Abstract

Litecoin (LTC) is an altcoin created in 2011 by former Google engineer Charlie Lee. It aims to become a "lightweight version of Bitcoin" and achieve near-instant low-cost payments. Litecoin adopts Bitcoin’s code and certain features in its blockchain, but prioritizes transaction confirmation speed, resulting in higher transactions per second (TPS) and shorter block generation times.

Due to its similarity to Bitcoin, developers have been using the Litecoin blockchain as a testing ground for technologies they want to run in Bitcoin. For example, Segregated Witness (SegWit) and Lightning Network first ran on the Litecoin blockchain before being applied to Bitcoin.

The total supply of Litecoin is 84 million. Similar to Bitcoin, it also has deflationary qualities, with halving occurring every 840,000 blocks (approximately every four years). The next halving is expected to be in August 2023. You can buy Litecoin on various cryptocurrency exchanges, including Binance.

Introduction

Litecoin (LTC) is one of the first altcoins to enter the market. When Litecoin was first launched in 2011, because its blockchain was mostly derived from Bitcoin code, it was called "Bitcoin, Litecoin" together with Bitcoin. Some cryptocurrency investors view Bitcoin as a superior store of value, while Litecoin is better suited for peer-to-peer payments due to its short confirmation times and low transaction fees.

What is Litecoin (LTC)?

Litecoin (LTC) was one of the first altcoins to enter the market. Its blockchain was created in 2011 by former Google engineer Charlie Lee and is developed based on Bitcoin's open source code. Litecoin has made some upgrades on this basis, such as a faster block generation rate and the introduction of a new proof-of-work (PoW) mining algorithm called Scrypt.  

The total supply of Litecoin is 84 million. Similar to Bitcoin, Litecoin can also be obtained through mining and has a halving mechanism, which is halved every 840,000 blocks (approximately every 4 years). The last Litecoin halving was in August 2019, when the block reward was reduced from 25 Litecoins to 12.5 Litecoins. The next halving is expected to be in August 2023.

How does Litecoin work?

As an improved version of Bitcoin, Litecoin aims to facilitate cheaper and more efficient transactions than the Bitcoin network. Like Bitcoin, Litecoin uses a proof-of-work mechanism that allows miners to earn new tokens by adding new blocks to the blockchain. But instead of using Bitcoin’s SHA-256 algorithm, Litecoin uses Scrypt, a hash operation. This operation can generate new blocks approximately every 2.5 minutes, while Bitcoin blocks take an average of 10 minutes to confirm.  

Scrypt was originally developed by the Litecoin development team to develop its own decentralized mining ecosystem outside of the Bitcoin system and make 51% attacks on Litecoin more difficult. In the early days, mining on Scrypt was made easier for users with traditional GPU and CPU cards, in order to prevent application-specific integrated circuit (ASIC) miners from dominating Litecoin mining. However, ASIC mining machines were later developed to efficiently mine Litecoin, which forced GPU and CPU mining to be eliminated.

Due to some similarities between Bitcoin and Litecoin, developers often use Litecoin as a "testing ground" to try out the blockchain technology that will run in Bitcoin. For example, Segregated Witness (SegWit) became operational in Bitcoin in 2017 after first being trialled in Litecoin. SegWit, planned to run in Bitcoin in 2015, aims to expand the blockchain by decoupling digital signatures from each transaction and making better use of limited space in blocks. The blockchain can therefore handle more transactions per second (TPS).

Another scaling solution is the Lightning Network, which was also tried out in Litecoin before running in Bitcoin. The Lightning Network is one of the key factors that makes Litecoin transactions more efficient. It is a Layer 2 protocol created on top of the Litecoin blockchain and consists of user-generated micropayment channels with low transaction fees.

In addition, Litecoin aims to solve transaction privacy issues by adopting the privacy-focused protocol Mimblewimble Extended Block (MWEB). It's named after the deadbolt spell in the Harry Potter series, which prevents the victim's information from being leaked. Similar to that spell, MimbleWimble allows complete anonymity of transaction information, including sender and receiver addresses and the amount of cryptocurrency sent. At the same time, MWEB cancels useless transaction information, makes the block size more compact, and has greater scalability space. As of December 2021, the Litecoin MWEB protocol is still under development.

Litecoin use case

As one of the first altcoins, Litecoin improves the Bitcoin code, Improve scalability, making transactions faster and cheaper. Although the market capitalization is not comparable to that of Bitcoin, Litecoin has its competitive advantages as a peer-to-peer payment system. The Litecoin Foundation announced in November 2021 that Litecoin will be available as a payment method through the Litecoin VISA debit card, with real-time conversion of Litecoin to USD. In addition, some companies have adopted Litecoin as a payment method, including travel companies, convenience stores, real estate agencies and online stores.  

Another thing worth paying attention to is the upcoming release of the Litecoin network’s highly anticipated MimbleWimble. MimbleWimble not only obfuscates the wallet address of a transaction, it also has the potential to double Litecoin’s TPS. If successful, the upgrade could further enhance the privacy and fungibility of Litecoin transactions. However, as of December 2021, the mainnet has not yet announced a release date.

How to buy Litecoin on Binance?

You can buy Litecoin from cryptocurrency exchanges like Binance.  

1. Log in to your Binance account and go to [Trading]. Select [Classic] or [Advanced] trading mode to get started. In this tutorial, we choose [Classic].

2. Next, enter "LTC" in the search bar to see the list of trading pairs available for purchase on Binance. Let’s take LTC/BUSD as an example.

3. Under [Spot], select the order type and enter the purchase quantity. Click [Buy LTC] to place an order, and you will see the purchased Litecoin in your spot wallet.

Summary

Since its first launch in 2011, Litecoin has always been committed to becoming "Litesilver alongside Bitcoin Gold." It is not as popular as Bitcoin or Ethereum (ETH) in terms of market capitalization, but the Litecoin community is looking forward to further development and continued optimization of features and use cases.