What is Litecoin cryptocurrency and How does Litecoin work?

by anne jane in Blockchain on 20th December 2018

Litecoin that is released under the X11/MIT licence is open-source software and peer-to-peer cryptocurrency. The transfer and creation of coins are purely based on the open-source platform called open source cryptographic protocol. Litecoin originated in 2011, is an early altcoin or bitcoin spinoff. Technically, Litecoin is similar to the Bitcoin. Taking market capitalization into consideration, Litecoin is the third-largest after Bitcoin. Litecoin just like its contemporaries acts like online payment systems. Like other banks online networks and PayPal, users can transfer the currencies from one account to the other. But despite U.S.dollars, Litecoin transactions are done mainly in the units of Litecoin.
Charlie Lee, who is an ex-Google employee designed Litecoin, on 7th October 2011. It was thus created to complement Bitcoin, to solve the issues such as concentrated mining pools and transaction timing.

Difference between Litecoin and Bitcoin

The Litecoinprocesses the block for every 2.5 minutes when compared to the Bitcoin which is 10 minutes. This makes to have Litecoin process and confirms the transaction faster.
Litecoin uses proof-of-work algorithm, that is a sequential memory which functions hard and requires asymptotically more memory.

As Litecoin uses the scrypt algorithm, it uses ASIC and FPGA devices for mining Litecoin which are more complicated to make and are more expensive to produce. Whereas, Bitcoin uses SHA-256.

What is “Scrypt”?

Scrypt that is pronounced as “Script” is named initially as -s-crypt. Though the algorithm utilizes SHA-256 it is computed in a more serialized way. As such there will be fewer chances of parallelizing. Scrypt is also termed as “Memory Hard Problem” as the limiting factor is the only memory but not the processing power. This is precisely the reason behind the issue of parallelization. Scrypt is designed to make sure that Litecoin mining is democratized and accessible. Moreover, in recent past, few companies such as Flower and Zeus Technology managed to create the so-called Scrypt ASICs.

Mining of Litecoin

The government will not issue a Litecoin just like other cryptocurrencies. This has been the only entity where the society relies upon to issue money. Litecoins are usually created by using an elaborate procedure known as mining. This consists of the process called lists of Litecoin transaction. Comparing with the traditional currencies, the supply and demand of Litecoins are fixed. This will end up being only 84 million Litecoins in circulation and not more than that.

On the whole, Litecoin uses proof-of-work algorithm. In mining of Litecoin, miners use the computational procedure to solve the hard cryptographic puzzles. The solving of puzzles needs to be extremely tough, otherwise, the miners keep on mining blocks and drain out the whole bitcoin supply.

Conclusion

As we have seen there are many altcoins which are alternative cryptocurrencies than the Bitcoin. Besides, each has its unique vision and technology to change the world. Litecoin is such a currency where it is not universally accepted. Even the founders have accepted that there are fewer than one million users to it. As the cryptocurrency is more accepted the value gets stabilizes and possibly with other currency Litecoin also emerges as the standards currencies in the digital realm.

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