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LITECOINOur definitive guide to Litecoin

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CONTENTS

WHAT IS LITECOIN? 3Token – LTC 4Technology 4

ALTCOINS VS BITCOIN: WHAT YOU NEED TO KNOW 5Bitcoin vs Altcoin: The popularity contest 5Why you might choose Litecoin over Bitcoin 5

LITECOIN VS ETHEREUM: THE KEY DIFFERENCES 6What is Ethereum? 6Ethereum vs Litecoin – the key differences 7

HOW TO BUY, SELL AND TRADE LITECOIN 8Four simple steps 8What is a Litecoin wallet? 8Software cryptocurrency wallets 8Hardware cryptocurrency wallets 9Using exchanges for Litecoin 9

LITECOIN’S QUEST FOR CONFIDENTIALITY 10How confidential transactions solve fungibility 10Any issues? 10Not rolled out on Bitcoin 10

CONCLUSION 11

and one could argue they clearly serve alternative purposes.

1. The Litecoin Network aims to process a block every 2.5 minutes, rather than Bitcoin’s 10 minutes. The developers claim that this allows Litecoin to have faster transaction confirmation.2. Litecoin uses Scrypt in its proof-of-work algorithm, a sequential memory-hard function requiring more memory than an algorithm which is not memory-hard.

Due to Litecoin’s use of the Scrypt algorithm, FPGA and ASIC devices made for mining Litecoin are harder to produce, meaning there are less large-scale mining farms at play with Litecoin. They hope this approach will keep mining collusion at bay.

Purpose of Token TPS Confirmation Time Consensus Protocol

LTC, to be used as a cryptocurrency

for quick payments56 150 seconds Scrypt

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While Bitcoin was seen as “gold” and a potential long-term store of value, Litecoin was created to be “silver” and used for everyday purposes. So, on October 7th 2011, Litecoin (LTC) was released via an open-source client on GitHub. The Litecoin Network went live on October 13th 2011, and was essentially a fork of the Bitcoin Core client with a different set of parameters.

In spite of its close relationship with Bitcoin, there are some key differences between the two cryptocurrencies,

WHAT IS LITECOIN?Created by a former Google employee and later CTO of Coinbase, Charlie Lee, Litecoin was one of the first serious altcoin projects developed with an actual purpose.

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Token – LTCLitecoin’s goal is to be the decentralised money of the internet – free of censorship, permissionless, and open to anyone who wishes to join. They aim to offer private, secure, borderless payments for pennies – anywhere, anytime, and fully controlled by LTC holders. Litecoin offers the following:�� Real-time settlement (150 seconds)�� Cryptographically secure transactions�� Payments that move like email�� International reach with

a single integration�� The best solution for micro-payments�� Quick and easy LTC payment

channel integration

Currently, there is about 70% of the total LTC supply in circulation:�� Total supply: 84,000,000 LTC�� Circulating supply: 59,605,963 LTC

(about 70% of the total supply)

Use cases�� Money of the internet: Litecoin

can be used to make instant and borderless transactions anywhere in the world, through Litecoin’s decentralised, secure network

�� Quick integration: Businesses can quickly integrate Litecoin payments with their systems using third-party vendors like Revolut, Wirex, Coinbase, or Coinify

�� Points-of-sale: Businesses can deploy LTC points-of-sale to attract more customers and to give anyone an easy gateway for fiat-to-crypto or crypto-to-crypto payments

�� General uses: Users can make near-free transactions to any account across the globe, with a 150-second settlement time

TechnologyLitecoin uses a mining algorithm called Scrypt, which is more serialised than Bitcoin’s SHA-256. As such, parallelising mining calculations is not possible.

Let’s suppose we have two processes: A and B.

With Bitcoin, it will be possible for ASIC mining hardware to do A and B together at the same time by parallelising them. However, with Litecoin, you will need to do A and then B serially. If you try to parallelise them, the memory required becomes way too much to handle.

Scrypt is called a “memory-hard problem” since the main limiting factor isn’t the raw processing power but the memory. This is specifically the reason why parallelisation becomes an issue. Running 10 memory-hard processes in parallel requires 10 times more memory. Now, of course, there are devices available with tons of memory, and so normal people can compete on the Litecoin mining stage by buying simple day-to-day memory cards instead of super-specialised ASICs.

