In late 2011, a new type of digital currency; the Litecoin, was launched. With the support of many Bitcoin users, Charles Lee; its creator, introduced it to the world. Although similar in many respects to Bitcoin which operates as a digital currency between people, Litecoin has some extra abilities which, according to those who developed it, ensure it is superior to the original Bitcoin.
What stands out Litecoin?
One big difference when comparing these two forms of digital currency is the Litecoin’s projects radical approach to security. It works on the premise of more memory being essential; memory is required on a large scale to complete the complex algorithms making it much more difficult for anyone to hack the system. The system operates by using scrypt, which is frequently referred to as a proof of work type of algorithm. In essence transactions are blocked together and, before it is possible to process them, the system manufacturers a complex equation; the solution to this requires an array of computers working together. Only once the challenge has been resolved will the transaction batch can be approved and processed fully.
The disadvantage of an approach such as this is the lack of reason to create application specific integrated circuits; they will not be efficient or economically viable due to the complex calculations which must be taken into consideration. A more positive effect of this is that, although these circuits will eventually arrive for Litecoin, whilst they are unavailable the digital currency will retain its decentralization; this is an important part of any digital currency as this helps ensure both its value and its ability to be resilient to market forces.
Although the complex calculations require more memory they do not slow down the amount of time it takes to complete a transaction. In fact, the average Litecoin transaction will be completed and confirmed within two and a half minutes. In comparison Bitcoin’s average is ten minutes and customers are often advised to wait one or two hours to ensure all the security checks have been completed before you attempt to access your funds. In this way, Litecoin can offer a distinct advantage; the speed of their transactions enables you to access your funds almost instantly.
What is the similarity between Litecoin and ordinary Bitcoin?
There are similarities between the two systems and their approaches. Both software systems retain the amount of blocks required to be processed before the difficulty is changed. Likewise a block reward, usually based on a halving event is set for the same timescale in both systems. In practice this means that Litecoin will produce as much as four times the number of coins that the Bitcoin software will; this is based on the difficulty forcing a change every three and a half days which will result in as many as eighty four million Litecoins.
Litecoin is gaining rapidly in popularity, it is seen as a math based digital currency and is now a part of the main Bitcoin exchange in the world; MtGox. When this exchange started to accept Litecoin there was an immediate rise in value of the currency and in April 2013 Litecoin reached an impressive $81 million; the value of this fluctuated drastically as the exchange rate between Litecoin and the US dollar was fluctuating hugely, ranging from two and a half dollars to four and a half! At this time Bitcoin appears to have mined as much as fifty percent of itself whilst Litecoin had only reached twenty percent. It is not expected to reach fifty percent until towards the end of 2015.The community support being offered to Litecoin is tremendous and growing rapidly. Charles Lee has remained in charge with a team of six developers assisting and guiding him.