Litecoin hasn’t been around quite as long as Bitcoin. But it’s only a couple of years younger than Satoshi Nakamoto’s creation, and has shown staying power as one of the leading alternatives for cryptocurrency traders and investors.
A computer science graduate of MIT, Charles Lee was a Google software engineer when he created Litecoin in October 2011. He’d just helped to create an altcoin called Fairbrix, a fork of another currency called Tenebrix, and decided it would be “fun” to launch a new cryptocurrency of his own, he recounts in this talk from March 2017. In addition to the opportunity to learn the Bitcoin code, he says, he also welcomed the challenge of trying to create a better altcoin.
So what’s different about Litecoin? While it’s technically “nearly identical to Bitcoin”, it has a coin limit of 84 million compared to Bitcoin’s maximum of 21 million, and also processes blocks more quickly – at the rate of one every two-and-a-half minutes (the Bitcoin network takes 10 minutes).
“Bitcoin is a great store of value. I’m fine spending ~$1 fee per transaction, but I can’t stand waiting 40+ minutes for a confirmation!” Lee tweeted in 2017. “The probability of this on Bitcoin is equivalent to a 10-minute wait for confirmation on Litecoin.”
Litecoin also uses scrypt for its proof-of-work algorithm instead of Bitcoin’s SHA-256. This makes it harder to develop custom ASICs for mining, and helps preserve the ability for Litecoin miners to use CPUs rather than more specialised mining devices.
The goal, according to the Litecoin Wiki, was to “preserve the decentralisation in mining that brings a decentralised currency so much of its value and resiliency.”
Because of differences like these, Litecoin has long been touted as the “silver” to Bitcoin’s “gold”.
Fluctuating in price from single to low double digits for most of its existence, Litecoin – like most other cryptocurrencies – experienced massive spikes in value from December 2017 through January 2018, briefly seeing prices surge past $300. Over the past three months, values have declined from the $50 range to the $30 range, with a market cap close to $2 billion as of early January.
Like Bitcoin and other popular altcoins, Litecoin can be purchased directly with fiat currencies or traded with Bitcoins using any of a number of crypto exchanges, which typically offer storage services as well. Investors can also store their Litecoin in a variety of software-based wallets, including Litecoin Core, Electrum Litecoin and the Lee-developed LoafWallet, as well as in hardware wallets.
So what are the future prospects for Litecoin?
According to Ilir Gashi, community manager for the Litecoin Foundation, the past year saw business support for Litecoin transactions grow “significantly”.
“The focus going into 2019 is to continue driving adoption,” Gashi wrote recently on Medium. “In terms of developments, we are aiming to grow the Lightning Network on Litecoin and incorporate Atomic Swaps as well as Privacy features... The Lightning Network allows transactions to be validated off-chain instantly at very minimal costs, which enables Litecoin to scale at much bigger capacity and improve its user experience. In addition, the use of Atomic Swaps will aim to enable the ability to swap two coins instantly and act as a way of transferring value between currencies, improving interoperability.”