Beginners Guide to Litecoin Cryptocurrency
Litecoin may sound awfully similar to Bitcoin because it is. It’s one of the biggest competitors Bitcoin has ever seen both in terms of market capitalization and user acceptance. In this post, we’re going to take a quick look at what Litecoin is, how it works, and where you can find Litecoin to start trading.
What is Litecoin?
The first question to pop into your head must be what is Litecoin? Well, it’s a cryptocurrency, just like Bitcoin, Ether, Dogecoin, and so on. According to Litecoin, it’s a peer-to-peer payment system that users can use to convey transactions within a matter of seconds.
Litecoin utilizes Bitcoin’s open-source codebase platform to operate. It uses the same blockchain technology that has made the crypto industry such a prominent field in recent years. Using a wallet, you can send, receive, and store your Litecoin. It might not be as valuable as Bitcoin is right now, but that’s only understandable because Bitcoin was the first mainstream cryptocurrency to get the limelight.
At the time of writing, Litecoin’s market cap sits at $12.41 billion which is likely to increase over the next few years. In comparison, Bitcoin’s market cap is $814 billion. Litecoin may have a long way to go but it’s definitely on the right track.
History of Litecoin
The October of 2011 is the birth month for Litecoin. It was first released as an open-source client on the popular GitHub platform. Charlie Lee is the mastermind behind Litecoin who was an employee at Google that that time. Later, he became the Engineering Director at Coinbase.
Lee developed Litecoin from the core codes of Bitcoin. Thanks to the open-source nature of the codebase, anyone and everyone with the right tools and expertise can make it better. Charlie Lee improved the codes that resulted in a shorter block generation time, a higher total number of coins that can exist, and a memory-intensive algorithm.
The first giant leap for Litecoin was in 2013. The value for each coin jumped over 100% in a matter of 24 hours! Since then, the cryptocurrency has gradually increased its market cap. It’s also the first to adopt the Segregated Witness protocol.
How Does Litecoin Work?
If you have a prior understanding of how other crypto networks work, it will become easier for you to understand Litecoin. However, if you don’t. There’s nothing to worry about. We’ll cover everything from the ground up.
As you may already know, Litecoin is a peer-to-peer network for payments. Peer-to-peer or P2P means direct transactions without any intermediary. For example, when you need to send money to someone, you must go through a bank or a payment processor to get the job done. Litecoin eliminates the need for the middleman.
If you find familiarity with the decentralization concept introduced by Bitcoin, you are not wrong. Litecoin is a decentralized currency. In fact, all crypto networks that use Blockchain technology are decentralized. The goal is to eliminate all kinds of regulations and make the process as user-friendly as possible.
If you’re wondering how Blockchain technology works, let us help. The whole purpose of the Blockchain is to validate crypto transactions as a ‘proof of work’. Just like you receive an invoice for your centralized transactions, your decentralized transactions are recorded into the Blockchain.
You may be thinking that how is this decentralized if we’re using the Blockchain as a medium? Well, this is the interesting part. Unlike centralized authorities, the Blockchain is not controlled by one person or one server. All of the users connected to the crypto network are responsible for validating the transactions.
This eliminates any single point of failure. For example, if you need to send money urgently to someone but the bank’s server is down, you cannot help but wait. That’s not the case with the Blockchain. Even if one or more users fail, there are hundreds of other nodes keeping the integrity of the Blockchain intact.
If you already know how Bitcoin works, Litecoin may seem exactly the same to you. But it isn’t. Because it uses a completely different hashing algorithm to solve the blocks. Unlike Bitcoin’s SHA-256 hashing algorithm, Litecoin’s Scrypt doesn’t rely on heavy processing power. Rather, it uses memory to solve the blocks and add transactions to the Blockchain.
The use of Scrypt has allowed Litecoin to reduce the turnaround time significantly. It can process a block within 2.5 minutes while it takes around 10 minutes for a Bitcoin block to get solved. It’s partly because Bitcoin relies on processing power while Litecoin relies on memory speed. And memory is significantly faster than processors, both CPU and GPU.
A few years after Bitcoin mining became mainstream, ASICs were introduced. It stands for Application Specific Integrated Circuits that are particularly designed for mining Bitcoin. These are essentially computer processors optimized for the SHA-256 hashing algorithm.
As amazing as they sound, ASICs are really expensive and you can’t use them for any other application. Charlie Lee, the founder of Litecoin wanted to make Litecoin mining accessible to everyone. And that’s why he came up with Scrypt that relies on memory more than anything. Every device has memory. Hence, every device can mine Litecoin.
