All About Litecoin

How Is Litecoin Made?

Like all cryptocurrencies, the government does not issue Litecoin; the government has, historically, been the only institution that society trusts to issue money. Instead, it is controlled by the Federal Reserve, and coming out of a press at the Engraving and Printing Bureau, Litecoins are developed through an elaborate process called mining, which is the processing of a list of LTC transactions. The supply of Litecoins is fixed, unlike traditional currencies. Only 84 million LTCs will eventually be in circulation. The Litecoin network produces what is called a block every 2.5 minutes – a ledger entry of the latest LTC transactions worldwide; this is where the inherent value of Litecoins originates.

Mining software verifies the block and makes it visible to any ‘miner’ that wishes to see it. The next block enters the chain once a miner verifies it, which is a record of every LTC transaction that has ever been made.

Next stop, we are going to talk about mining Litecoin.

Mining LTC

The incentive for mining is that 50 LTC will be awarded to the first miner to check a block effectively. With time, the number of Litecoins awarded for such a task decreases. It was halved in October 2015, and the halving will continue until the 84,000,000th LTC is mined at regular intervals. But could one miner change the block, allowing the same Litecoin to be sent twice? No. Another miner, anonymous to the first, would detect the scam, instantly. The only way to play the scheme would be to get a majority of miners to agree to process the false transaction, which is virtually impossible. 

Mining cryptocurrency to miners at a rate that is valuable needs high processing power, courtesy of specific hardware. The central processing unit in most laptops is not nearly quick enough to finish the job of mining most cryptocurrencies. This takes us to another point of differentiation for Litecoins; they can be mined more than other cryptocurrencies can with regular computers, although the higher the mining ability of a computer, the better the opportunity for a miner to gain value.

What’s the value of LTC?

Any currency, including the US dollar or gold bullion, is only as vital as it is believed to be by culture. If the Federal Reserve began circulating too many banknotes, the dollar’s value would collapse in the short term. This phenomenon goes beyond currency. The more quickly and cheaply it can be accessed, the less important it becomes.. From the outset, the creators of Litecoin recognised that developing a reputation in the marketplace would be difficult for a fresh currency. However, by limiting the number of Litecoins in circulation, the founders could, at least, alleviate the concerns of overproduction. 

LTC has intrinsic benefits over Bitcoin. Because of the shorter block generation time, Litecoin can manage more transactions. LTC also has a transaction fee that is scarcely perceptible. The processing of a transaction costs 1/1000 of a Litecoin, regardless of its size, compared to the 3% fee for PayPal.

The most reliable value stores in the physical world are the currencies of choice in case of a crisis. Zimbabwe became synonymous with hyperinflation in the late 1990s and early 2000s. When inflation achieved 89.7% of a sextillion and made the Zimbabwean dollar meaningless, many people who were unfortunate enough to hold liquid assets had their fortunes wiped out. People had no option but to use something more stable for everyday trade – mainly the US dollar and South African rand. The inherent scarcity of LTC makes hyperinflation impossible, but the challenge of gaining general acceptance and making more people use the currency remains.

Other Features of LTC

So, some of the features of Litecoin, which are being implemented soon are:

• The lightning networks: This has been introduced into the Litecoin blockchain, but it’s not fully rolled out yet. It will take a couple of years as it is a gradual process. Litecoin is the first crypto to adopt this technology; the lightning network enables free instant transactions across the off-chain network of the full Litecoin. 

So, you don’t have to pay the fees because it’s off-chain, but you do have to pay a fee to open up and close something called a payment channel. This channel is a multi-signature wallet, which means it uses smart contracts that can be set up to be unilateral (one way) or bilateral (two ways). This is just a payment path in which people can transact values in LTC, making this is a much more secure way of sending fees and allowing for greater off-chain scalability.

• Automatic Swaps: The lightning networks allow Litecoin to perform atomic swaps. This is also being worked on with the implementation of the lightning networks, allowing cross-chain swaps. For example, you can send someone a Litecoin and the person could send you a Bitcoin. This is done without the need for a centralised exchange, which makes it a good option because it eliminates fees when using the lightning network.

• Mast: Within the next six to twelve months, something called mast is being implemented. This is a privacy feature that will enable large transactions through a Merkle route in a process known as tumbling. So, you tumble or mix transactions together, say 1,000 transactions; it makes it very difficult to determine single transactions when you have all these bunched up together. Mast also introduces the complex smart contracts to LTC. These contracts are already on the chain, but they take a considerable amount of space, which means they are not yet scalable. 

• Confidential Transactions: After mast, confidential transactions will be introduced. This is just another layer of privacy on top of the mast transactions, which is a similar technology to Monero.

Where Do You Buy and Store Litecoin?

First, we’ll talk about where you can store your LTC.

Wallets

When it comes to wallets, you have quite a few options with Litecoin.

You can put Litecoin on:

• A hardware wallet, for example, legend, Nano, or Trezor.
• LTC desktop client wallet
• Exodus 
• Jax.
• Loaf wallet (iOS only) 
• Paper wallets

Where do you buy LTC?

