[ad_1]
Created in 2011, Litecoin is an evolution of Bitcoin. It is based on a modified version of the original Bitcoin code.
As such, the two cryptocurrencies have a lot in common. However, specific code and algorithmic changes allow Litecoin to transact faster and cheaper than Bitcoin. This makes Litecoin a useful method for small payments.
Litecoin is 10th the largest cryptocurrency by market capitalization, currently valued at $ 4.27 billion. It is used to purchase goods and services or make payments. It can also be bought and traded on exchanges such as BTC markets.
How can Litecoin make transactions faster and cheaper than Bitcoin? Why is it ideal for small payments? How is the new Litecoin created? This guide answers these questions.
How does Litecoin make transactions faster and cheaper than Bitcoin?
Litecoin transacts faster than Bitcoin thanks to its “confirmation time”. The confirmation time is the period between sending a cryptocurrency transaction and receiving the assets. Litecoin’s confirmation time is 2.5 minutes. Compare this to Bitcoin’s 10 minutes, which is four times longer.
The Bitcoin payment network can get busy. After all, it is one of the most used cryptocurrencies in the world.
Computers that process Bitcoin payments work harder when network demand increases. To pay for this, the transaction fees go up. The busier the network, the higher the fare. Users can even pay higher specific fees to increase the speed of their transactions.
Litecoin’s network works in much the same way. However, because the confirmation time is faster, the network is less congested. This keeps the transaction fees lower. As such, making daily payments using Litecoin is more efficient than Bitcoin.
Why is Litecoin ideal for smaller payments?
Bitcoin, Litecoin, gold and silver are all in short supply – only a limited amount will ever exist. Bitcoin is often described as “digital gold” being limited to 21 million tokens.
Litecoin is more abundant than Bitcoin with 84 million tokens. Since Litecoin is less expensive, it is considered the “silver” cryptocurrency compared to Bitcoin’s “gold”.
Litecoin’s higher token limit and lower price make it more practical for small payments. For example, you want to pay a friend $ 170 with cryptocurrency. At the time of writing, each Litecoin or Bitcoin is worth $ 68 and $ 14,295 respectively. That said, you can send 0.0118925 Bitcoin or 2.5 Litecoin.
How is the new Litecoin created?
The new Litecoin is created and comes into circulation through a process called mining. This process is very similar to that of Bitcoin.
The miners are the worker bees of the Litecoin blockchain network. They are specialized computers that verify and organize transactions on the network in “blocks”.
However, mining equipment is both expensive to purchase and manage. To cover the costs, miners are rewarded with a set amount of newly created Litecoin per mined block. In effect, they digitally mine new coins which then go into circulation.
Over time, the reward dwindles. This process, known as “halving”, is built into the Litecoin code. It occurs once every four years, halving the mining reward by half.
Currently, 12.5 Litecoins are awarded per block mined. The next halving, scheduled for August 2023, will see mining premiums halve to 6.25 Litecoin. The last Litecoin is estimated to be mined in 2142. There are currently 65.4 million Litecoins in circulation.
The halving ensures that Litecoin remains a deflationary asset. This means that as scarcity and demand increase, the value of the cryptocurrency should also rise.
Since 2011 Litecoin has always been one of the best known and most valuable cryptocurrencies. It shows how digital assets can be used for daily payments. Its continued development will ensure Litecoin is a leading digital asset for years to come.
BTC Markets is Australia’s leading digital asset exchange, trusted by 270,000 verified clients who have traded over $ 10.5 billion. Buy, sell and trade Litecoin (LTC), Bitcoin (BTC), Ethereum (ETH), XRP and more with AUD today. Visit BTC markets for more information.
This article was developed in collaboration with BTC Markets, a Stockhead advertiser at the time of publication. This story does not constitute advice on financial products. You should consider getting independent advice before making any financial decisions.
