Developed in 2011 as a fork of the Bitcoin network, Litecoin aimed to improve upon Bitcoin's shortcomings. It was the first altcoin, with the goal of offering a decentralized peer-to-peer currency with faster transaction processing times and lower fees than Bitcoin.
A brief look at LTC price and market cap indicates that Litecoin was among the top five cryptocurrencies in December 2017. However, since then, the ranking of the altcoin has slipped to the top 20 as other altcoins gained market share and LTC's popularity dimmed.
One of Litecoin’s primary goals was to prevent the centralization of mining seen in Bitcoin. To achieve this, the LTC token uses a different algorithm called Scrypt, which makes it challenging for large mining farms to dominate. Scrypt accomplices this by making mining more memory-intensive and significantly slower than Bitcoin's mining algorithm. While LTC failed to prevent mining farms from controlling the majority of mining activity, its focus has shifted to becoming an efficient payment system.
While Litecoin shares several similarities with Bitcoin, the two cryptocurrencies differ in terms of hashing algorithm and block creation times, among other factors. The Bitcoin network takes up to 10 minutes to create a block and can process about five transactions per second. The longer processing times make Bitcoin inefficient as a payment method, where merchants may have to wait an hour to receive their payment.
On the other hand, Block generation on Litecoin takes up to 2.5 minutes, and the network can handle up to 54 transactions per second. Additionally, Litecoin claims to offer better security and lower fees than BTC.
Over the years, Litecoin's usage as a payment method has increased, with merchants such as the American Red Cross, Newegg, and Twitch all accepting LTC as payment. Additionally, virtually every cryptocurrency exchange, wallet, and CeFi service support LTC or LTC trading.
Litecoin also launched its highly anticipated MimbleWimble upgrade, enabling anonymous transactions on the network, similar to other private networks like zCash (ZEC) and Monero (XMR).
The integration of MimbleWimble with Litecoin via extension blocks (MWEB) allows users to conceal transaction information, enhancing privacy. The upgrade was released in January 2022 and activated in May.
The MimbleWimble upgrade was first proposed in October 2019 two Litecoin improvement proposals. In October 2020, the network launched the first MimbleWimble testnet. The protocol's name is derived from the tongue-tying spell in the fictional Harry Potter series.
According to the Litecoin Foundation, the upgrade enhances the network's scalability by reducing on-chain data and improving fungibility.
LTC price and tokenomics
Like BTC, LTC is not a pre-mined digital asset and relies on a mechanism to supply new coins to the market. Mining serves as the emission system for LTC, rewarding miners with newly minted coins upon success.
While Litecoin, like Bitcoin, has a capped supply model, the maximum supply of LTC is 84 million, compared to Bitcoin's 21 million. This cap ensures that the last LTC will be mined in 2142, two years after the last BTC. As of now, around 70.8 million LTC are already in circulation.
The halving of mining rewards occurs every 840,000 blocks for LTC, limiting the coin's supply and maintaining token value. Similar to Bitcoin halving, this event reduces the rewards earned by miners by half.
As of September 2022, the total circulating supply of Litecoin was over 71.14 million, leaving around 13 million LTC tokens yet to be mined.
About the founders
Litecoin was founded by former Google software engineer Charlie Lee, also known as "Chocobo." Lee referred to Litecoin, which used Bitcoin's source code, as a "lite version of Bitcoin." He also called the token the "silver to Bitcoin's gold."
Lee served as Director of engineering at Coinbase between 2015 and 2017. He is also the director of the Litecoin Foundation, a Singapore-based non-profit organization that works towards the growth and adoption of LTC.
In December 2017, Lee sold his entire stake in Litecoin, saying it was a conflict of interest for him to talk about the cryptocurrency while influencing it.
Over the years, in an effort to establish LTC as a digital asset suitable for micro-payments, Litecoin has built merchant-focused solutions and partnerships. Charlie Lee also successfully aligned the supply frequency and cycle of Litecoin with what we have on Bitcoin, thanks to the chosen supply cap and the adoption of an almost similar anti-inflation supply mechanism at play on the Bitcoin network.