What is Litecoin?
Litecoin is one of the earliest cryptocurrencies. It was launched in 2011 by Charlie Lee, a former Google engineer, who based it on Bitcoin's code and changed a few key settings. It is often described as "silver to Bitcoin's gold".
Litecoin runs on its own blockchain, and its coin is LTC. The non-profit Litecoin Foundation supports its development. Like Bitcoin, Litecoin has no company in charge, and changes are made through open-source software that anyone can review.
How does it work?
Like Bitcoin, Litecoin uses proof of work: miners compete to solve puzzles, and the winner adds the next block and earns new coins. Litecoin uses a different puzzle method called Scrypt, so Bitcoin mining machines cannot mine it directly.
Litecoin aims for a new block about every 2.5 minutes, compared with about 10 minutes for Bitcoin, so payments get their first confirmation sooner. The reward for miners is cut in half roughly every four years in an event called a halving, which slows the creation of new coins. Because the total supply is limited, the block reward keeps shrinking, and over the long run miners will rely more on transaction fees.
In 2022, Litecoin added an optional privacy feature called MWEB (MimbleWimble Extension Blocks), which lets users hide the amounts in their transactions if they choose.
What is it used for?
Litecoin is mainly used as a simple digital currency.
- Sending payments between people and to merchants
- Moving value between exchanges and wallets
- Holding as a long-term store of value
- Making private transfers through the optional MWEB feature
Key facts
- Launched: 2011
- Creator: Charlie Lee
- Consensus: proof of work (Scrypt)
- Native blockchain: Litecoin
- Supply: capped at 84 million LTC
Explainer written by Finvane from official project documentation. It is not investment advice.