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What is Litecoin?
Litecoin (LTC) is a peer-to-peer cryptocurrency and open source software project released under the MIT/X11 license. Inspired by and technically nearly identical to Bitcoin (BTC), LTC creation and transfer is based on an open source protocol and is not managed by any central authority. After Bitcoin and Ethereum, LTC is the third-largest true cryptocurrency by market capitalization.
LTC was released via an open-source client on GitHub on October 7, 2011 by Charles Lee, a former Google employee. It was a fork of the Bitcoin-Qt client, differing primarily by having a decreased block generation time, increased maximum number of coins, different hashing algorithm (scrypt, instead of SHA-256), and a slightly modified GUI. During the month of November 2013, the aggregate value of Litecoin experienced massive growth which included a 100% leap within 24 hours. LTC reached a $1 billion marketcap in November 2013. As of February 2016, its market capitalization is US$136,512,971 with the price at $3 levels.
A peer-to-peer network similar to bitcoin’s handles LTC’s transactions, balances and issuance through scrypt, the proof-of-work scheme (Litecoins are issued when a small enough hash value is found, at which point a block is created, the process of finding these hashes and creating blocks is called mining). The issuing rate forms a geometric series, and the rate halves every 840,000 blocks, roughly every four years, reaching a final total of 84 million LTC.
The LTC Network aims to process a block every 2.5 minutes, rather than Bitcoin’s 10 minutes, which its developers claim allows for faster transaction confirmation. A drawback is a higher probability of orphaned blocks. Advantages can include greater resistance to a double spending attack over the same period as bitcoin. However, total work done is a consideration. For example, if the LTC Network has comparatively ten times less computing work done per block than the bitcoin network, the bitcoin confirmation is around ten times harder to reverse, even though the LTC Network is likely to add confirmation blocks at a rate four times faster.
Due to LTC’s use of the scrypt algorithm, FPGA and ASIC devices made for mining Litecoin are more complicated to create and more expensive to produce than they are for bitcoin, which uses SHA-256. This is widely due to the Scrypt hashing scheme being more memory intensive; increasing memory requirements for ASICs and FPGAs. However, as of December 2015, ASIC miners are widely available and the primary method of mining Litecoin.
The most common Wallet available today is “Litecoin Core” for Linux, Windows and Mac OS. Litecoin Core is an offline wallet based on the Bitcoin Core wallet. On January 19, 2014, the LTC Android wallet was released. This new release replaces the old Android client which contained major security issues.
Electrum client — a lightweight wallet for LTC — was released for beta testing on April 10, 2014. As with other LTC Dev projects, the client is based on the bitcoin source and the LTC developers fix issues upstream in order to make it easier to keep the LTC version updated. As with the LTC Android wallet, this new version of Electrum for LTC replaces the old and unsupported version created in the first year of LTC’s release.