What Is Litecoin (LTC)?
Litecoin (LTC) is a cryptocurrency created from a fork of the Bitcoin blockchain in 2011. It was initially designed to address the developer’s concerns that Bitcoin was becoming too centrally controlled and to make it more difficult for large-scale mining firms to gain the upper hand in mining. While eventually unsuccessful in preventing enterprise miners from taking over the lion’s share of Litecoin mining, the cryptocurrency has reworked itself into a minable coin and a peer-to-peer payment system.
Learn more about Litecoin and what makes it different.
Key Takeaways
- Litecoin is a cryptocurrency founded in 2011, two years after Bitcoin, by a former Google engineer named Charlie Lee.
- It shares similar features with Bitcoin but has a different algorithm. The cryptocurrency’s goal is to become a medium for daily transactions.
- Litecoin has a faster transaction processing time than Bitcoin.
- Although it is a Bitcoin fork, the two have several differences.
History of Litecoin (LTC)
In 2011, Bitcoin was becoming more popular with enterprise-sized miners because of its potential price appreciation. It appeared that businesses were going to take control of mining because it was quickly becoming computationally unfeasible for individuals to participate.
To some, this looming centralization went against one of the original concepts behind the cryptocurrency, that it would remain decentralized.
Charlie Lee
In a project led by Charlie Lee, a former Google engineer, Litecoin was released to the public in 2011. Like Bitcoin, Litecoin is an open-source global payment network designed to be decentralized. Lee referred to Litecoin as “the silver to Bitcoin’s gold.” This statement inferred that Litecoin was not intended to act as a replacement for Bitcoin but rather supplement it. Like silver, it would never be as valuable as gold, but it would still maintain a place as a payment method and be used more.
Design
Litecoin was designed to be inaccessible to the growing network of application-specific integrated circuit (ASIC) miners who were beginning to dominate cryptocurrency mining. By implementing a different hashing algorithm that required more memory than processing power, it was believed that profit-minded miners would be discouraged from attempting to centralize the cryptocurrency’s network. However, its ASIC-resistant setup didn’t last long: the world’s first Litecoin ASIC miners were released in 2014.
Mining Litecoin
You can participate in the Litecoin network using a personal computer, but there is really no benefit to doing so other than the satisfaction of being involved unless you join a mining pool. Even then, your rewards will be very small because pools pay out rewards based on the share of work your miner does. The CPU and GPU in modern computers are not capable of keeping up with the large mining networks that exist.
In 2024, the best way to mine Litecoin is by purchasing one or more ASIC miners compatible with Scrypt. But even then, you’ll need to join a mining pool because you’re competing with pools that are far more efficient at hashing.
Buying and Selling Litecoin
Most cryptocurrencies can be purchased on cryptocurrency exchanges. Several exchanges can conduct transactions within the United States; many more are outside the U.S. It’s important to note that exchanges within the U.S. are monitored and regulated by the Securities and Exchange Commission to ensure that the best interests of investors and traders are upheld. With that in mind, if you live in the U.S., your choices are limited to exchanges within the U.S.
Because exchanges are regulated and regulations are still being developed, the places you can buy and sell cryptocurrencies fluctuate.
Exchanges outside the U.S. may or may not have regulatory authorities, although many countries have implemented controls or granted regulatory authority to their financial regulating agencies. Some U.S. exchanges where you can buy Litecoin are:
- Coinbase
- eToro
- Kraken
- Binance.US
- Robinhood
- Gemini
You can sell your Litecoin on the same exchanges where you can purchase it. However, selling your crypto on a centralized exchange is different than selling it on a decentralized one. For example, if you’re selling your Litecoin on an exchange like Kraken, you’ll need to send your LTC to your Kraken address. From there, the exchange facilitates the sales of your Litecoin.
To set up an account on one of these exchanges, you’ll need to go through the “Know Your Customer (or client)” registration process. This generally includes providing identification, taxpayer ID numbers, addresses, or other information that the exchange is required by law to collect. Once approved, you can deposit your Litecoin and begin selling it.
Decentralized exchanges (DEX) may or may not require KYC procedures depending on the jurisdiction in which they operate.
How Is Litecoin Different From Bitcoin?
While Litecoin is a Bitcoin fork, there are many differences besides market capitalization and price.
-
Total coin cap of 84 million
-
Uses Scrypt hashing algorithm
-
Capacity for up to 50 transactions per second
-
Block time of 2.5 minutes
-
Reward halves every 840,000 blocks
-
Total coin cap of 21 million
-
Uses SHA-256 hashing algorithm
-
Capacity for up to seven transactions per second
-
Block time of 10 minutes
-
Reward halves every 240,000 blocks
Halving Schedule
A cryptocurrency halving is an event in which the block rewards are cut in half. Litecoin’s halving dates differ from Bitcoin’s because it was released two years later. The reward also halves at different intervals because Litecoin produces new blocks faster than Bitcoin.
Halving dates for LTC:
- Aug. 25, 2015: 50 to 25 LTCs
- Aug. 5, 2019: 25 to 12.5 LTCs
- Aug. 2, 2023: 12.5 to 6.25 LTCs
- Mid-2027 (expected): 6.25 to 3.125
The Future of Litecoin
Litecoin has moved away from a mining ecosystem dominated by individual miners to a corporatized setup, where large mining pools run by tech firms account for the overwhelming majority of Litecoin mining.
Whether the cryptocurrency has a future depends on whether it is maintained, remains relevant, and meets the needs of users and investors. As of May 2024, it was still being maintained by a community of developers with fixes and improvements. In 2024, Litecoin activated Runes (similar to non-fungible tokens), similar to the Runes available on the Bitcoin blockchain.
It had a market price of more than $80, a 24-hour trading volume of about $310 million, and a market cap of $6 billion. Between January and May 2024, the network set a record of 34 million processed transactions—nearly four times the amount of transactions processed in the same period the previous year.
These developments all suggest that there is a continued interest in the cryptocurrency’s future. It’s eventual outcome, however, is anyone’s guess.
Does Litecoin Have a Future?
It is difficult to determine how investors, traders, cryptocurrency fans, governments, and the general public will treat Litecoin in the future. Cryptocurrency is being scrutinized by governments; more cryptocurrencies are being created every day, and the markets are volatile.
What Will Litecoin Be Worth in 5 Years?
It’s difficult to predict LTC’s market value in five years. It depends on its popularity and how individuals and investors use it.
Is Litecoin a Worthy Investment?
It depends on your outlook, risk tolerance, and preferences. If you enjoy speculating and can tolerate losses if its price drops, it could be a worthwhile investment. However, if you’re looking for a safe investment that will grow your worth over time, it may not be worth it. A financial advisor can help you decide whether it is a good investment for your circumstances.
The Bottom Line
Litecoin is a blockchain and cryptocurrency intended to be used as a payment method. Like Bitcoin, it has also become used as an investment and instrument for speculation.
You can participate in the Litecoin network by downloading a client and becoming a miner, or you can buy and sell it on exchanges.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own LTC.