So, where can you buy Litecoin? LTC is on many of the big exchanges, which is excellent. You want to have a coin that is on a lot of exchanges, but a lot of reputable exchanges because it means it has liquidity, is backed, and has reliability. So GDXB, Bithumb, and BitFinex are some of the exchanges that most people regularly buy from.

The Litecoin Team

The next thing I want to look at is the team and the team for Litecoin is excellent with the head of LTC, who, most people know as Charlie Lee.

He’s a brilliant guy; he is quite animated on Twitter and shares his opinion, and he’s very blunt, and synced in his thoughts on the crypto market, concerning Bitcoin and things like that.

Charlie helped set up a lot of things at Coinbase exchange and has done a lot of other work with blockchain and cryptocurrencies; he’s really well respected in the community, which is one of the things that gives Litecoin its fan base or user base; people follow Charlie as head of the cryptocurrency community and I think he will be for some time as well.

The team is an excellent with some outstanding developers on board; they are  working hard to bring out new features as quickly as they can. They seem to take time and we have to wait until it happens.

In the community, quite a few things make Litecoin unique. The community is active with forums. Here are some examples:

• Your Litecoin official forum
• Litecoin official Reddit with 70k users
• Litecoin’s Twitter, which is an unofficial Twitter with 140k followers
• Charlie Lee with nearly 200,000 subscribers on Twitter

The Future of LTC

Upcoming Features

There are upcoming LTC features, which we talked about before, such as the lightning network rollout, atomic swaps, MAST, private transactions, and covenant. But one thing we have not talked about are the Schnoor signatures. This is something that Litecoin haven’t confirmed that they’re going to implement, but they are currently researching to try and achieve them.

Before I can explain where Schnoor Signatures are, let’s look at something first. In a Bitcoin transaction, or another typical blockchain transaction, when you send split payments such as multiple payments from one person to two different people at the same time, each of those transactions requires a signature to verify it. This signature takes up space; this is one of the things that Bitcoin were trying to straighten out because signatures take up so much data.

Signatures help solve two problems. 

The first is scalability; it doesn’t solve the whole problem, obviously, but it’s been shown to reduce storage and bandwidth by 25%. You can send split payments to multiple people with one signature. Let’s say you send payments to three people; for those three payments you will only need one signature for verification, which saves a lot of space on the block.

Second, it also helps stop spammers. This is because you only have one signature for multiple transactions, so it doesn’t take up as much space on the network, avoiding a bottleneck in the network. We saw this in Bitcoin in around July; PayPal was spamming individuals on the network with split transactions, asking for individual signatures, and this badly backed up the network. What this Schnorr signature will do is eliminate the stress of sending multiple transactions with multiple signatures and instead replace it with one signature for those transactions making it economically unviable for spammers.

General Opinion of Users

Most users at the moment have no complaints towards Litecoin, but one reservation is common amongst users; this is the fact that it shares a lot of the same centralisation and scalability issues as Bitcoin.

What do I mean by this? 

The first centralisation part is due to the fact that it is a proof of work blockchain, which has cards developed as minor cards. These are cards specifically built to create this currency and mine blocks. Although LTC is probably less centralised than Bitcoin, it is still quite centralised. 

Litecoin’s scalability problems are the same as Bitcoins, and although it has a small block time and SegWit, it’s not really a long-term fix. In my opinion, even if the lightning network adds scalability, there is a limit to what the lightning network can currently handle. 

More so, we will need to find another way to scale, possibly off-chain. We can’t seem to find an excellent on-chain solution at the moment, but we are not mass adopted yet, so we don’t necessarily need this tremendous scalability. Nevertheless, when the time comes for mass adoption, we will need to be ready, and we will need to be able to scale our networks to supplement the transactions that occur.

Bottom Line

Currency is not currency until it has many users who have confidence in its use and sustainability. Regarding this milestone, LTC is nowhere near as it has fewer than 100,000 users. However, the cryptocurrency market is expanding daily with many people gaining trust in digital currencies, and it is believed that Litecoin can emerge as a standard digital currency to be used by all.

If we look back to the time when Bitcoin first came into existence, many took it to be a simple joke – something that would never work out – but truth be told, it did become something that everyone wished they had mined on inception. 

The problem now is that Litecoin has come along, posing to eliminate most of the issues associated with Bitcoin. However, we see many people still shying away from this cryptocurrency, even with all the possibilities attached to mining it. LTC has the potential of growing to the level of Bitcoin and even surpassing it, making the choice of mining this cryptocurrency left to you.

This article is an educative piece for those who are new to the crypto world, those who are already mining other cryptocurrencies, and those who are just looking to invest in Litecoin and not an advertisement. No investment comes without a risk of its own and to say that an investment is too risky does not hold water.

 Every businessperson you see today, making the most of their investments, and enjoying the benefits thereof, has been at the crossroads of investment. The only thing that is vital when making such decisions is information, something that you have taken a slice of today. Once you make up your mind to take a step, you must get more information because there is nothing more wasteful than an uninformed investment. 

Finally, the Litecoin investment platform has steadily taken a leap of steady growth, something a lot of people have tagged as improbable: would things move as they expect or would LTC take a turn for the worst? I guess all we can say is time will tell. So, from me as well as the rest of the crypt family, all I can say is good luck!