Litecoin

Litecoin is designed as a P2P digital currency that allows instant and very cheap borderless transactions. The cryptocurrency is a fully-decentralized open-source payment network that operates independently of issuers, central authorities, or regulators.

The team behind the project defines Litecoin as “a proven medium of commerce, complementary to Bitcoin.” To get a clearer understanding, we can say that Litecoin is best described as a lighter version of Bitcoin (which is where its name comes from as well). It is often referred to as “silver to Bitcoin’s gold”. If we assume that Bitcoin shares some of the characteristics of gold (high value, hard to produce and transact, a good long-term investment opportunity), then, following this line of thought, it is safe to say that Litecoin resembles silver (a cheaper asset, suitable for on-the-go transactions, and daily use, etc.).

Litecoin was created in October 2011 by Charlie Lee, a former Google employee and Engineering Director at Coinbase, who wanted to build a digital currency that improves the Bitcoin protocol and provides a better alternative for everyday usage. The Litecoin project was released under the MIT/X11 open-source license that allows the community to copy, modify, run, and distribute the software. The Litecoin network officially went live on October 13, 2011, as a fork of the Bitcoin Core client.

Although Litecoin wasn’t the first altcoin to come to life after the creation of Bitcoin, it surely is among the most successful ones. At the time Charlie Lee came up with the idea of Litecoin, a few altcoins were up-and-running already. All of them were designed as forks of Bitcoin with little adjustments. However, the majority failed in their own way. Learning from the experience of all the failed altcoins, Charlie Lee managed to shape the roadmap behind Litecoin by targeting Bitcoin’s flaws. What made Litecoin so successful was the idea of solving some of Bitcoin’s key disadvantages, such as slow transactions, complicated mining, scalability, etc.

Over time, Litecoin has managed to become one of the top 5 leading cryptocurrencies. It is often referred to as an excellent example of the potential in the cryptocurrency niche due to its unprecedented bullish trend in the period of December 2016 – December 2017. For just a year, the price of the coin jumped with more than 8200% reaching its all-time high of $360.93.

Litecoin is also considered a pioneer in the industry as it was the first one among the top 5 cryptocurrencies to adopt SegWit (Segregated Witness). It was also the first to execute а Lightning Network transaction (under 1 second). The Litecoin infrastructure also set the foundation for Atomic Swaps and other scaling features way before the other on the market.

The creation and the transfer of new coins are powered by the open-source cryptographically-secured protocols MIT/X11. Although Litecoin was inspired by Bitcoin and is very similar in technical terms, it allows for cheaper and quicker transactions. To understand the way Litecoin works in detail, we should find out how it is different from Bitcoin. The main differences between both currencies are in terms of speed, number of coins, and the mining algorithm.

Litecoin improves the speed of transactions set in the Bitcoin protocol by allowing for faster transaction confirmation times. Although it is based on the same open-source code that powers Bitcoin, it has some adjustments that enable block generation that is four times faster. The speed is reduced to just 2.5 minutes, compared to 10 minutes for Bitcoin transactions. The faster confirmation time means the network has a higher capacity and is capable of handling more significant transaction volume. Aside from that, Litecoin’s network can process 56 transactions per second, which is considerably higher than those of Bitcoin (7 transactions per second) and Ethereum (15 transactions per second).

Similar to Bitcoin, Litecoin also has a finite supply. However, in this case, the number of coins is capped at 84 million, which is four times the limit of Bitcoin. At the time of this writing, 75% of all Litecoins are already mined.

The last difference between Bitcoin and Litecoin is the mining algorithm (more on this in the next question).

There are also some technical differences between both currencies. Litecoin, for example, uses a PoW mechanism based on a Scrypt hashing function, unlike Bitcoin, which uses the SHA-256 algorithm. Aside from that, the mining difficulty for Litecoin changes every 3.5 days (in the case of Bitcoin, it is changed every two weeks).

Litecoin transactions are executed in a very straightforward way, similar to Bitcoin and other cryptocurrencies. First of all, you need a Litecoin wallet address. You can use a hardware wallet as Litecoin is supported by all of them, or a free solution (software, paper, etc.). Once you have a wallet address, you will be able to send and receive Litecoins. Before the transaction is finalized, though, it should be verified as legitimate by the network (a group of miners). Although this doesn’t happen instantaneously, it is way quicker than Bitcoin transactions.

