During the growth of the Bitcoin network, it became clear that transaction times can be very long. Litecoin was created by an ex-Microsoft employee, Charlie Lee, in response to this issue. Using the Bitcoin code as a base, he made the new blockchain much faster than its predecessor. The purpose of Litecoin was to handle frequent small transactions and be easily traded. A maximum of 84 million LTC can be distributed, and the smallest unit of measurement within the blockchain is 1/10 million. As a result of its similar architecture, it has also been used as a testing platform for upcoming Bitcoin updates including SegWit, Lightning Network, and Atomic Swaps.
History and Evolution
Litecoin was created on the 7th of October 2011 by Charlie Lee with the intention of allowing users to make small, fast transactions on a daily basis. As mentioned in the beginning Litecoin’s blockchain network was copied from Bitcoin and then heavily modified. It is currently the #4 mineable crypto coin in the world and it seems that it will not stop gaining popularity.
How Does It Work?
Peer-to-peer (P2P) virtual currencies are not governed by central authorities, such as Bitcoin. Litecoin’s network offers near-zero cost, instant payments to individuals and institutions worldwide. Proof-of-work (PoW) is used by Bitcoin, Litecoin, and many other cryptocurrencies to secure their networks. In PoW, one party must demonstrate to all the other participants in the network that a certain amount of computational effort has been made. Bitcoin uses the SHA-256 PoW hashing algorithm, while Litecoin uses the less resource-intensive Scrypt PoW algorithm.
What Is Litecoin Used For?
You can use Litecoin as a P2P payment method anywhere in the world without an intermediary. In addition to serving as a store of value, it can also be viewed as part of a diversified portfolio of cryptocurrencies.
This is a peer-to-peer cash system that eliminates the need for a third party to complete a transaction. Like Bitcoin, Litecoin is a Proof of Work coin and its hashing algorithm is Scrypt. New coins are created in the network by miners discovering new blocks in the chain, as you probably already know. There are 2MB blocks in this protocol, and it takes approximately 150 seconds before a new one is discovered. Currently, each successful block earns 25 LTC coins, which are halved every 840 000 blocks. The difficulty adjustment window is fairly fast, roughly every 2 days, at 1155 blocks.
Nodes are the brains of blockchain networks, just as your body needs a brain to function. Every node needs to have a copy of the blockchain transaction history of the network. Blockchain nodes are all users who connect to and operate on the blockchain. There are two types of nodes:
- Light Nodes – They require only a partial download of the transaction history. It is not possible for them to serve as validation nodes
- Full nodes – The most important nodes for the network are the full nodes. If you want to host a full node, you will need to download the entire blockchain history, which is currently around 20GB. Full validation nodes make the final decision regarding a block’s validity.