Cryptocurrency Explained, Featured

Cryptocurrency Explained: What Is Litecoin?

Litecoin was created by Charlie Lee, the ex-Google employee, who had the vision to create a lighter version of Bitcoin. It was released as an open-source client on GitHub. Litecoin Network was made live on October 13, 2011, and is a soft fork of Bitcoin Core client.

How Is Litecoin Different From Bitcoin?

Bitcoin has a coin limit of 21 million whereas Litecoin has 84 million. The mean block time of Bitcoin is 10 minutes and Litecoin is 2.5 minutes. An initial reward of Bitcoin and Litecoin was 50BTC for both but now, it has been reduced to 25 BTC. Though, in essence, there is no difference between Litecoin and Bitcoin, but the only difference lies in mining.

Litecoin Mining

The most fundamental difference between Bitcoin and Litecoin is the mining procedure. Both Bitcoin and Litecoin use the Proof-of-Work (PoW) consensus mechanism. In Proof-of-Work, the miners get engaged in solving extremely hard cryptographic puzzles.

Litecoin uses scrypt algorithm. Originally, it was called ‘s-crypt’ but with time it came to be known as ‘scrypt.’ This algorithm uses SHA 256, but its calculations are more sequential than in SHA 256 Bitcoin. The parallelizing of calculations is not possible. In Bitcoin, the ASIC can do A and B together, however, in Litecoin, A would have to be done first and only then can B be calculated. If they are parallelized, it would require a lot of memory which becomes difficult to handle.

Scrypt is considered to be ‘memory hard problem’ as it gets limited with memory. That is why parallelization becomes a problem. When 10 memory processors are run in parallel, they require 10 times the memory.

Transaction Speed Of Litecoin

The average speed of Litecoin is much better than Bitcoin which is 2.5 minutes as to 10 minutes. The block creation time for Litecoin has drastically improved over the years which translated to the highest 8.25 min in Jan 2012 and to a mere 3 min in July 2017. Due to network congestion, the waiting time for a transaction may fluctuate to 29 minutes.

For those who are engaged in many mini-transactions per day, they can get confirmation of 2 transactions within 5 minutes.

Previous Disadvantage: More Orphaned Blocks Were Created

Due to low block creation time, more orphaned blocks are created. During instances more than a single miner was able to create a blockchain, even though the block created was perfect in all aspects, it gets rejected. This solely happens as the network decides which block is to be added next. So a blockchain that was perfectly legitimate, gets dropped out with no transactions on it.

Litecoin’s Solution To Reduce Strain On The Blockchain

Litecoin solved the problem to remove the strain on the system by coming up with Segwit. If a person sends BTC to another person, it is verified with a signature data. The signature data may cause problems such as;

  • It may be manipulated causing malleability attacks on the transaction
  • It uses too much space in every single block

Dr. Wiulle thought of adding a feature to the sidechain, which began to include signature data of all transactions and the feature was named as Segregated Witness or Segwit. With the removal of the signature data, two objectives were achieved with a single effort. The blockchain became emptier and transactions were malleable free. This lessened the load on the blockchain drastically.

Easy Exchange With Litecoin Atomic Swaps

The ‘Atomic Swap’ feature created with Litecoin allows easy swap between two people wanting to exchange their Bitcoin and Litecoin. They don’t need to go through an exchange and thus avoid paying the transaction fee. The HTLC (Hash Time Lock Contracts) is utilized by Atomic Swaps to do this, one of the most convenient applications created in payment channels. HTLC allows the transaction to happen automatically as per afore-set deadlines and with the submission of the cryptographic rules, the payments get acknowledged.

[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]
coinmag

Ritika Monga loves trying new things and is a person of many interests - content writing, Graphic & Web Design, sports, teaching and researching. She writes cryptocurrency guides, research and news articles for OWLT Market.

Leave a Comment

Your email address will not be published. Required fields are marked *