The primary function of Litecoin is to work as a digital payment system. Similar to PayPal, the network can be used to transfer funds easily. However, instead of using traditional currency like the USD, transactions are executed in Litecoins. The transactions are almost instant, and the fees are way lower when compared to Bitcoin and even some fiat-currency processing services.

Another function of Litecoin is to serve as an investible instrument and storage of value. Similar to Bitcoin and other cryptocurrencies, Litecoin can be traded for profit on an exchange.

Regarding security, the Litecoin network is no different from the one of Bitcoin. The only way it can be hacked is via a 51% attack (when one node controls 51% of the network), which is close to impossible.

Aside from purchasing from an exchange, mining is the other way to own LTC. The process requires significant computing power and advanced technical skills. Although it is still possible to mine Litecoins with a common computer configuration, if you want to get serious, you will need to invest in high-end hardware solutions, capable of solving mathematical equations quickly. However, it is worth noting that mining Litecoins remains easier than mining Bitcoins.

The Litecoin’s mining process is based on the Proof-of-Work (PoW) consensus mechanism, similarly to Bitcoin. However, there are some key differences in both methodologies. Let’s start with the hashing algorithm each cryptocurrency uses to solve a block. Bitcoin’s mining process runs on the SHA-256 hashing algorithm (Secure Hash Algorithm). The mining logic is based on the idea of increasing the difficulty over time - the more transactions are processed, the more difficult it gets. This progressive process continuously increases the demand for electricity needed to mine a new block. To ensure the efficiency of the Bitcoin mining process, one should invest in an expensive ASIC machine (Application-Specific Integrated Circuit). This means that miners who can’t afford a powerful machine are phased out as they won’t manage to survive the competition (the reason why mining pools were born – the bigger the scale of operations, the higher probability of earning mining rewards).

With Litecoin, though, things are a bit different. The Litecoin ecosystem is based on an algorithm called Scrypt. The reason for that, according to Litecoin’s creator, is that Scrypt allows users to mine LTC and BTC simultaneously, which means that Litecoin won’t have to compete with Bitcoin for miners. Although Scrypt isn’t as complex as the SHA-256 algorithm, it helps make the whole network lighter by reducing the resources needed for mining. That way, Litecoin miners can mine coins successfully even with GPU machines (Graphic-Processing Unit), which are way cheaper. Or in other words – the chance to mine Litecoins successfully by using an ordinary computer is way higher than in the case of other cryptocurrencies. Due to the fact that the Litecoin network grows at a steady rate, though, we are slowly marching to a point where mining will require ASIC hardware. So, although for now, GPUs will do the job, it is worth knowing that the more powerful machine you have, the better chance to earn a reward you get.

A block of Litecoin transactions is verified every 2.5 minutes, which is four times faster, considering the 10-minute interval for blocks on the Bitcoin blockchain. This also means a higher probability of earning a reward. At the time of this writing, the reward of mining a block is 12.5 LTC. However, it halves with every 840,000 mined coins, so the next step is 6.25 LTC per block. The next halving is projected for August 2023. The process will continue at regular intervals until the 84,000,000^th LTC is mined.

You can start mining Litecoin on your own or join a mining pool. In the first case, you will cover all expenses but won’t have to split the reward with someone else. Also, it will be harder (or even impossible, if you don’t have a good machine) for you to mine a block. If you join a mining pool, you will leverage your processing power (thus increasing the chance to get a reward) and won’t have to pay for all the costs on your own. However, you will also have to split the rewards with the rest in the pool. There is also a third option – to take advantage of cloud mining services. Cloud mining companies use the latest machines and allow you to lease high-capacity mining equipment for a certain period of time to help you outperform the competition. Here is what you will have to do in each scenario to start mining Litecoins:

Solo mining

The first thing to do is to set-up a Litecoin wallet – you can either buy a hardware one or use a free solution (software or paper). If you prefer a software wallet, then the most popular choice is the Litecoin Core client. Bear in mind that it downloads the whole blockchain and runs full nodes, which means it requires more space.

