By Natalie Lord
Litecoin is often referred to as silver, with Bitcoin being the gold standard. Like Bitcoin, Litecoin is a peer-to-peer cryptocurrency that enables near-zero cost payments globally. It is an open-source payment network that is decentralized, and as such free from any central authorities.
Litecoin was released on Github in 2001 via an open-source client called Charlie Lee. Lee was a Google employee and former Engineering Director at Coinbase. Litecoin was a fork of the Bitcoin Core client that used a different hashing algorithm, a slightly modified GUI and a decreased block generation time. Bitcoin aims to process a block every 10 minutes, whereas the Litecoin network aims to process a block every 2.5 minutes, allowing Litecoin to produce faster transaction confirmation. The consequence of this is that Litecoin can also handle higher transaction volumes than Bitcoin.
The mathematical protocol that Litecoin’s network is based on is Scrypt. Scrypt uses a proof-of-work algorithm, which is a sequential memory-hard function. The downside is that it requires more memory than an algorithm which isn’t memory dependent. Because of its use of the Scrypt algorithm, FPGA and ASIC devices that are made for mining Litecoin are more complicated to create and more expensive to produce than for Bitcoin, which uses SHA-256 technology. As it stands, miners are currently awarded 25 new Litecoins per block, an amount that is halved approximately every four years or every 840,000 blocks.
Litecoin is an open-source software project released under the MIT/X11 license. It allows you to run, modify, and copy the software and to distribute modified copies of the software. The software is released in a transparent process that enables independent verification of binaries and their corresponding source code.
According to analysts, because of the similarities between the two cryptocurrencies, Litecoin and Bitcoin often move in tandem. Recent performance shows Litecoin at its lowest level in six months. According to Joe DiPasquale, CEO of BitBull Capital, a cryptocurrency fund of hedge funds, Litecoin has been under pressure since the halving of the block reward failed to boost price and hasn’t been helped by concerns surrounding funding for future development. He attributes the recent fall in Litecoin’s price to this, alongside the fact that it closely follows Bitcoin.
In a contrasting trend, Litecoin experienced exponential growth in a 24-hour period, rising in value 100% in November 2013, whilst between December 2018 and June 2019 the price of Litecoin accelerated by more than 500%.