Litecoin - a duplicate
Summary: Litecoin was created as a duplicate of Bitcoin. Thereby, the cryptocurrencies shares many similarities like finite supply and close to identical consensus mechanism to verify transactions. A few changes have, however, made Litecoin able to process slightly more transactions and opened its network for smaller miners.
Litecoin (LTC) is a decentralized globally distributed cryptocurrency and counts as one of the oldest cryptocurrencies after Bitcoin. The cryptocurrency was launched in October 2011 by the former Google engineer Charles Lee. In December 2017, Charlie Lee sold his entire Litecoin portfolio and allegedly donated the funds to charity. Charles Lee has since explained that Litecoin was mainly a side project intended to be a duplicate of Bitcoin. As a result, there are many direct similarities between the two cryptocurrencies. The two cryptocurrencies use the same method to verify transactions on their blockchain through mining, known as proof-of-work – see intro for Bitcoin for more on this. The most fundamental technical difference between Litecoin and Bitcoin is the difference in the cryptographic algorithms they apply, due to Litecoin’s vision of making mining more easily accessible for interested miners. Technically, it is both cheaper and easier to mine Litecoins, thereby increasing the potential number of people to assist with verifying transactions and keeping the network safe.
A finite supply as for Bitcoin
Litecoin’s total supply is four times the one of Bitcoin at 84 million Litecoins compared to Bitcoin’s 21 million. There are currently more than 66 million Litecoins in circulation. Even though the total supply is fixed, Litecoin has never been acknowledged for this scarcity but has mainly been acknowledged for improved scalability and faster transaction speed. Litecoin can handle slightly more than 50 transactions per second, even though Litecoin has never been near that limit daily.
As Litecoin’s block time is four times less than the block time of Bitcoin, new Litecoins are being added to the supply every 2.5 minutes. This makes the transaction speed approximately 4 times faster than Bitcoin’s. Miners are getting rewarded both the newly mined Litecoins together with the transaction fees paid by users. Similar to Bitcoin, the block reward for Litecoin is halved every fourth year until the total supply is hit. This event is called Litecoin halving. The latest halving occurred in August 2019 with the next halving expected to occur in August 2023, on which day the reward will be reduced to 6.25 LTC from the current reward of 12.5 LTC. At the time of writing, it is expected that it will take at least 120 years before every Litecoin has been mined.
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