What Is Litecoin?
Litecoin was launched in 2011 by Google engineer Charlie Lee.
Charlie Lee was inspired by Bitcoin and wanted to create his own cryptocurrency. His first attempt was a cryptocurrency named Fairbix, which ultimately was abandoned due to flawed code and a large pre-mine that divided the community.
On his next attempt, he decided to copy the entire Bitcoin code (known in cryptocurrency as a fork), while adjusting for a few things he saw as Bitcoin weaknesses. His main changes were in regards to long transaction times and high fees.
He launched the currency in 2011 under the name Litecoin, which he described as “the silver to Bitcoin’s gold”.
Since its launch, Litecoin has proven to be one of the most reliable, fast, cheap and stable cryptocurrencies available today.
It’s main selling points are speed and cost. Because of its faster block times, it sends transactions within a few minutes whereas Bitcoin can take up to an hour. Fees are also a fraction of Bitcoin’s – rarely more than a few cents.
This has seen Litecoin marketed as a more suitable day-to-day currency than Bitcoin. Charlie Lee has said that Litecoin is superior for small purchases, such as groceries and coffee, whereas Bitcoin is better suited for things like big asset purchases and international transfers.
The litecoin Team
The way Litecoin is being developed is interesting.
At first, it was just Charlie Lee writing the code, and he later added Warren Togami. For the initial years of Litecoin, they were the only two actively developing the chain.
Litecoin is still being contributed to by Charlie Lee and Togami today as can be seen on their Github, but also has a team of other developers that work on the project either voluntarily or with support from the Litecoin Foundation. Most commits are now being written by their two sponsored developers. Let’s see what we know about them:
Also known by the handle thrasher, Gallagher was the first sponsored (paid) full time developer by the Litecoin Foundation. He is based in Australia and has been working on Litecoin since its inception in 2011. Other information on his education/background doesn’t seem available online.
Loshan is the second full time developer sponsored by the Litecoin Foundation. Information about his education/background doesn’t seem available online. He does have an active Twitter account.
Litecoin is also supported by many Bitcoin developers, and many see the co-existence of cryptocurrencies as a good thing and helpful to drive mass adoption.
The litecoin Product
Because Litecoin was only a slightly modified hard fork off Bitcoin, the product is more or less a Bitcoin clone with a few minor but important differences.
First, the algorithm. Bitcoin uses a SHA-256 mining algorithm, which relies heavily on computing power. Lee instead went with an algorithm known as Scrypt, which is highly memory-consuming. The Scrypt algorithm makes it difficult for one entity to set up a large mining pool, like what we see so commonly in Bitcoin.
He also chose a shorter block time. On average, the block transaction time is 2.5 minutes compared to Bitcoin’s 10 minutes. This means transaction time is reduced by 75% with Litecoin, making it more suitable for real-world usage. As an example, a merchant can get two “confirmations” (notification that a transaction has been written to the blockchain) in five minutes, whereas they would need to wait ten minutes to get just one confirmation with Bitcoin.
With faster block times comes lower fees. As miners only need to spend a quarter of the time confirming blocks, the fees are able to be lower. It also means there is less traffic on the network so fees are backlogged less often. Even if Litecoin is to process exactly the same amount of transactions of Litecoin, fees could be expected to be at least 4x lower, possibly evenly a lot more due to the flow on effects of the chain being more efficient in general.
the litecoin Token (Utility and Metrics)
Litecoin’s intended utility is nothing other than to be a medium of exchange, just like Bitcoin. It runs on a proof-of-work algorithm and therefore coins must be mined.
There was a small pre-mine of Litecoin (around 75 coins) just to validate the genesis block.
Litecoin has a hard cap is 84 million LTC, exactly 4x the Bitcoin supply cap of 21 million BTC.
Because LTC is a cheaper and faster version of Bitcoin, with a 4x hard cap, some investors believe Litecoin’s price should trail at around 1/4 the price of Bitcoin.
The litecoin Community
One thing that seems apparent in the Litecoin community is they don’t consider themselves to be competing with any coins.
In fact, Litecoin often supports Bitcoin developers and vice versa, and code that is intended for Bitcoin is often implemented on Litecoin first, as their core functions are mostly the same. You can see examples of this with the Segregated Witness protocol and the Lightning Network, both of which were implemented on Litecoin first.
