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Litecoin

What is Litecoin?

Litecoin is a digital currency that was introduced in 2011. It evolved from bitcoin and gave investors an opportunity to diversify their cryptocurrency package. Litecoin is among the most prominent digital currencies.

The creation and transfer of altcoins are based on an open source cryptographic protocol. It is, however, not managed by any central authority. Litecoin creation although greatly inspired by Bitcoin has some differences between the two digital currencies.

After the launch of Litecoin, it became the second most popular altcoin after Bitcoin. Hence, it is commonly referred to as ‘The Silver to Bitcoin’s Gold.’

How does Litecoin Work?

Litecoin uses the Scrypt algorithm. Initially, it was known as an S-crypt algorithm, pronounced as ‘script.’ The Scrypt algorithm integrates the SHA256 algorithm used by Bitcoin.

However, its calculations are more straightforward than Bitcoin’s SHA256 algorithm. The Scrypt algorithm favors vast amounts of high-speed RAM than raw processing power alone.

The Litecoin network generates a block every 2.5 minutes. This is four times faster than bitcoin which produces a block every 10 minutes. A block is a ledger entry of the most recent Litecoin transactions in the world. Due to this, the developers are confident that it allows fast transaction confirmations for Litecoin.

Who created Litecoin?

Litecoin was created in October 2011 by a former engineer at Google, Charles Lee. The motivation behind creating this altcoin was to bring an improvement upon Bitcoin. After its creation, Litecoin was released through an open source client on GitHub. The Litecoin network went live on 13th October 2011.

Over the years, Litecoin value has experienced massive growth. In November 2013, Litecoin reached a $1 billion market capitalization. The value per coin was $85.18 by the end of November 2013.

In May 2017, Litecoin was among the top 5 digital currencies to adopt Segregated Witness (SegWit). In the same month, the first Lightning Network transaction was completed through Litecoin. During this operation, 0.00000001 LTC were transferred from Zurich to San Francisco in less than a second!

Litecoin Vs. Bitcoin: What are the differences?

The main difference between Litecoin and Bitcoin is that LTC can handle more transactions than BTC due to its shorter block generation time. Litecoin has a block generation of 2.5 minutes while bitcoin has 10 minutes.

Also, Litecoin has more coins in circulation as compared to Bitcoin making it more affordable and fast to transact with. The fast block time of Litecoin reduces the risk of double spending attacks.

Is Litecoin a good investment? Is it the next Bitcoin?

Litecoin has proven to be a more stable, faster and a secure digital currency. A recent surge in LTC price shows that investors are beginning to catch in this coin as an alternative to Bitcoin.  Although it has remained the dominant player, it continues to be the most significant digital currency by share of market cap.

Bitcoin is losing ground to other cryptocurrencies on questions of mining efficiency and also how expensive it has become to purchase. Litecoin has an advantage over Bitcoin because transactions happen more quickly, allowing buying and selling at increased speed.

What is a Litecoin Wallet?

A Litecoin wallet allows you to store, send and receive your LTC safely. There are different types of wallets available. However, before selecting wallet for your Litecoin, it is essential to focus on its security and ensure that it is not compromised.

Some LTC wallets allow you to check your transaction history instantly. Others have to be connected to their respective portals for them to monitor the transaction history and manage the funds.

The most secure wallet is the one whereby you own the Private Keys. In this case, even if there is a hacking event, your LTC is secured. The wallet should also have a simple user interface and have a reliable way of restoring and backing up currencies.

How to get a Litecoin Wallet?

Working with LTC requires you to open, register and create a Litecoin wallet online. Usually, registering a Litecoin wallet is easy and free and takes just a few minutes. There are paper wallets, software-based and physical hardware wallets.

Paper wallets involve generating and printing a private key on a computer that is not connected to the web. Each wallet has a unique private key that is required to receive and send coins to and from your Litecoin address. However, this type of wallet is complex and has been outdated.

The software-based wallets reside on your phone or computer. They are in the form of desktop or mobile software. They are available for almost all operating systems.

How safe is Litecoin? Can Litecoin be hacked?

Litecoin is one of the most secure cryptocurrency. Litecoin is safe given the amount of time required to confirm transactions. It is not easy to hack Litecoin since the implementation of SegWit.

SegWit reduces the size of blocks on a blockchain, by removing signature data from the transactions. Hence, there is an additional capacity on the blockchain for more transactions to be completed.

Litecoin is using this new technology which has contributed significantly to the increase its value. SegWit also provides the opportunity for lightning transactions. These transactions are fulfilled nearly in real time, without having to wait for confirmations.

