Developed in 2011 as a fork of the Bitcoin network, Litecoin aimed to improve upon Bitcoin's shortcomings. It was the first altcoin, and its goal was to offer a decentralized peer-to-peer currency with faster transaction processing times and lower fees than Bitcoin.
A brief look at LTC price and market cap would indicate that Litecoin was among the top five cryptocurrencies in December 2017. However, since then, the ranking of the altcoin has slipped to the top 20 as more altcoins took up market share and LTC's popularity dimmed.
A primary goal of Litecoin was to prevent the centralization of mining seen in Bitcoin. As a result, the LTC token uses a different algorithm called Scrypt, making it difficult for large mining farms to dominate. Scrypt achieves this by making mining more memory-intensive and much slower than Bitcoin's mining algorithm. While LTC failed to prevent mining farms from eventually controlling the majority of mining activity, its focus has shifted to becoming an efficient payment system.
While Litecoin has several similarities with Bitcoin, the two cryptocurrencies differ in terms of hashing algorithm and block creation times, amongst others. The Bitcoin network takes up to 10 minutes to create a block and can process about five transactions per second. The longer processing times make Bitcoin inefficient as a payment method, where merchants could wait an hour to get their payment.
Block generation on Litecoin, on the other hand, takes up to 2.5 minutes, and the network can handle up to 54 transactions per second. Additionally, Litecoin claims to offer better security and cheaper fees than BTC.
Litecoin's usage as a payment method has increased over the years, with merchants including the American Red Cross, Newegg, and Twitch all accepting LTC as payment. Additionally, virtually every cryptocurrency exchange, wallet, and CeFi service support LTC or LTC trading. A growing number of platforms, including OKX, also offer the ability to earn a return just by holding Litecoin.
Most Litecoin investors subscribe to the HODL mentality to buy Litecoin and hold on to it long-term. This strategy often includes yield-bearing features like those offered by OKX Earn. This allows you to earn value not just by price appreciation but also by increasing the amount of Litecoin you hold over time.
Litecoin also launched its highly anticipated MimbleWimble upgrade, which allows for anonymous transactions on the network, similar to other private networks like zCash (ZEC) and Monero (XMR).
MimbleWimble's integration with Litecoin via extension blocks (MWEB) allowed users to conceal transaction information, thereby increasing privacy. The upgrade was released in January 2022 and activated in May.
The MimbleWimble upgrade was first suggested in October 2019 in two Litecoin improvement proposals. Then, in October 2020, the network launched the first MimbleWimble testnet. The MimbleWimble protocol derives its name from the moniker of the tongue-tying spell in the fictional Harry Potter series.
According to the Litecoin Foundation, the upgrade enhances the network's scalability since the amount of data stored on-chain reduces fungibility.
Like BTC, LTC is not a pre-mined digital asset. In other words, it requires an emission mechanism to supply new coins to the open market. Mining anchors LTC's emission system as miners is rewarded with newly minted coins if successful.
Like Bitcoin, Litecoin has opted for a capped supply model. However, while the maximum supply of Bitcoin is 21 million BTC, that of LTC is 84 million LTC. This specific cap was chosen so that the last LTC would be mined in 2142, two years after the previous BTC will be mined. At the time of writing, around 70.8 million LTC are already in circulation.
The halving of mining rewards takes place every 840,000 blocks for LTC to limit the coin's supply and maintain token value. The halving event, like Bitcoin halving, slashes the rewards earned by miners by half.
The total circulating supply of Litecoin as of September 2022 was over 71.14 million. This leaves around 13 million LTC tokens left to be mined.
Litecoin was founded by former Google software engineer Charlie Lee, also known as "Chocobo." Lee referred to Litecoin, which used Bitcoin's source code, as a "lite version of Bitcoin." He also called the token the "silver to Bitcoin's gold."
Lee served as director of engineering at Coinbase between 2015 and 2017. He is also the director of the Litecoin Foundation, a Singapore-based non-profit organization that works towards the growth and adoption of LTC.
In December 2017, Lee sold his entire stake in Litecoin, saying it was a conflict of interest for him to talk about the cryptocurrency while influencing it.
Over the years, Litecoin, in a bid to establish LTC as a digital asset suitable for micro-payments, has built merchant-focused solutions and partnerships. Charlie Lee also successfully aligned the supply frequency and cycle of Litecoin with what we have on Bitcoin, thanks to the supply cap picked and the adoption of an almost similar anti-inflation supply mechanism at play on the Bitcoin network.