Scrypt has been deliberately designed to make sure that mining is accessible and democratised as much as possible. Recently, however, companies like Zeus and Flower Technology have managed

to create Scrypt ASICs, which may, unfortunately, mean the demise of their dream of democratised mining. However, pound-for-pound, memory is way more expensive to produce than SHA-256 hashing chips, so bigger companies might just stick to mining Bitcoin.

Another major advantage of Litecoin is the faster block creation time. Since the time between blocks is so small, more and more miners get the opportunity to mine blocks and earn the mining rewards. What this means is that the mining rewards should theoretically be more well distributed with Litecoin and, by extension, it should be more decentralised.

In essence, Litecoin possesses Bitcoin’s features, but is “lighter” to carry and faster to transact. It’s founder, Charlie Lee, believes the goal and mission of Litecoin is to be a live testnet for Bitcoin, meaning that:1. Segwit (or segregated witnessing) has been activated before Bitcoin2. Litecoin has its own P2P payment channels (aka the Lightning Network)3. There are a number of side-chain implementations taking place to better connect Litecoin with Bitcoin’s blockchain, allowing better interoperability.

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Bitcoin vs altcoins is becoming an increasingly prominent battle in the world of cryptocurrency. While Bitcoin still takes up the majority of the market, its alternatives are becoming increasingly popular. Altcoins are often created to resolve some of the limitations of Bitcoin. As a result, altcoins often use different protocols and encryption algorithms. They also have a different focus, whether that’s:�� Privacy�� Stability�� Alternative payment methods

Bitcoin vs Altcoin: The popularity contestBitcoin, in terms of popularity always comes on top when it comes to Bitcoin vs Altcoins. It sought to become an alternative, electronic, peer-to-peer cash system. The intention of its creation was to decentralise the world of finance and offer greater levels of transparency. Its creators aimed to give power back to the people and enable self-sovereignty over our finances, rather than giving control to a central authority – such as a bank.

The original cryptocurrency is encrypted with an algorithm known as ‘SHA-256,’ which encrypts the data into a 256 bit long ‘hash.’ This message is infeasible to invert without the private key. A private key is not too dissimilar from a password; only you, the owner, should ever have access to it. This level of encryption adds layers of security to the cryptocurrency and also offer anonymity.

The hash rate also has another vital role. For a series of transactions to be added to the blockchain, a cryptographic

puzzle must be solved by a data miner. The incentive for a miner is that they will be awarded with Bitcoin, known as a ‘block reward’. The block reward for Bitcoin is halved every four years. The current block reward is 12.5 Bitcoin. If the network is running optimally, a new block will be added to the blockchain every 10 minutes.

Why you might choose Litecoin over Bitcoin At its core, Litecoin is not dissimilar from Bitcoin – at least when considering their respective code. But, Litecoin can be mined significantly quicker than Bitcoin with a block generation time of 2 1/2 minutes. The aim behind the quicker block generation time is to allow for faster transaction confirmation times, looking to solve some of Bitcoin’s limitations. Litecoin also allows for a grand total of 84 million coins to be minted, which is four times higher than Bitcoin.

ALTCOINS VS BITCOIN: WHAT YOU NEED TO KNOWWhy does Litecoin matter as an altcoin? Well, it plays an important role in the Altcoin vs Bitcoin battle that seems to be dominating the market at the moment.

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What is Ethereum?Where Litecoin offers competition to Bitcoin, it naturally follows that this altcoin stands apart from Ethereum. Below, we take a look at the differences between the two.

Ethereum is a public blockchain that allows developers to create third-party applications (dApps) on it. Rather like iOS and the Apple Store, Ethereum provides a platform for almost unlimited innovation to blossom.

Like Bitcoin, Ethereum has its own native cryptocurrency called Ether (ETH). It also makes use of the same Proof-of-Work (PoW) protocol to secure its network.

Without getting into the ins and outs of cryptocurrency mining here, PoW basically means that miners have to verify transactions of blocks in the

LITECOIN VS ETHEREUM: THE KEY DIFFERENCESAccording to CoinMarketCap, there are currently over 2000 altcoins available, despite the bear market. Each of these altcoins has similarities and differences, but let’s take a look at two of the most popular ones – Ethereum and Litecoin.

