Litecoin is one of the first cryptocurrencies created after Bitcoin and still strives to be the silver to Bitcoin’s gold. Today we’re going to be talking about Litecoin and everything that you need to know.
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Overview of Litecoin
Litecoin, with the symbol LTC, is sometimes described as a Bitcoin lite. It is a digital asset designed to enable the instant peer-to-peer exchange of value at affordable rates. Litecoin is one of the most veteran crypto projects and still has a large active community.
Upcoming Litecoin Halving
First, we need to talk about the upcoming Litecoin halving and its possible impact on the price in 2023. Are you confused why Litecoin has recently been moving in the markets? Well, it’s all due to the Litecoin upcoming halving event, which is scheduled to occur in August of 2023. Regarding the event’s possible influence on the asset’s price, there has been a lot of speculation in the crypto community, where some are following in and others are booking profit.
But what exactly is going to happen in this event? The halving will reduce the mining reward for Litecoin by half from 12.5 to 6.25 LTC. In 2023, Litecoin began its price growth on January 16th, hitting its peak on July 5th at around $113. The overall market has mixed sentiments related to this event, with market analyst Michaël van de Poppe believing that Litecoin will hit a $200 market cap. Another analyst thinks a deep retracement with a 70% drop will occur, as we have a very limited number of past halving events. In this case of Litecoin, the sample size is too small to accurately predict future price movements of the coin. Therefore, it’s important to maintain caution while approaching these assumptions.
History of Litecoin
Litecoin first surfaced in October of 2011, two years after Bitcoin’s genesis block was mined. It was first released on GitHub by its creator, the well-known computer scientist Charlie Lee, a Google employee and later director of engineering at Coinbase. Litecoin had the initial aim of supplementing Bitcoin’s economy rather than competing with it. The crypto community quickly accepted this narrative, calling Litecoin the silver to Bitcoin’s gold, which made the digital asset one of the highest-valued coins and a top five crypto for a long time.
In November 2013, it witnessed a huge surge that catapulted the asset into the public limelight. Lee sparked controversy in mid-December of 2017 when he publicly declared, while Litecoin was enjoying an all-time high, that he had sold and donated all of his Litecoin holdings to focus more objectively on the currency’s development. Litecoin’s price subsequently tanked, and many irate Litecoin holders unfairly blamed Lee for this.
Instead of taking into account the end of the 2017 bull run for allegedly dumping his own currency, Litecoin is a fork from the Bitcoin core source code with a few key differences that distinguish it from Bitcoin. It has a faster block generation time—two and a half minutes versus Bitcoin’s ten—larger total coin supply, and the use of the script hash function as opposed to Bitcoin’s SHA-256 encryption. Litecoin also implemented several upgrades that were initially slated for deployment on the Bitcoin network, such as Segregated Witness (SegWit), with the aim of increasing its transaction throughput. It has also integrated a Layer 2 scaling solution called the Lightning Network.
Litecoin and Mimblewimble
In January of 2021, Litecoin launched its Mimblewimble upgrade via the minimal symbol extension block (MWEB). Making Litecoin Mimblewimble friendly allows the network to increase the usability of its currency by adding confidentiality features. Litecoin took its first steps towards integrating Mimblewimble back in October of 2019, with the Litecoin Mimblewimble testnet launching in October of 2020.
Litecoin’s Supply
How many Litecoins are there? Litecoin adheres to a scarce tokenomics model, permitting only a limited amount of LTC to be mined. The cryptocurrency’s supply is capped at 84 million, with around 73 million in circulation as of July 2023. Like Bitcoin, Litecoin also undergoes a block reward halving approximately every 840,000 blocks, or four years, which slows down the pace of new coins being mined over time. The Litecoin network has undergone two halving events so far—first in 2015 and then in 2019.
Block rewards began with 50 Litecoin at launch and currently stand at around 10.5 LTC. The next halving is estimated to occur in August of 2023 and will reduce the rewards to 6.25 LTC per block, similar to Bitcoin’s current mining rewards. The halving mechanism has been engineered to make it harder to mine LTC as its circulating supply comes closer to its maximum supply, which prevents the indefinite inflation of the coin and rewards those miners who took part in maintaining the network in its early days.
Litecoin vs. Bitcoin
Litecoin began as a fork of Bitcoin. It has several differences from its predecessor. First, it goes beyond the block limitations of its parent protocol with a block time of two and a half minutes. Second, Lee has architected the network to function as a lighter and faster version of Bitcoin, as its name suggests. Litecoin also uses a script hash function instead of Bitcoin’s SHA-256 to avoid being taken over by ASIC-based miners, allowing CPU and GPU miners to thrive. However, over time, ASIC miners were able to develop script-based hardware and infiltrate the Litecoin mining economy.
Litecoin was designed for speed, whereas Bitcoin was built for maximum security and immutability. As a lighter version of Bitcoin, it can process transactions a lot faster and prevent payment delays. Bitcoin payments are processed in around nine or ten minutes, which may be a bit slow for some situations. However, Bitcoin does offer better security as it allows more time for information to spread throughout a global network of peers or nodes before transactions are confirmed.
Litecoin vs. Dogecoin
Did you know that the popular meme crypto Dogecoin is a fork of the Lucky Coin blockchain, which is a fork of Coin, which is itself a fork of Bitcoin? It’s enough to go mad! Litecoin and Dogecoin use the same script-based mining system, so they are commonly used in merge mining—a mining pool feature that enables users to mine two different cryptocurrencies simultaneously. However, the two protocols differ immensely in their economic models. Dogecoin has an infinite token supply and does not undergo halving periodically. Dogecoin blocks are generated every minute, making it two and a half times faster than Litecoin. Litecoin, however, is scarcer, making it more suitable as an asset to hold long term.
Litecoin vs. Ethereum
There are a few main differences between the purpose of Litecoin and Ethereum and how they function. For starters, Litecoin is meant to be a transactional currency or store of value similar to Bitcoin. However, Ethereum functions as a decentralized global computer with smart contract functionality and the ability to run decentralized applications (dApps). In terms of tokenomics, Litecoin has a capped supply of 84 million, while Ethereum does not have a fixed supply.
Litecoin’s enduring success demonstrates that altcoins can withstand the test of time, remain relevant, and continue to evolve. Litecoin’s low cost and fast transaction capacity, as well as its growing community, have all fueled its adoption as an accepted form of payment at thousands of merchants worldwide. However, only time will tell if Litecoin will remain worthy of its moniker as the silver to Bitcoin’s gold.