What is Litecoin Mining?

Specialized computers and hardware do LTC mining. The primary purposes of LTC mining are:

  • To secure the network and verify the transactions
  • To acquire new Litecoin which are paid out to miners as rewards

Graphics cards are one of the best Litecoin mining hardware. However, they are not very profitable. If a miner successfully verifies a block, he/she is rewarded with 50 LTC. However, the number of LTC awarded for such tasks has been reducing with time.

Just like other altcoin mining, there are mining pools available that make the process more rewarding for the participants. However, if you wish to invest in LTC mining do your homework to determine whether the entire process is worth it.

How to Mine Litecoin?

It is possible to use computers with powerful graphics cards that were once used to mine Bitcoins to mine Litecoin. These computers can be repurposed for LTC mining. The mining process is very similar to the BTC mining process.

Another option of mining LTC is by mining BTC with Antminer S7 hardware and then converting the earned Bitcoins to Litecoin. The main benefit of using Scrypt miner is that you can change it to mine other more profitable digital coins as long as they are Scrypt based just as Litecoin.

Is it worth mining Litecoin?

Litecoin mining uses proof-of-work which makes the whole process costly.

To send Litecoin, transactions must be included in a block. The miners verify these transactions through proof-of-work. Then they check the incoming transaction against the previous transactions on the blockchain. If there are no double spends, the miners create a block with new transactions and add it to LTC’s existing blockchain.

You can use the available Litecoin mining calculators to determine the profitability of hardware. The profitability depends on the Litecoin price, power of your hardware, hardware efficiency and electricity costs.

How to Buy Litecoin? Where to buy Litecoin?

If you want to own Litecoin but you are not interested in mining, you can buy it using other altcoins on websites known as exchanges. These exchanges allow you to buy LTC with fiat currencies including Euros, US dollars, and Great Britain Pounds. You can pay with your credit card, bank transfers or PayPal.

Some of the exchanges where you can buy Litecoin for fiat include BTC-e, Kraken, Bitfinex, among others. The fastest way to buy LTC is using Bitcoins. It takes just a few minutes while a wire transfer can take days. Also, you can buy BTC locally and convert them to LTC.

Is Litecoin going to crash? Will Litecoin rise in price?

It is the nature of markets to go up and down.

Litecoin has a market value that is determined by the number of buyers and the number of sellers. With a better algorithm which speeds up both the system and the hashing power, Litecoin has a bright future ahead.

Over the coming years, Litecoin, like the other cryptocurrencies will prove to be a good investment. Litecoin is faster and has cheaper transaction fees as compared to other cryptocurrencies. Therefore, many people are investing in it. Although its subject to fluctuations, it is a definite risk for investors wishing to invest in Litecoin. However, do not risk what you cannot afford to lose.

Is Litecoin Legal (illegal)?

Litecoin is legal.

Using Litecoin is legal in most countries. However, regulation varies from country to country. It is likely that many national and regional financial regulators will be interested in Litecoin and other digital currencies.

The use of Litecoin is entirely legal if you are not using the coin to carry out transactions that are prohibited by the law. In most countries, there is a presumption of permissibility. The cryptocurrency law is not regulated. You can modify, create or delete the information on your hard disk. Hence, you will not be doing anything illegal by using Litecoin.

Is Litecoin Taxed?

The virtual currencies are treated as property for tax purposes. Therefore, the general tax principle for property transactions is applied.

Taxpayers will be able to claim capital gains or losses on transactions if they hold Litecoin or any other altcoin as an investment property. They will realize ordinary profit or loss if they keep the cryptocurrencies as inventory.

The cryptocurrency’s fair market value is determined by the date of payment and must be reported in US Dollars. Cryptocurrency is the future of money. Although highly risky and volatile, it is also an attractive and potentially profitable investment asset for investors.

Where is Litecoin Accepted?

As the digital currencies continue to catch individuals and business owners by storm, many businesses are accepting them as a mode of payment. Litecoin is the second most valued currency in the market. Many organizations have begun implementing Litecoin into their finances.

Litecoin can be used to purchase different types of goods and services from various sellers. The buyer needs to download a Litecoin wallet to be able to buy Litecoin which they can then use to buy the goods and services.

The primary intention of Litecoin developers was to improve the structure used by Bitcoin. Litecoin is preferable to bitcoin because Litecoin processes a block faster than bitcoin hence the transactions are faster. Also, Litecoin has more coins (84Milion) than Bitcoin (21 Million).