Mr. Lee is a former employee of both Google and Coinbase.
What is the History of Litecoin?
Litecoin was released on 10/7/2011 on Github as an open source software project released under the MIT/X11 license. The name “Litecoin” is a trademarked term in the U.S. and Singapore.
Litecoin was an early “fork”1 of the original Bitcoin core.
However, Litecoin is technically different than Bitcoin in a few ways. Specifically, Litecoin was created to solve three problems:
- To increase the number of transactions that could be processed by the Bitcoin network.
- To increase the speed of cryptocurrency transactions that may occur.
- To process transactions more cheaply than Bitcoin.
Litecoin can process transactions 4x as fast as Bitcoin. Bitcoin transactions take approximately 10 minutes to verify whereas Litecoin transactions may be confirmed in 2.5 minutes.
Sending any denomination of Litecoin costs only a few pennies, as of this writing, whereas a Bitcoin can cost several dollars. The transaction cost advantage of using Litecoin makes it much more likely that a cryptocurrency such as Litecoin could be used in large volume, small value transactions.
What if a large company such as Amazon wanted to accept a cryptocurrency?
Doing so using Bitcoin would likely increase costs for consumers.
However, if Amazon chose to accept Litecoin, say only for Amazon Prime members, it might actually cost less for a Prime member (and for Amazon) to process their orders using Litecoin per $100 of value than using when using a credit card (which usually charges a fee from 1-2.5%).
Litecoin is considered to be one of the “legitimate” cryptocurrencies available as it can be purchased on several exchanges, including the most popular exchange, Coinbase.
Litecoin uses a different technology than Bitcoin. Litecoin uses a sequential memory-hard proof-of-work hashing algorithm called scrypt rather than Bitcoin’s chosen SHA-256. In May 2017, Litecoin was the first to fully adopt the Segregated Witness (aka SegWit) upgrade to evolve its performance as a cryptocurrency. Litecoin was also the first to conduct a Lightning Network transaction which transferred 0.000000001 LTC from Zurich to San Francisco in under 1 second.
- Is there a limited supply of Litecoin? Yes. There can only be up to 84 million Litecoins. This is 4x the number of coins as there can be of Bitcoin. Litecoin is 4x “lighter” than Bitcoin, and as such can be transacted four times more quickly, and for less money.
- Transaction Fees: Litecoin transaction fees fluctuate. The current rate can be found here. The Litecoin cost per transaction was ____ at the time of this post.
- Advantages: As mentioned above, Litecoin is faster and less expensive to use than Bitcoin. Litecoin uses less energy to process than Bitcoin because of the number of Litecoins that may ultimately exist. Because mining for cryptocurrencies is a competitive process, the more scarce a cryptocurrency becomes, the more energy intensive it is to mine. Litecoin’s founder Charles Lee is well known and accessible, unlike the anonymous founder of Bitcoin, Satoshi Nakamoto.
- Disadvantages: Litecoin is not as well known as Bitcoin, or even Ethereum. Litecoin has potentially four times as much circulation as Bitcoin, making it less scarce as a virtual currency than Bitcoin. If Litecoin were to experience a significant increase in popularity, it could suffer from the same energy consumption issues that Bitcoin does.
- Is Litecoin an Asset or Transaction Tool? Litecoin is considered both a cryptocurrency that can be used for purchases as well as an “asset” in the sense that it may represent a store of value, similar to physical gold.