same when paying via online wallet, for instance, where Paypal is the third-party guarantor.

There’s a lot that goes behind the scene when you set up a transaction, such as:

  • All the transactions are lumped into what’s called the block.
  • The miners will then try to determine if the transactions for each block are verifiable
  • Here comes the proof-of-work puzzle, which miners will have to solve using a mathematical formula
  • When a miner solves the equation, they get a reward
  • If the transaction is proven to be legit, it will then be transmitted to the public blockchain

In recent years, the term proof-of-stake has gained traction. There’s no reward system under this scheme. There’s an advantage to this system, not least of which is to avoid the large amount of energy used in the proof-of-work. In essence, forming a new block will be as simple as identifying an already established transaction depending on value. This is now called a stake. Compare that to proof-of-work where miners have to compete with each other to solve the equation before they can create a new block.

Determining Litecoin Profitability

There are many factors that may affect Litecoin profitability. There’s also a stark difference between being a mere participant in the digital stock exchange to mining. In the latter method, prepare to spend a lot in terms of your electrical bill. The hardware needed to compute proof-of-work in LTC is much greater compared to Bitcoin. Whereas ASICs employed in BTC require less energy to work, you don’t have such luxury with Litecoin mining.

You will have to factor the cost of your electrical bill to the earnings. Obviously, if the money coming out is bigger than the money coming in, you have to seriously reconsider your present setup. One way to defray the cost is to join other miners and combine your assets. In that way, you can spread your risks. You can make use of the LTC mining calculator in order to compute profitability.

The Litecoin is getting good traction right now, which makes it a worthy investment. Whereas the Bitcoin and other digital currencies have suffered a downslide, LTC value went up from just $40 in June 2017 to $46 as of August 2017. In fact, it peaked at $55 in July this year. The learning curve in trading with cryptocurrencies is very steep, however, so make sure to do a lot of research, join community forums and hire professionals if you want to participate now.
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