Litecoin: What It Is & How It Works

Often referred to as the little brother of bitcoin, litecoin is a peer-to-peer cryptocurrency that has gained fairly widespread adoption since its inception in 2011.

A form of digital money that utilizes a blockchain to easily maintain a public ledger of all transactions, litecoin is used to transfer funds directly between individuals or businesses without the need for an intermediary such as a bank or payment processing service.

What Makes Litecoin Different?

Three things make Litecoin different:

  • Speed
  • Number of Coins
  • Market Cap

Speed
Litecoin is based on the same open source code behind bitcoin, with some notable differences. Created by engineer Charlie Lee to be the silver to bitcoin’s gold, one of the main disparities between the two cryptocurrencies lies in their transaction speeds.

Because it generates blocks about four times faster than bitcoin, litecoin can confirm the legitimacy of transactions a lot quicker as well as process a much higher number of them over the same time frame.

For more information about how blocks are created and transactions are confirmed, be sure to read our primer on blockchain technology – which functions as the underpinning of litecoin and most other p2p virtual currencies.

Number of Coins
One of the reasons some cryptocurrencies hold intrinsic value is because of their limited supply. Once a certain number of bitcoin (btc) or litecoin (ltc) are created, that’s it.

There can be no more new coins at that point.

While bitcoin has a limit of 21 million coins, litecoin will max out at the 84 million mark.

Market Cap
Although its market cap pales in comparison to bitcoin, litecoin still ranks among the top 5 cryptocurrencies at the time of publication.

These rankings fluctuate based on price and number of coins in circulation.

 

How to Buy Litecoin

If you’d like to own some litecoin but aren’t interested in mining it, the cryptocurrency can be purchased with another cryptocurrency such as bitcoin on websites known as exchanges. Some of these exchanges, as well as other services like Coinbase, also allow you to purchase ltc with actual fiat currency including US dollars.

Ed. Note: When investing and trading cryptocurrencies, be sure to watch for red flags.

Litecoin Wallets

Like bitcoin and many other cryptocurrencies, litecoin is typically stored in a digital wallet.

There are different kinds of wallets including those that are software-based and reside on your computer or mobile device, as well as physical hardware wallets. Another secure yet admittedly outdated and somewhat complex method to store your litecoin is to create a paper wallet, which involves generating and printing out a private key on a computer not connected to the web as one of its steps.

Each wallet has private keys required to receive and send coins to and from your litecoin address. Because these keys are stored offline in a hardware wallet, they are inherently more secure than wallets connected to the internet.

These application-centric wallets exist in the form of desktop or mobile software, and are available for almost all popular operating systems and devices. In addition to third-party applications such as Electrum, laptop and desktop users also have the option to install Litecoin Core, which is the full-fledged client created and updated by the Litecoin Development team. Litecoin Core downloads the entire blockchain directly from the peer-to-peer network, avoiding any middleman involvement in the process.

source:lifewire

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