After you have made sure that there is a place to store your LTC, the next step is to choose your hardware configuration. Bear in mind that the more powerful your machine is, the bigger the chance to earn a reward. However, don’t forget that with higher performance come higher electricity bills. After you’ve chosen your hardware, it’s time to install the mining software. ASIC machines usually come with pre-installed software, while with GPUs, you will have to do it on your own (do your research and bear in mind that, although there are lots of free solutions, you should make sure to download only from reputable sources). And voila – you are now ready to start mining.

Mining pool

If you decide to join a mining pool, you will also have to go through the same initial steps, like when mining on your own - setting up a wallet, choosing your hardware and software (some mining pools may require you to use a specific software). Next on the list is choosing the best mining pool for your needs. Make sure to compare the fees, the rewards, the minimum payouts, and other relevant characteristics of each solution. Then you are ready to go.

Cloud mining

If you prefer to take advantage of cloud mining services, then the first thing to do is to set up a wallet to store your rewards. Next, make sure to choose a reputable service provider. Bear in mind that there are lots of scammers who may try to run away with your money. Find a cloud mining company with a rich history and a proven reputation. After you’ve found your preferred service provider, the next thing is to select a mining package. Depending on the amount you are willing to spend, you will be able to choose from contracts that differ in terms of cost, longevity, equipment, payouts, etc. After you’ve chosen your package, it’s time to find a mining pool. Make sure to compare all the options and choose the one that suits your needs.

To get into more practical details regarding the Litecoin mining process, make sure to check the tutorials on the Litecoin Wiki page.

There are two possible ways to own Litecoins – either by mining or by buying from an exchange. The majority of the users usually prefer the latter as it is way easier and quicker.

The “Markets” tab on the Nomics’ Litecoin page is the easiest way to find all crypto exchanges where the digital currency is trading, as well as its near real-time price and volume. You will also get a quick understanding of which of the listed venues allow you to buy LTC with fiat and which require to deposit another cryptocurrency first. Aside from that, thanks to our Transparency Rating, you will be able to choose from the most reputable exchanges and avoid dealing with shady service providers.

The good thing is that almost all cryptocurrency trading platforms support Litecoin. At the time of this writing, on Nomics, there are more than 980 markets for Litecoin with 76 of them coming from exchanges with the highest Transparency rating score of A+ or A.

The case with every digital currency with finite supply is that the closer it gets to the point of mining the last coin, the higher its price will get. Considering the scarcity factor, this should be valid in the case of Litecoin as well - at least in theory.

How high Litecoin’s price will go in time depends on several factors. One is the development of the whole industry. If cryptocurrencies go mainstream and achieve widespread adoption, then the price of Litecoin, as one of the frontrunners, will surge. Aside from that, if the project keeps developing at a similar pace and, at some point, manages to become the “Visa” or “MasterCard” of the cryptocurrency industry, then it may reach price levels above its all-time high. So far, it moves in the right direction – the network is developing new functionalities at a steady rate, and its community is continuously growing.

It is worth noting that the Litecoin project adhered strictly to its roadmap and had, so far, managed to live up to its motto to become the silver to Bitcoin’s gold. The Litecoin Foundation made some ambitious moves, such as buying a 9.9% stake in WEB Bank AG, a leading German bank, in a bid to provide crypto-to-fiat payments to a broader audience. Litecoin also managed to develop Atomic Swaps and to become an on-ramp platform for those willing to join the Bitcoin lightning network. This allows investors who find Bitcoin fees too high to use the Litecoin lightning network and exchange the cryptocurrency for Bitcoin via a specific swap that lowers the transaction costs.

Litecoin enjoys a healthy and liquid market, better than those of other cryptocurrencies. Another positive is that Litecoin resembles Bitcoin very closely. This means that all positive developments in the Bitcoin world will inevitably affect Litecoin as well. It is safe to say that Litecoin complements Bitcoin, instead of competing with it.

Before taking a look at some numbers, it is worth noting that, over time, Litecoin has proved to be a very volatile cryptocurrency. It has experienced some massive price swings with jumps from $4 up to $320 for the period of just one year. These notable discrepancies can partially explain the lack of one-sided opinion when making price predictions.

