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This is a cryptocurrency guide sponsored by eToro.
In our previous eToro beginner's guide, we treated Bitcoin and Ethereum and the basic concepts behind it. In addition to Bitcoin, there are over 3,000 cryptocurrencies. In this series of beginners, we will cover some of the most important cryptocurrencies in the market. This guide looks at Litecoin.
History of Litecoin
Charlie Lee during an interview with Coin Congress. Source: everipedia.org
Litecoin is one of the first Bitcoin forks, which borrows heavily from Bitcoin's open source codebase. It was created and released on GitHub by former Google and Coinbase employees Charlie Lee October 7, 2011. The first block of Litecoin, also known as the genesis block, was extracted on October 13, 2011. This launch date was chosen based on the results of a survey of the first Litecoin supporters.
Litecoin was not the first coin created by Charlie Lee. Before Litecoin, he experimented on a coin called Fairbrix, which is a fork of Tenebrix. However, it did not take off due to a software bug in the source code from which it was bifurcated.
Interestingly, Litecoin did not have a white paper. Lee stated that Litecoin aims to be the "Silver to Bitcoin & # 39; s Gold" and reach all the noble objectives of Bitcoin, adopting a "lighter" approach and using a different hashing algorithm.
An extravagant detail of Litecoin's blockchain is that the Geneco block of Litecoin has a hidden message, just like Bitcoin's Genesis Block. If you decode the raw hexadecimal data in ASCII format, you will see the message "NY Times 05 / Oct / 2011 Steve Jobs, Visionary of Apple, Die at 56". This was the title of The New York Times on October 5, 2011.
Litecoin details
All Litecoin public key addresses begin with "L" or "M". There is a distinction between the "L" and "M" addresses. "L" addresses are legacy addresses that do not support SegWit, while "M" addresses are compatible with SegWit.
SegWit (Segmentated Witness) is a protocol update that frees more space on the blockchain by separating signature data from transactions. SegWit also solves the problem of malleability of transactions that now allows the implementation of the Lightning network. With Lightning Network, immediate payment on Litecoin is possible at a very low cost.
Litecoin, like the "light" version of Bitcoin, shares many similarities with Bitcoin. Litecoin has the same divisibility as Bitcoin units. The smallest unit of Litecoin is known as lithoshi, which is equivalent to one hundred millionth of a single litecoin or 0.000000012 LTC.
The inflation rate of Litecoin is similar to that of Bitcoin. Mining premiums are reduced by about 50% every 4 years. In the case of Bitcoin, mining premiums are halved every 210,000 blocks. However, Litecoin's mining premiums are halved every 840,000 blocks.
Litecoin has a blocking time 4 times lower than that of Bitcoin. Its blocking time is 2.5 minutes compared to the 10-minute Bitcoin blocking time. Litecoin also has an emission limit of 84 million LTC, which is 4 times higher than Bitcoin's BTC 21 million.
Currently 58 million litecoin were extracted. This represents almost 70% of all litecoin that will ever be created.
Scrypt Mining
When Litecoin was launched in 2011, miners had already started using rudimentary ASICs (application-specific integrated circuits) to extract bitcoins. Some advocates felt that this distanced itself from the original "1 CPU 1 vote" vision of Satoshi Nakamoto (the creator of Bitcoin) and tried to experiment with a way to penalize mining from anything other than a CPU.
Charlie Lee echoed this point of view when he implemented the Scrypt hashing algorithm for Litecoin's Proof-of-Work consent algorithm. Scrypt differs from Bitcoin's SHA-256 in that sector requires more memory resources than simple processing power. This makes the Scrypt extraction more resistant to ASICs.
However, the use of Scrypt to keep ASICs away was not a permanent solution. While the extraction of Litecoin became more profitable, Lee foresaw the emergence of Scrypt ASICs. Currently, there are ASICs specialized in the extraction of Scrypt cryptocurrencies like Litecoin.
The value of Litecoin
What started out as a fun experiment by Charlie Lee quickly became a cryptocurrency with many cases of niche use and their own community of supporters. First, Litecoin implemented SegWit and Lightning Network before Bitcoin, serving as a test-bed for Bitcoin's blockchain. Bitcoin developers can monitor the effects of SegWit and Lightning Network before implementing Bitcoin.
Another interesting aspect of Litecoin is its relatively low transaction fee and higher transaction speed. Since Litecoin processes a block 4 times faster than Bitcoin, it can confirm transactions at a faster rate than Bitcoin. Similarly to Bitcoin, Litecoin commissions are also paid in a "per-byte" manner. It does not matter if you send 1 litecoin or 20.000 litecoin; what matters is the amount of information necessary to carry out the transaction. So, rather than having to pay heavy commissions in Bitcoin for a small transaction, you can use Litecoin and benefit from its lower fares.
Conclusion
Cryptocurrencies like Litecoin play an important role in the development of the public blockchain ecosystem. As demonstrated by SegWit, many features are tested on smaller altcoins before being implemented on larger blockchains such as Bitcoins. This allows new features to be tested in battle so that all bugs can be located and corrected.
This is a cryptocurrency guide sponsored by eToro.
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