While Bitcoin and Ethereum stand for blockchain 1.0 and blockchain 2.0 respectively, Litecoin is undoubtedly the second most popular cryptocurrency of blockchain 1.0. This achievement owes much to its simplicity and obvious advantages in utility. More than 2,000 shops around the world support payment via Litecoin, making it one of the most widely accepted cryptocurrencies. Like Bitcoin, Litecoin can be obtained from trading platforms or mining.
Litecoin, which shares many features with Bitcoin, was created by Charlie Lee, a former programmer in Google. To make Litecoin a “simplified version of Bitcoin”, he first released Litecoin through the open-source client on GitHub on October 7, 2011, and then officially launched the Litecoin network on October 13. Its technical principle is the same as that of Bitcoin, applying a decentralized architecture free from any control of the central authority. New currency issuance and payment transfer are all based on open-source encryption algorithms. But Litecoin improves some of the shortcomings of Bitcoin, such as slow transaction confirmation, a limited quantity, and large mining pools caused by the proof-of-work mechanism.
Compared with Bitcoin, which needs 10 minutes to generate a block, Litecoin only needs 2.5 minutes. Therefore, with faster transaction confirmation and extremely low transaction fees, Litecoin has become a good payment choice for places with small transactions. And the Litecoin network is expected to produce 84 million Litecoins, four times the amount of coins issued by the Bitcoin network. The biggest difference between the two is that the Litecoin workload proof mechanism applies the scrypt encryption algorithm, while Bitcoin uses the sha256 algorithm. The scrypt algorithm takes longer to calculate and requires more memory. This algorithm prevents 51% attacks by making it hard for hashrates to concentrate and dispersing miners. Because the scrypt algorithm of Litecoin is different from that of Bitcoin, Bitcoin mining machines cannot be used to mine Litecoin, which protects Litecoin from attack for normal development. By the way, the scrypt encryption algorithm is also applied to DogeCoin.
As of August 2021, 68.24 million LTC have been mined out of the total number of 84 million. The Litecoin Foundation recently estimated that it will take more than 100 years for LTC to be fully diluted (around 2140). Because as part of the scheme to reduce the block reward by half, the number of LTC mined in each block will be cut every four years — currently, miners can get 12.5 LTC for every block generated.
The total market value of Litecoin is now as high as $9.1 billion (ranked 15th on CoinMaeketCap). The whole network hashrate is 263TH/s (as of August 4). But Litecoin mining is not supported by many mining pools, which does have a lot to do with Litecoin’s scrypt algorithm.