Litecoin price predictions from industry experts and technical analysts vary widely. There are forecasts suggesting that Litecoin’s all-time market high is just a sign of its vast potential and that it can quickly reach a point where it soars above $1,500, while some experts maintain a firm position that the market has peaked and the only way is down to prices of less than $2.

However, the reality is that only time will tell in which point of this wide horizon will the price end up. What history had taught us is that price estimations are rarely correct. When it comes to Litecoin, things are no different. Let’s take a look at just a few predictions from industry experts. Investingpr.com predicted a price of $1,000 by the end of 2018. Oracletimes.com and several other experts also came out with similar forecasts. However, the projections turned out completely inaccurate, with LTC starting the year at slightly above $250 and closing it at $32. Oracletimes.com also referred to a price of $10,000 for 2020, which at this point, seems to be way off the mark. Several industry professionals also went bullish on Litecoin but ended up completely wrong on their predictions. According to walletinvestor.com’s forecast, on the other hand, Litecoin may turn out to be a disappointing investment with prices as low as $0.000001 in the next few years. Others believe the Litecoin market has peaked, and there is no turning back.

What all of this comes to show is that predicting the coin’s price is very hard even for seasoned industry professionals. The technological development, the market shifts, the regulation – all these and other factors that are hard to take into account at this point in time further complicate the price prediction process.

However, what is clear is that Litecoin has all the prerequisites to grow further – a powerful infrastructure, high liquidity, popularity among the users’ base, real-world application with clear benefits, and much more. All this paints a bright future for the cryptocurrency. But in reality, only time will tell how high will it go.

There are several factors affecting the price of Litecoin. Like every other asset, the first and most important one is supply and demand. The scarcer an asset is, the higher its price usually gets.

The next thing that moves Litecoin’s price is the halving schedule. In the six months before the halving in 2019, the price of the coin jumped by more than 370%. This is often referred to as “profit-taking”, and we’ve seen it in other cryptocurrencies as well, notably Bitcoin. Halving events, intended to keep inflation under control, usually trigger bull runs. However, although history has helped form some sort of a pattern and come to such a conclusion, the positive effect of halving schedules isn’t always guaranteed.

Another proven price mover for Litecoin is the developments in the world of Bitcoin. Due to Litecoin being a fork of Bitcoin, developments in the world’s leading cryptocurrency almost always influence the price of Litecoin. However, it is worth noting that, although historically Litecoin’s price has followed Bitcoin’s, the relationship is pretty-much one-sided. That is why it is essential to look at Litecoin-specific factors, in the first place, and then to keep an eye on the developments in the world of Bitcoin. Transaction volumes, the inflow of new capital, the state of the mining network, the project’s development, and increasing adoption, etc. - there are lots of currency-specific price movers that you should take into account to be able to make a more accurate price prediction.

Of course, there are also external price movers such as the state of regulation and the oversight landscape, the development of the payment industry (opportunities for mainstream adoption of the Litecoin network), and the upcoming trends in the crypto industry as a whole. Last but not least, it is worth keeping an eye on social media activity and project-related news. For example, a leaked conversation between Charlie Lee, the founder of Litecoin, and Franklyn Richards, a director at the Litecoin Foundation, revealed that there was no one interested in the development of the Litecoin network. After the chat was leaked, Lee had to come out with a series of tweets to explain the situation and handle the storm. However, many investors had already changed their perspective of Litecoin and had left the project. This has resulted in a notable price drop, that turned out too hard to recover from. It is safe to say that the project hasn’t been the same since the information was revealed.

One last thing that can influence the price of Litecoin is its listing on Coinbase. Although often underestimated, this factor is one of the main reasons why Litecoin managed to attract so much interest over time. Coinbase’s Android and iOS apps are among the most popular in the Finance category in both stores, while its website gets 20 – 30 million visits per month. Overall, the exchange serves more than 30 million users. With that said, being one of the five listed cryptocurrencies there, has helped Litecoin reach the point where it is today. Although this isn’t something that may influence its price positively from now on, should, at some point, the coin gets delisted or even in case of such rumors, its price will surely be affected.