Ethereum blockchain. They do this by solving mathematical equations in return for Ether.

One of the reasons that Ethereum took off in such a big way is due to its implementation of smart contract technology. Smart contracts allow one user to transfer a payment to another user without an intermediary.

ICOs came into their own in 2017 thanks to their ability to use Ethereum’s platform to create their own ERC-20 tokens and sell them through smart contracts.

This is also one of the biggest reasons behind ETH’s crashing price in 2018, as many ICOs began dumping and panic selling ETH. Since they use ETH to raise funds rather than as a store of value, most ICOs started to cash in as the price began to drop.

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Ethereum vs Litecoin – the key differences

Time in marketOne of the key differences between Ethereum and Litecoin is that Ethereum is much newer than Litecoin. Litecoin has been around since 2011 (which may as well be centuries in the crypto industry). Ethereum was not unveiled until 2015. But because it has many more value propositions than Litecoin, it has developed at a much faster rate.

Market capEthereum is currently the third largest cryptocurrency after Bitcoin and XRP by market cap (around $13bn), dwarfing Litecoin in seventh place with a market cap of close to $2bn.

FunctionalityLitecoin is much more of a payment system than Ethereum, which is a developer application platform. Ethereum’s main raison d’etre is a decentralised computer system with its own programming language that lets developers create dApps through smart contracts.

Block timeThe block time on Ethereum is pretty low, which means that an Ethereum

transaction can be confirmed typically in around 10-20 seconds. Litecoin, on the other hand, takes around 2.5 minutes.

TransactionsThe Ethereum network can currently handle around 15 transactions per second, while Litecoin can manage around 56, giving it an advantage. However, both these figures pale in comparison to Visa, which can handle up to 24,000 transactions a second.

It should be noted that both blockchains are working on scaling solutions to improve the number of transactions per second. Ethereum is working on its sharding and Plasma solutions while Litecoin is scaling with the Lightning Network.

Total supplyLitecoin has a limit of 84 million tokens. This is way more than Bitcoin at 21 million and is meant to keep its goal of being a cheaper coin. There is no set limit of Ether that can be mined.

MiningBoth cryptocurrencies use PoW to mine, however Ethereum is working to make the shift to a Proof of Stake (PoS) mining system that uses less computational power by 2020.

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Four simple stepsTo make successful transactions with Litecoin, there are a few simple steps you need to take. You’ll need to:�� Get a Litecoin wallet�� Find an exchange that sell Litecoin�� Deposit money and make the trade �� Withdraw the Litecoins to your wallet

What is a Litecoin wallet?A cryptocurrency wallet is a digital wallet for holding digital currency. Cryptocurrency wallets rely on cryptography for security and each currency tends to have its own wallet. However, there are many types of wallets you can use when it comes to Litecoin including software and hardware wallets.

Software cryptocurrency walletsThis is the main type of wallet as you might expect with a digital currency.

HOW TO BUY, SELL AND TRADE LITECOINHaving read about how Litecoin stands apart from main cryptocurrencies Bitcoin and Ethereum, you may well choose this altcoin as your preferred investment. Below, we take a look at how you can buy, trade and sell the coin.

�� An application installed locally on a computer or device (smartphone or tablet)

�� Some web-based wallets use additional security – you may have come across two step verification like Google authenticator. The main benefit of this additional authentication is it avoid a hacker using keystroke logging to try and gain access to the wallet.

�� A cryptocurrency exchange (for example the Kraken exchange) links the user’s wallet to the exchanges centrally managed wallet. Any trades are written in the exchanges ledger as an off-chain transaction. When a user enters their cryptocurrency into the exchange or takes it out of the exchange then the transaction is written into the blockchain.

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Examples of Litecoin software wallets include Exodus and Jaxx.

Hardware cryptocurrency walletsIt’s interesting that a hardware wallet exists when you consider cryptocurrencies and the whole concept of a decentralised digital currency. A hardware wallet is a small digital device that can be plugged into a computer to be used to authenticate cryptocurrency transactions. The rationale is to provide added security. Some types of wallets require the user to physically press or touch the wallet in order to sign a transaction.

When the user of a wallet requests a payment, the wallet creates the transaction and provides a public key which is sent to the network. In effect, the signing keys never leave the wallet.

