Ushered into existence by Google engineer Charlie Lee on October 13, 2011, Litecoin is the tenth largest cryptocurrency by market capitalization at present.
Litecoin coin is an “OG” crypto. Apart from Bitcoin, no different coin has stayed in the top ten longer. BTC and LTC have held locations in the charts for 410 and 409 weeks, respectively (different high performers embody XRP at 396 weeks and ETH at 291).
It was created following a source code “fork” of the Bitcoin Core blockchain (a fork is when a blockchain diverges into two separate paths, creating two distinct cash). Litecoin’s largest variations from Bitcoin embody:
- Decrease transaction charges
- A special hashing algorithm
- A decreased block era time
- An elevated most cap of cash
Don’t be deterred! We’ll get into the specifics of those variations beneath and likewise take a look at how these elements contributed to Litecoin’s success as a extra “spendable” cryptocurrency. You’ll have heard Bitcoin described as “digital gold,” and following that line of pondering, Litecoin might be thought-about “digital silver.” However the cryptocurrency’s historical past isn’t as spotless as you may assume.
In an April 26 interview with CNBC’s Worldwide Exchange, Lee mentioned Litecoin, evaluating and contrasting its attributes with these of Bitcoin. Though Lee is one thing of a polarizing entity within the cryptosphere, it’s price listening to what he has to say concerning the cryptocurrency he invented. Let’s dive in.
CRYPTO-SAVVY is an occasional sequence from Inverse that explains the world of cryptocurrency and the place it’s going subsequent.
Litecoin vs. Bitcoin
One of many essential variations between the 2 cryptocurrencies is transaction charges (1). Cryptocurrency miners select to validate the transactions that pay essentially the most. The current average transaction fee for Litecoin, on the time of writing, is simply $0.04. With Bitcoin, that quantity is far increased, with its common transaction charge being $26.89.
“The Bitcoin blockchain is congested,” says Lee. “Everyone seems to be competing to get their transactions into the subsequent block, and the best way they do that’s by paying extra charges.”
One other basic distinction between Litecoin and Bitcoin is their mining algorithms (2). Litecoin employs Scrypt, one of many first hashing algorithms carried out on blockchain networks. Builders of Scrypt supposed it to be an enchancment on an excellent earlier hashing algorithm, SHA-256 (the one utilized by Bitcoin). Lee selected Scrypt for good purpose, however now we have to take a deeper have a look at cryptocurrency mining to grasp why.
The fundamentals: mining might be carried out utilizing a central processing unit (CPU), graphics processing unit (GPU), or application-specific built-in circuit (ASIC) miners. ASIC miners have the benefit of with the ability to clear up the advanced knowledge strings wanted to mine (assume “win”) the block a lot faster – producing significantly extra hashes (assume “tries”) per second than CPUs or GPUs.
Consequently, Bitcoin mining, utilizing the dearer and hard-to-find ASICs, is now a kind of arms race. On April 28, Core Scientific, the most important mining pool in North America, announced it had bought 112,800 Antminer mining machines from ASIC producer Bitmain. Core Scientific’s CEO says this most up-to-date buy might assist his firm enhance its world share of Bitcoin’s hash fee from 5% to 12%. To be clear, this is able to imply one group might plausibly be processing greater than 1/10 of all of the Bitcoin blocks and, within the opinion of many, this goes in opposition to a philosophy on the very core of cryptocurrencies: decentralization.
That is the place Litecoin’s hashing algorithm is available in: Lee went with Scrypt as a result of the algorithm is much less vulnerable to ASIC mining. Whereas through the years, Scrypt ASIC miners have turn into extra prevalent, nearly all of the mining on the Litecoin blockchain nonetheless makes use of CPUs and GPUs, making it way more accessible to the typical particular person and fewer vulnerable to “management” by aforementioned centralized mining swimming pools.
“Digital Gold” versus “Digital Silver”
In his CNBC interview, Lee additionally explains why he calls Litecoin the “digital silver” to Bitcoin’s “digital gold.” As we all know, all through historical past, each gold and silver have been used as currencies, and since gold is price a lot greater than silver, it is higher fitted to big-ticket objects. Gold is essentially the most marketable good when giant values are traded (like shopping for a automotive), with silver being essentially the most marketable good for smaller transactions (shopping for groceries).
Arguably, this “spendability” is what Lee is referring to with this “digital silver” narrative. Due to the low transaction charges for Litecoin, the coin can be utilized extra readily. Transactions on the Litecoin community additionally occur sooner (3) than these on the Bitcoin community, on common each 2.5 minutes versus 10 minutes for Bitcoin.
However from a technical standpoint, it is not all excellent news. Whereas the Litecoin community could also be 4 instances sooner, there are additionally 4 instances as many cash (4). As per Coin Market Cap, the present circulating provide of LTC is 66,752,415 (with the max provide being 84,000,000). Conversely, the circulating provide of BTC is eighteen,694,375 (with the max provide being 21,000,000).
For Litecoin, this might be considered as a unfavourable attribute as a result of a part of the explanation Bitcoin is so precious is its shortage, and this shortage is why the highest cryptocurrency by market cap is usually touted as being the final word hedge against inflation.
That mentioned, issues might be worse: there’s no restrict or max provide cap on Ethereum’s native cryptocurrency Ether or one other current favourite, Dogecoin. As an alternative, supply increases every year. Whereas supporters of Ether could be fast to level out that there are proposed financial insurance policies within the works geared toward curbing inflation over time with out counting on a provide cap, nothing concrete has materialized but, as Ethereum’s monetary policy is in flux.
“Why do folks hate LTC?”
As touched on briefly within the introduction, a contributing issue to the anti-Litecoin sentiment surrounds its founder Lee, who bought all of his LTC holdings in December 2017 when the coin was nearing its all-time high of $310. It is because of this some folks accuse him of pumping and dumping his holdings for his personal private profit.
One other perspective, in accordance with Ilir Gashi of their Medium piece “Defeating the FUD: Charlie Lee promoting his Litecoin as a result of Battle of Curiosity,” is that Lee “bought his Litecoins as a result of a rising perceived battle of curiosity.” Gashi’s article goes on to supply particular causes that assist “make clear why Lee promoting was one of the best factor for Litecoin shifting ahead, to stay decentralized.”
This clarification is smart. Distancing oneself from a mission to alleviate issues of battle of curiosity is typically par for the course in enterprise, and looks as if a fairly authentic purpose for Lee’s sale.
A fast Google search reveals a Reddit thread titled “Why do people hate LTC?” The thread helps shed some extra mild on the place this anti-Litecoin sentiment comes from. As per contributors, this attitude stems primarily from so-called “Bitcoin Maximalists” – BTC supporters who imagine the Bitcoin community offers any and all the pieces that buyers need or want in a digital foreign money. A few of them see Litecoin as only a copy/paste model of the world’s main crypto.
Maybe at first look, there’s some reality to that. However in actuality, when one dives a little bit deeper (and as I feel I’ve proven on this piece) there are a number of vital variations, use instances, and purposes for each cash. Don’t @ me!
CRYPTO-SAVVY is an occasional sequence from Inverse that explains the world of cryptocurrency and the place it’s going subsequent.
