Litecoin (LTC), like many of its counterparts, is an open-source, decentralized, peer-to-peer, global payment network (definitions to these terms along with many others can be found here). The coin has no central authority and is not backed by any government or bank.
Charlie Lee, Google software engineer turned Coinbase director of engineering, developed and created Litecoin. Recently, Lee sold and donated all of his Litecoin citing "a conflict of interest", but he still remains active in the development of Litecoin. Lee is on the board of directors for the Litecoin Foundation, whose mission is to "advance Litecoin for the good of society by developing and promoting state-of-the-art blockchain technologies."
As Litecoin was actually a fork of Bitcoin back in 2011, it is built on some of the most original blockchain technology. Litecoin’s intention from the beginning, according to their developers, was to create the silver standard to Bitcoin’s gold standard.
The Differences Between Litecoin and Bitcoin
While Litecoin promotes many of the same positive attributes that Bitcoin offers, there are a few key differences:
- Hash rate. One of the biggest changes was the decrease in block processing time. Blocks on the Bitcoin blockchain are processed every 10 minutes on average. The Litecoin blockchain has reduced this to an average of 2.5 minutes, leading to faster transaction confirmations.
- Total supply. Another difference to note is the total amount of coins in supply. Whereas Bitcoin will never exceed 21 million coins, Litecoin has raised that limit to 84 million. Since both coins are divisible past multiple decimal points, the actual effect of this may be negligible as both coins should be readily available to buy, sell, and use for goods and/or services.
- Cryptographic algorithms. From a technical standpoint, the biggest difference between the two coins are the cryptographic algorithms they employ. While both utilize a proof of work (PoW) protocol, Bitcoin uses the more widely used SHA-256 algorithm, whereas Litecoin uses a newer algorithm known as Scrypt. Both are used to mine new coins by validating and adding new blocks to the blockchain. Scrypt was designed to be less susceptible to custom hardware (ASIC) mining, allowing Litecoin mining to be more accessible to everyone. However, as of late, Scrypt ASICs have been introduced.
Litecoin is one of the highest market cap coins, which has created a space for it in many crypto-asset portfolios. It is a diversifying coin with much of the same upside potential as Bitcoin. The differences between Bitcoin and Litecoin were implemented to make Litecoin more usable on a day-to-day basis for smaller, quicker transactions. More information about Litecoin can be found on their website here.