Litecoin is one of the earliest bandit coins to appear in the cryptocurrency field. Litecoin (LTC) was created in 2011. Compared with Bitcoin, it has higher accessibility and transaction throughput, and is more suitable for payment. Complementing bitcoin's utility as a store of value.
Litecoin has been described as "a lightweight version of Bitcoin" and as "digital silver" compared to bitcoin being "digital gold".
Litecoin was created from a copy of bitcoin's source code, rather than forking out from the Bitcoin blockchain, making litecoin an entirely new blockchain without a shared creation block. Litecoin is technically very similar to Bitcoin, but there are some key differences. Specifically, litecoin has the following characteristics:
- Unique litecoin mining hash function
- Faster block generation time
Both Litecoin and Bitcoin use proof of work (PoW) as their consensus method. Miners of both cryptocurrencies compete to complete challenging mathematical puzzles using hashing algorithms in order to reach consensus within their respective networks, win the right to add valid blocks of transactions to their blockchains, and win block rewards.
Bitcoin uses the SHA-256 hash function to power poWs on the bitcoin network. The equipment the miners use to complete these challenging mathematical problems is computers that vary widely in design and configuration. Initially, the core machine used for bitcoin mining relied on the central processing unit (CPU). Due to a competitive relationship among miners in THE PoW, miners began to look for superior equipment to mine, and began to pair cpus with graphics processing units (Gpus) to enhance the processing power of their cpus. This relieves the bulk of the processing load on the main CPU, thereby increasing the processing power of the device. Overall processing output.
As competition heats up, new technologies are being developed specifically for bitcoin mining purposes. Special-purpose integrated circuits (ASics) are highly specialized devices that are good at mining and almost always better than their CPU and GPU counterparts. They are also expensive, difficult to maintain, and require expertise -- factors that tend to deter more people from joining the bitcoin network. As fewer and fewer people have the knowledge, time, and money to acquire, configure, and maintain ASics, mining on the Bitcoin network becomes more centralized and exclusive, which compromises the network's security and resilience.
Litecoin uses Scrypt hashing, a memory-intensive algorithm that fundamentally blocks the advantages of gpus and ASics. Therefore, it is important for individuals to be able to mine litecoin with their CPU from the outset. But over time, SCrypt-enabled asics were created, and almost all litecoin mining is now done using this hardware.
On average, new blocks are created on litecoin's network every 2.5 minutes, four times faster than Bitcoin, which is mined roughly every 10 minutes. As a result, litecoin's transaction throughput is also about four times that of Bitcoin. For each block generated on the Litecoin blockchain, miners receive a predetermined amount of LTC rewards, called block rewards. Over time, block rewards are gradually reduced by 50% in a process called halving.
Extended the interval between halves to compensate for the faster block generation time of litecoin. Bitcoin's block rewards are halved every 210,000 blocks, while Litecoin's block rewards are halved every 840,000 blocks. A four-fold increase in blocks during each halving period means that Litecoin generates four blocks for every block bitcoin generates. In theory, this compensation mechanism should keep Litecoin and Bitcoin on a similar trajectory, with both cryptocurrencies halving every four years.
With faster block generation times and higher transaction throughput, litecoin is built as a more practical and scalable medium of exchange, while Bitcoin is more of a store of value. Litecoin's similarities to Bitcoin also make it a viable test network for the Bitcoin protocol, as demonstrated by its early adoption and Bitcoin's subsequent adoption of SegWit soft forks.
Litecoin is now one of the most recognized, trusted and used blockchain-based payment networks in the world, with many recognizing litecoin as a complement to bitcoin rather than a competitor.