Résumé

Litecoin (LTC) is an altcoin founded in 2011 by former Google engineer Charlie Lee. It was intended to be the lighter version of Bitcoin, allowing almost instantaneous and inexpensive payments. Litecoin has adopted the code and some features of Bitcoin into its blockchain, but it prioritizes transaction confirmation speed to facilitate a higher transaction rate per second (TPS) and shorter block generation time.

Due to its similarity to Bitcoin, the Litecoin blockchain has been used as a testing ground for developers to experiment with technologies they want to implement on Bitcoin. For example, Segregated Witness (SegWit) and Lightning Network ran on the Litecoin blockchain before Bitcoin.

The total number of Litecoin is 84 million. Like Bitcoin, it is deflationary in nature and rewards are halved every 840,000 blocks (roughly every 4 years). The next halving will take place in August 2023. Litecoin can be purchased on various cryptocurrency exchanges, including Binance.

Introduction

Litecoin (LTC) is one of the oldest altcoins on the market. When it was first introduced in 2011, Litecoin was considered "silver if Bitcoin was gold" because its blockchain was largely based on Bitcoin's code. While some cryptocurrency investors view Bitcoin as a good store of value, Litecoin is often considered a better option for peer-to-peer payments due to its confirmation time and lower transaction fees.

What is Litecoin (LTC)?

Litecoin (LTC) was one of the first altcoins created. Created by Charlie Lee, a former Google engineer, in 2011, its blockchain was developed based on the open-source code of Bitcoin. But Litecoin introduced some changes, like a higher block generation rate and a different proof-of-work (PoW) mining algorithm called Scrypt.

The total number of Litecoin is 84 million. Just like Bitcoin, Litecoin can be obtained by mining and has a halving mechanism that occurs every 840,000 blocks (approximately every 4 years). The last LTC halving took place in August 2019, when block rewards went from 25 to 12.5 LTC. The next halving will take place in August 2023.

How does Litecoin work?

As a modified version of Bitcoin, Litecoin was designed to enable cheaper and more efficient transactions than the Bitcoin network. Just like Bitcoin, Litecoin adopts the proof-of-work mechanism to allow miners to earn new units by adding new blocks to the blockchain. However, Litecoin does not use Bitcoin's SHA-256 algorithm. Instead, LTC uses Scrypt, a hashing algorithm that can generate new blocks approximately every 2.5 minutes, while Bitcoin's block confirmation time takes an average of 10 minutes.

Scrypt was initially developed by the Litecoin development team, the idea was to develop its own decentralized mining ecosystem away from the Bitcoin system and make a 51% attack on LTC more difficult. In its early days, Scrypt made mining more easily accessible to those using traditional GPU and CPU cards. The goal was to prevent ASIC mining from dominating LTC mining. However, ASIC miners were later developed to mine LTC efficiently, making mining via GPU and CPU obsolete.

Since Bitcoin and Litecoin are somewhat similar, Litecoin has often been used as a "testing ground" for developers to experiment with blockchain technologies that will be adopted on Bitcoin. For example, Segregated Witness (SegWit) and Lightning Network ran on the Litecoin blockchain before Bitcoin. Proposed for Bitcoin in 2015, SegWit aims to evolve the blockchain by separating the digital signature of each transaction to better utilize the limited space on a block. This has allowed blockchains to process a greater number of transactions per second (TPS).

Another scalability solution, the Lightning Network, was also implemented on Litecoin before Bitcoin. Lightning Network is one of the key components that makes Litecoin transactions more efficient. It is a layer 2 protocol created on top of the Litecoin blockchain. It consists of user-generated micropayments channels, which helps reduce transaction fees.

Additionally, Litecoin aims to address the transaction privacy issue by adopting a privacy-focused protocol called MimbleWimble Extension Block (MWEB). It takes its name from the mute spell in the Harry Potter books, which prevents the victim from revealing information. Like Spell, MimbleWimble allows transaction information, including sender and recipient addresses and the amount of crypto sent, to remain completely anonymous. At the same time, MWEB eliminates unnecessary transaction information, and the block size is more compact and scalable. As of December 2021, the Litecoin MWEB protocol is still under development.

Litecoin Use Cases

As one of the first altcoins, Litecoin improved Bitcoin code to increase its scalability, accelerate transaction processing speed, and reduce fees. Although it cannot compete with Bitcoin in terms of capitalization, it has a competitive advantage as a peer-to-peer payment system. Indeed, the Litecoin Foundation announced in November 2021 that LTC could be used as a means of payment via the Litecoin VISA debit card by converting LTC to USD in real time. Additionally, some businesses have added Litecoin as a payment method, including travel companies, convenience stores, real estate agencies, and online stores.

Another thing to note is the highly anticipated release of MimbleWimble on the Litecoin network. MimbleWimble can not only hide wallet addresses in a transaction, but also potentially double Litecoin's TPS. If the implementation is successful, the upgrade can further improve the privacy and fungibility of LTC transactions. However, there is no release date set on the mainnet as of this writing.

How to buy Litecoin on Binance?

You can buy Litecoin on cryptocurrency exchanges like Binance.

1. Log in to your Binance account, then go to [Trader]. Choose [classic] or [advanced] trading view. In this tutorial, we will select [Classic].

2. Next, type “LTC” in the search bar to see a list of trading pairs available on Binance. We will use LTC/BUSD as an example.

3. In [Spot], choose the order type and enter the amount you want to buy. Click [Buy LTC] to confirm the order and you will see the purchased LTC in your Spot Wallet.

To conclude

Since its debut in 2011, Litecoin has demonstrated a continuous development effort to be “to bitcoin what silver is to gold.” Even though it is not as popular as Bitcoin or Ethereum (ETH) in terms of capitalization, the Litecoin community expects further development that can bring improved features and use cases.