The Litecoin Foundation also openly supports and donates to the development of Bitcoin and believes Litecoin and Bitcoin should co-exist for the cryptocurrency ecosystem to work. This makes sense as for cryptocurrency to work as a monetary system, there needs to be choice, just like there is choice in our current system of money (USD, euro, yen etc).
Charlie Lee later formed the Litecoin Foundation, a non-profit foundation based in Singapore. While it operates independently of Litecoin, its aim is to foster development of Litecoin and other cryptocurrencies for the good of the ecosystem. It’s main goals are to encourage adoption and merchant acceptance. The Litecoin Foundation currently sponsors two developers to work on Litecoin full time. Charlie Lee is the foundation’s managing director.
Some people believe Litecoin has an advantage over Bitcoin as it has a “leader” in Charlie Lee, unlike Bitcoin, whose creator has not been seen or heard from since 2014.
In late 2017, Charlie Lee created controversy when he publicly disclosed that he was selling all his Litecoin holdings. His reasoning was that any time he announced Litecoin news publicly, he was accused of only doing it for financial gain. He stressed that selling all his tokens was an important step in Litecoin’s development, as a decentralised currency cannot have a “leader”, it requires a community and shouldn’t rely on one person. He still works on Litecoin full time.
I’ve said this before and I will say it again. Ask not what litecoin can do for you. Ask what you can do for litecoin. Go forth and make it happen. This is a decentralised currency. You don’t get to sit back and enjoy the profits from other people’s hard work. – Charlie Lee
B Money Verdict:
Based on tech alone, it does everything that Bitcoin and does most of it better. It is faster, it has less politics, it has much lower fees, and has an algorithm that encourages better decentralisation.
Based on fundamentals, I agree it is highly undervalued and should be closer to 1/4th the price of Bitcoin.
The main advantage Bitcoin has is its strong, devoted community. The Litecoin reddit is active and LTC is talked about often on Twitter and in crypto media, but its community support is far lower than Bitcoin’s. In comparison to most coins though its community is strong.
Someone like Charlie Lee is invaluable and he gives the impression of someone who is in crypto for all the right reasons. I believe he will add a lot of value long term.
Overall, I like Litecoin due to how streamlined it is and think it provides a lot of value.
The Good Stuff
- Fast transaction times.
- Low fees.
- Large community.
- Stable since 2011, no hacks or divisive forks.
- Litecoin Foundation provides funding and guidance.
The Bad Stuff
- May be made obsolete by BTC in future if BTC solve speed and cost issues.
- Might be too much importance placed on Charlie Lee as “leader”.
- Shorter block times can compromise security in rare cases.
Lee and Togami still contribute code, and Bitcoin developers also contribute to Litecoin. Full time developers sponsored by Litecoin Foundation. Team is not rockstar level but gets results.
Faster, cheaper, more decentralised than Bitcoin. Stable chain since 2011.
Only intended utility is peer to peer currency, works perfectly, hard to fault. Fixed hard cap ensures scarcity.
Litecoin Foundation provides a lot of value. Smaller community than Bitcoin but still very active and supportive.
How To Buy litecoin In New Zealand
To buy instantly with New Zealand dollars, I recommend using EasyCrypto. Rates are some of the fairest in NZ and transactions are fast. It will be more expensive than Independent Reserve but the process will be much easier. You can sign up for a free EasyCrypto account here.
For a step-by-step guide on buying Litecoin, check out our buyers guide here.
WHITEPAPER: NoneWEBSITE: https://litecoin.org/BLOG:https://blog.litecoin.org/REDDIT:https://www.reddit.com/r/litecoin/TWITTER:https://twitter.com/ltcfoundationBUY WITH NZD: EasyCrypto or Independent Reserve
- Blockonomi Litecoin Guide: https://blockonomi.com/litecoin-guide/
- Charlie Lee biography: https://medium.com/the-mission/brief-bio-on-charlie-lee-the-litecoin-creator-bb9e8df7e8fb
- What is Litecoin – Forbes: https://www.forbes.com/sites/quora/2018/02/08/what-is-litecoin/
- Litecoin Wikipedia: https://en.wikipedia.org/wiki/Litecoin
- Charlie Lee sells all Litecoin holdings: https://bitcoinist.com/charlie-lee-on-selling-his-litecoin-it-just-feels-like-its-not-the-right-decision/
- The Founder of Litecoin Charlie Lee: https://www.ig.com/au/view-ig/the-founder-of-litecoin–charlie-lee-41836-180129
- Tradeoffs of shorter block times: https://bitcointalk.org/index.php?topic=2557872.0