Hardware wallets for Litecoin include Ledger Nano S and Trezor One.

Using exchanges for Litecoin A cryptocurrency exchange, or digital currency exchange (DCE), is an online platform that allows you to buy and trade cryptocurrency or digital currency, then sell it to convert it back to fiat money. These exchanges will either take a commission or simply charge usage fees for their service.

Cryptocurrency exchanges don’t work in exactly the same way as stock exchanges and foreign currency exchanges. However, having a grasp of general exchange fundamentals and procedures will allow you to more easily navigate cryptocurrency exchanges.

If you’re familiar with placing buy and sell orders through stock brokers, you can safely assume cryptocurrency exchanges function in a similar, third-party manner to these brokers. Brokers take your desired cryptocurrency price and order quantity, wait for an order to be completed, and then typically collect a percent commission (plus an upfront fee) on your order.

Similarly, a cryptocurrency exchange is usually programmed to accept your digital buy and sell orders (along with price and quantity), waits in a similar manner for your order to be triggered (met by a buyer or seller on the other end), completes the trade, and then updates your on-exchange holdings, all without human brokers.

Litecoin is available to buy, sell and trade on the following exchanges:

�� Coinbase�� Binance�� Bitfinex

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Litecoin founder Charlie Lee has claimed he is focused on making Litecoin more fungible with the introduction of ‘confidential transactions’ to the 7-year-old network.

In a tweet pinned to the top of his profile, he goes on to describe how “fungibility is the only property of sound money that is missing from Bitcoin and Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy.”

According to the founder, the addition of confidential transactions “can be implemented as a soft fork” in the network. If this is the case, then the Litecoin blockchain will not have any potential chain split risks or consensus building challenges that are often associated with hard forks on the network. He also mentioned that the change should be taking place sometime in 2019.

The Litecoin founder is in the process of doing his homework for the new “battleground” feature. Lee tweeted that he has some “light crypto reading” to do on confidential transactions.

A recent community poll saw overwhelming support for the plan to add confidential transaction capability into the Litecoin protocol. From the 7,000 people who voted, only 8% thought it was a bad idea.

How confidential transactions solve fungibilityConfidential transactions solve the issue of fungibility by encrypting input and output values. Due to the fact that the history of outputs cannot be traced, it is impossible to determine their origin, making it difficult to differentiate tainted coins from untainted ones.

After incorporating this feature, it then becomes significantly harder to track

LITECOIN’S QUEST FOR CONFIDENTIALITYLike many other cryptocurrencies, Litecoin will continue to evolve as it seeks to become to most popular cryptocurrency on the market. If you are planning to, or already are, trading Litecoin then there are a number of things you should look out for in the future.

the transaction history of a particular user, even if their public address is freely available. This provides an increased level of security for those conducting confidential transactions on the network.

Any issues?One of the issues with confidential transactions on the main Bitcoin blockchain was the fact that they would have required roughly 16 times the data size of a regular Bitcoin transaction.

This larger size makes confidential transactions difficult to implement into a Bitcoin protocol already experiencing scaling issues. However, with the increased capacity (and lower demand) in the Litecoin network, users may accept the trade-offs with higher transactions fees or longer confirmation times that may come along with the addition of this new feature.

Not rolled out on BitcoinThe technology behind confidential transactions was originally conceived for use on the original Bitcoin blockchain by Blockstream CEO and cryptographer Adam Back.

Although never rolled out on the layer-one BTC blockchain, Blockstream’s Bitcoin-backed sidechain Liquid has incorporated the use of confidential transactions into their network features list.

Litecoin’s attention to privacy in confidential transactions could be bad news for other privacy and anonymity focused tokens like ZCash, Dash, and Monero. It will be interesting to watch how the privacy tokens fair once Litecoin introduces Lee’s vision into its blockchain.

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Now, Litecoin wants to enter the mainstream, and the company is acutely aware that the ‘silver to Bitcoin’s gold’ narrative must be rewritten in order to promote mainstream adoption.

It will be interesting to see how Litecoin continues to evolve over the coming years. To keep on top of the latest Litecoin news and developments, be sure to follow Coin Rivet.

CONCLUSIONThe silver to Bitcoin’s gold has seen remarkable growth in the last seven years, in areas such as network security, exchange liquidity, merchant payment processes, and so on.

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