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Litecoin is a software fork of Bitcoin, which means the two share a lot of code. Litecoin is intended to act as Bitcoin’s “silver to gold” rather than compete with it. Lee sought to make Litecoin technically distinct from Bitcoin in two different ways. First, it initially aimed to allow the average consumer to mine the coin using consumer grade hardware, as opposed to the specialized mining hardware required by bitcoin. Second, Lee sought to create a network that would allow for faster and cheaper transactions, about 2.5 minutes per transaction compared to 10 minutes for Bitcoin.
Lee launched Litecoin using code very similar to bitcoin, save for a few key differences that aimed to solve bitcoin’s transaction speed and scalability.
The main differences are that litecoin will have a maximum of 84 million coins, as opposed to 21 million bitcoins, and that it incorporates Scrypt’s proof-of-work mining algorithm, as opposed to bitcoin’s SHA-256. The goal was for people to be able to use any computer to mine litecoin and thus make mining more democratic. Lee designed litecoin to complement bitcoin as a means of payment.
Litecoin was launched in October 2011. The first Litcoin block, its genesis block, was mined on October 8, 2011. The code for Litecoin was released three days before the mined genesis block and the next two blocks confirmed that the genesis block was valid.
In May 2017, litecoin conducted a “soft fork” to enable segregated witness (SegWit), a change that allowed it to create more transactions per block. This was done by putting less data load on each transaction by removing the signature information. This was done to resolve the long-term downsizing debate that originally started with bitcoin and spilled over to litecoin due to the similar code base.
Litecoin is a deflationary currency, as there will be a hard limit of 84 million litecoins ever created, which is four times the total supply of bitcoin. With a reward of 50 litecoins per block created in the beginning, the block reward is halved every 840,000 blocks and the last block is expected to be mined in 2142.
The average litecoin time to produce a block is 2.5 minutes compared to bitcoin’s 10 minute block time. Transactions for litecoin, similar to bitcoin, are all produced on-chain.
Used as a peer-to-peer open source digital currency, Litecoin was written in C ++ and is still primarily based on the bitcoin protocol.