By adhering to its core idea to provide a universal cryptocurrency-based payment network with quick and cheap transactions, over time, Litecoin has managed to penetrate a variety of industries. Today, there are thousandths of merchants using the Litecoin network – from online gift stores, through sports teams, to tech companies, and booking service providers. However, it is worth noting that, at the time of this writing, it is hard to find the names of big retailers joining the group. The penetration among the popular and established brands is still in its infancy.

A full list of the businesses accepting Litecoin as a payment can be found here. You can also check Cryptwerk’s platform to find a detailed list of all the places where you can spend your LTC.

If you are looking for Litecoin ATMs, make sure to check the following map.

Thanks to partnerships with third-party payment networks like the one with the New-York based blockchain startup Flexa, Litecoin payments are making progress and becoming available to an increasing number of users.

Since the start of the 2019 NFL season, for example, the Miami Dolphins have started accepting Litecoin payments for ticket purchases. After adding Bitcoin to its payment methods, Overstock.com has proceeded to add other cryptocurrencies, including Litecoin, Monero, and Dash. You can also use LTC to pay for your trip on CheapAir.com.

When it comes to real-world adoption and support in more prominent service providers and leading brands, though, Bitcoin remains the more popular solution. You can pay with BTC on companies and sites like Burger King (in some areas), Starbucks, Microsoft, Amazon (through third-party services), Shopify, Subway (in some regions), AT&T, several hypermarket chains (through eGifter.com), and many more.

The good thing, though, is there are rumors that Litecoin payments are becoming a topic of discussion at the highest level in leading companies and organizations worldwide. However, at this point, it is hard to make predictions about the mass adoption of the cryptocurrency as a universal payment method. Considering the fact that Litecoin has successfully managed to capitalize on Bitcoin’s progress in this aspect, it is safe to say that the potential is clear.

There are several different ways to store Litecoin – you can choose from hardware, software, paper, and mobile wallet solutions. If you aren’t familiar with the pros and cons of each category, make sure to check our brief guide here.

The good thing is that, due to its popularity, Litecoin is supported by the majority of hot and cold storage solutions on the market. Here is some information about all the available options that you can choose from:

Hardware wallets

Although hardware wallets don’t come for free, they are the most popular and secure option to store your cryptocurrencies. The good thing is that you can choose from a wide range of options, as almost all of the leading solutions support Litecoin. Trezor One, Ledger Nano S, KeepKey are just a few of the hardware devices that you can use to ensure the secure storage of your Litecoins.

Desktop wallets

You can also use a computer, a laptop, or a USB flash drive to store your crypto assets. To do so, you will need to download and install a software program that has integrated support for Litecoin. Some examples of suitable desktop wallets by third-party providers that you can consider are Exodus, Atomic, Electrum, and TrustWallet. However, bear in mind that if you choose a desktop wallet, you will be able to access your crypto assets only from a single device – the one where you have installed the software.

Users who prefer verifying the transactions by themselves and want to contribute to the decentralization of the project usually opt for using the original Litecoin full node as a desktop wallet. It is worth noting that it downloads and runs the whole blockchain, which means you will have to ensure there is enough space on your computer (you can check the actual Litecoin blockchain size here). Bear in mind that to be able to navigate the software successfully, you will need basic tech skills. If you find it too daunting, switch to one of the third-party solutions.

Mobile wallets

If you plan on storing small amounts and prefer having access to your funds on-the-go, so that you can make quick transactions, then mobile wallets are a convenient option. Mobile wallets are hot wallets that come in the form of a smartphone app for iOS and Android. Once you download and install it on your phone, you will be able to send and receive Litecoin payments with just a few clicks. Among the most popular mobile Litecoin wallets are LoafWallet (developed by Charlie Lee, the creator of Litecoin), Coinbase, Coinomi, Jaxx Liberty, and Atomic.

Paper wallets

If you prefer going for an offline cold storage medium like the paper wallets, then the best option is the LiteAddress wallet generator, developed and dedicated solely to Litecoin. However, there are other solutions that you can also consider, such as WalletGenerator and BitcoinPaperWallet. All of them work in the same way – you have to move your mouse or input some characters to add randomness to the generated sequence. Then your wallet will be created, and you will have to print it and store it at a secure place.