How to Get Litecoin?
If you feel your interest in Litecoin is rising, you might also be thinking about how do you get them. Because at the time of writing, all of the crypto networks are potential moneymakers. So, if you’re thinking about investing in Litecoin, you’ll be making a great decision for the future.
So, how do you get Litecoin?
You can buy it here on Coinbase which is the best cryptocurrency exchange that offers many different cryptocurrencies you can exchange USD into or you can mine Litecoin and receive it as a reward for your mining.
Just as it is with all other cryptocurrencies, mining is a viable option for Litecoin as well. You can dedicate your hardware to solve complex mathematical problems (for solving blocks) and get Litecoin as a reward.
The mining process is the heart of any cryptocurrency network that uses the ‘proof of work’ modality. To record a transaction on the blockchain, a block must be solved. All of the ‘miners’ work together on the Blockchain to solve the problem. You can get into one of the miner’s pools to spare your hardware and get Litecoin as a reward.
However, the complexity of the hashing algorithm is increasing promptly. If you have average computer hardware, it will be very hard for you to generate profit because the competition is fierce now.
So, your best bet to get acquainted with Litecoin would be to buy it at any crypto exchanges. We’re going to list a few of them where you can get started. But before anything else, let’s hook you up with a Litecoin wallet.
What is Litecoin Wallet?
For any cryptocurrency including Litecoin, you need a wallet. Crypto wallets are designed to store your coins safely as well as work as a portal for sending, receiving, and exchanging crypto. There are various wallets out there. Some are optimized for Bitcoin, some are optimized for Ether, while some are optimized for Litecoin. Let’s take a look at some of those.
LiteVault is a very good online wallet specifically designed for Litecoin. It’s secure, it’s fast, and most importantly, it’s open-source. It means users and developers are constantly trying to improve the security of the wallet on their own.
You can store your Litecoin private keys safely in LiteVault. When you log into your account, your identifier from the browser is sent to the LiteVault server. The server returns an encrypted wallet using the AES algorithm. Your browser later decrypts it to load the private keys and other information. One thing to note here is that your login password is never sent to the server. So, you can rest assured that your data is safe.
It’s an online wallet which means you don’t need to download any software to store and load your private keys. Your browser is good enough to send, receive, and store Litecoin.
Exodus is a software wallet. It means that you are required to download the wallet software and use it as the interface to your Blockchain transactions. Rather than being an exclusive Litecoin wallet, Exodus is a cryptocurrency wallet which means you can store almost all popular crypto in this wallet.
It’s a very good option for you if you’re getting started with the Crypto industry for the first time. The user interface is quite straightforward and easy to understand. You’ll promptly see the fees you need to pay before you through with a transaction.
If you possess multiple cryptos in this wallet, you can convert between them as well! The dashboard will show you the conversion rate and the fees in advance.
Crypto Exchanges to Buy, Sell, and Trade
Now that you have a precise idea of what crypto wallets are, you can get started with buying and selling them with dedicated exchanges. Two of the most popular exchange options would be Coinbase and Bittrex.
Coinbase is undoubtedly the leading cryptocurrency exchange in the world. It bridges the gap between investors the amazing world of Blockchain effortlessly. You can invest in Litecoin, trade Litecoin for other cryptos, and so on.
Since 2012, Coinbase has been offering services to users ensuring security and proper regulation. It started with Bitcoin as it was the only prominent crypto at that time. But over the years, Coinbase has adopted all other mainstream cryptos, including Litecoin.
However, you need to pay fees for each of your transactions. But you mitigate the fees by opting for the Coinbase Pro program.
Following a similar modality to Coinbase, Bittrex has become one of the most popular crypto exchanges in a very short time. One of the main reasons behind its popularity is the amazing security at a very low cost.
You can buy crypto from Bittrex with fiat currencies. If you’re not sure that they are, they are simply money regulated by governments. Moreover, you can exchange your crypto, buy cryptos other than Litecoin, and so on, all from the same platform.
The bottom line is, if you’re looking for a reliable and easy-to-use Litecoin exchange platform, look no further than Bittrex.
Litecoin has immense potential as the future of cryptocurrency. Its divine competitor, Bitcoin is reaching the limit of 21 million at a very fast pace which makes Litecoin the next big thing. If you haven’t already, make some investments into Litecoin to secure future profit.