Beginner’s guide: Litecoin

Beginner’s guide: Litecoin

Litecoin is a universal, peer-to-peer Internet currency that enables instant, near-zero cost payments throughout the world. It is an open source, global payment network that is fully decentralized. Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency.

The project was initiated by Charlie Lee and released on GitHub in October of 2011 basing its foundings around the technical details of Bitcoin. That is why to understand Litecoin, it also helps to understand the technology of Bitcoin, as Litecoin is a fork of the “Bitcoin Core Client”. With substantial industry support, trade volume and liquidity, Litecoin is a proven medium of commerce complementary to Bitcoin.

Litecoin is characterized by the following notable advantages and differences which include:
– The rate at which transactions are confirmed: Bitcoin’s algorithm allows for one transaction to be added to the public ledger every 10 minutes, Litecoin has a faster rate – at one per 2.5 minutes. In theory, this helps avoid one of the only types of fraud that can happen with cryptocurrency: “double-spending”.

– The number of coins that can ever be created: Litecoin’s algorithm will allow for a total of 84 million Litecoins to be created. This max capacity is 4 times greater than that of Bitcoin, mirroring the 4 times faster rate of transaction confirmation.

– Differences in cryptography algorithms: Both coins use a proof-of-work algorithm, but while Bitcoin uses the SHA256 hashing algorithm, Litecoin uses the scrypt hashing algorithm. The core difference here lays in the method of making the calculations. While this algorithm does, in fact, also utilize the SHA 256 algorithm, its calculations are way more serialized than the SHA-256 in Bitcoin. As such, parallelizing the calculations is not possible.

In essence, this makes confirming Litecoin transactions more CPU-intensive on machines designed to mine Bitcoin. So, scrypt appeared to be a “memory hard problem” since the main limiting factor isn’t the raw processing power but the memory.

How are Litecoins mined?
Mining is an integral part of the cryptocurrency ecosystem, a process that allows for the steady release of Litecoin following the solving of complex mathematical algorithms. While different currencies allocate different rewards, Litecoin’s mining award is currently set at 25 new Litecoins per block (formed approximately every 2.5 minutes).
Because the process is extremely difficult, a reward is given to guarantee the supply of miners who will secure the network. To slow inflation, the Litecoin network will cut the reward in half every four years

How to Trade Litecoin?
You are able to trade Litecoin on various stock exchanges under the LTC symbol. If you’re seeking to trade Litecoin for altcoins, your best bet is to purchase them on reputable exchanges and deposit them into respective Litecoin wallets on a low-fee trading site.
If you simply wish to buy and invest long-term, or as the crypto-community likes to say HODL (hold on for dear life), then purchasing on exchanges and simply leaving them on sites is fine.

How to Store Litecoin?
A Litecoin wallet is somewhere that lets you store your Litecoin digital assets. Below are some wallet storing options you can use:

  • Hardware wallets ( such as Ledger Nano S, Trezor) are physical devices where you can store your cryptocurrency. They come in a few forms but the most common is the USB stick style typified by the Nano Ledger series. Although many swear by them, hardware wallets are still prone to compromise. But under no circumstances should anyone ever use a pre-owned hardware wallet.
  • Desktop wallets (such as Jaxx, Exodus, Litecoin Core) are a form of hot wallets. They are downloaded and installed on a single PC or laptop and they are only accessible from that one device where it was downloaded. While it is a safer alternative than an online wallet, it can still be very inconvenient because you will not get access to your money unless you are on the device from which you downloaded the wallet.
  • Mobile wallets (such as Jaxx, LoafWallet) are a pretty good example of hot wallets. They are pretty convenient to use because all you need to do is to download an app into your phone.
  • Paper wallets (for instance, Liteaddress) are an offline cold storage method of saving cryptocurrency. It includes printing out your public and private keys on a piece of paper which you then store and save in a secure place. The keys are printed in the form of QR codes which you can scan in the future for all your transactions. The reason why it is so safe is that it gives complete control to you, the user.

For large amounts, you may want to consider purchasing a hardware wallet to secure your digital assets from an attacker. For a cheaper yet extremely secure alternative to hardware wallets, you can consider using paper wallets. However, they can be risky if you don’t know what you’re doing.

Unfortunately, Litecoin is not as widely supported as a payment options offline. But functioning like a currency and store of value, it has lots of places online where it is accepted or could be, for instance, converted into BTC for use. Litecoin is also much more “trade-able” as it has a lower price per coin so it has become a favorite of cryptotraders because of this and it’s very steady price in comparison to some other cryptocurrencies.

But we should not disregard the fact that Litecoin has been around almost as long as Bitcoin. It is stable, fast, cheap, has clear direction, and can by right be considered an under valued asset in the cryptocurrency world.

Related Posts

In the first part of this article, we looked at how to correctly set the commission ...
Most of us are familiar with Bitcoin. It has totally changed our attitude towards finance and ...
Bitcoin was originally created as an alternative decentralized payment method. In some parts of the world, ...
Our life has been changed by the new technologies and money is not an exception. The ...
  • 5
  • 1
  • 1

Leave a Comment