When we are speaking of cryptocurrencies Litecoin is sure to come up in the conversation as one of the most popular digital currencies, right behind Bitcoin.
Introduced in 2011 by founder Charlie Lee, Litecoin is in essence very similar to its older cousin – Bitcoin. In fact, Litecoin is often compared to silver while Bitcoin is thought of as Gold in the cryptocurrency world.
In reality, Bitcoin and Litecoin generally have the same properties. Both have a finite number of coins that can be ever produced, both use the proof of work method to verify transactions, and both use the blockchain technology to secure the network.
The differences between Litecoin and Bitcoin are more in the nuances than at face value. For instance, Bitcoin’s maximum number of coins is 21 million, whereas for Litecoin the maximum number of coins that can ever be created is set to 4 times that of Bitcoin or 84 million.
Litecoin was designed by Charlie Lee with the main idea to provide improvements to the already existing technology of Bitcoin. In this sense, Litecoin is literally Bitcoin’s twin brother if you will.
Litecoin has some key advantages over Bitcoin, however, primarily in terms of transaction speeds and transaction costs. Litecoin has a shorter verification time for each transaction which is ¼ of the time needed to verify a Bitcoin transaction. So, whereas it takes 10 minutes to verify a Bitcoin transaction on average, for Litecoin that time is 2.5 minutes. To achieve this, Litecoin uses a smaller block size which automatically allows for both faster and cheaper transactions.
This reduces the security of the transaction to some degree, but certainly, in no way it makes Litecoin transactions unsafe. If the gold-silver analogy is considered in this regard, it would make sense for someone to use Litecoin for smaller everyday transactions and use Bitcoin for payments of larger amounts. In that way, the person would make the most use of both cryptocurrencies, which anyway, was the intention of Litecoin’s founder in the first place.
So, the Litecoin network is considered to be somewhat less secure than those of other digital currencies and that’s one of the disadvantages.
In addition, the question comes up of how well will Litecoin survive in the future. For example, it could be overtaken by the other digital coins if their transaction processes are improved.
Suppose that the verification process on Bitcoin transactions is enhanced and transaction time and costs come close to those of Litecoin. In that case, there will be few reasons for someone to use or own Litecoins.
The main advantage of Litecoin is that it’s a more efficient version of Bitcoin. if that is ever taken away there likely will be little left in this coin that can attract investors.Conclusion
So, all in all, Litecoin is an interesting cryptocurrency that can be particularly useful for people that are frequently using digital coins as a medium of exchange. In terms of its value, Litecoin should generally move in tandem with and closely track Bitcoin as it’s heavily based on it.
Of course, monitoring how things are advancing in the whole cryptocurrency space is important when investing in or trading any cryptocurrency because new innovations and upgrades can quickly change the attractiveness of a given digital currency.