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Litecoin: A Complete Guide to What it is And How it Works

8 mins
Updated by May Woods
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Litecoin (LTC) is a decentralized crypto network and one of the earliest altcoins. The LTC crypto was designed to provide a more efficient alternative to Bitcoin for everyday transactions. This Litecoin guide covers everything you need to know about the network, including its history, functionality, and unique features. Here’s what to know.

Methodology

Where to buy Litecoin (LTC)

Before we dive into this Litecoin guide, here are a few BeInCrypto recommended exchanges where you can pick up LTC safely and securely in 2024

BYDFI

Best for low fees
Availability
150+ countries
Fees
0.1%~0.3%
Withdrawal fee
0.001 LTC
Minimum withdrawal
0.1 LTC

Kraken

Best for
Availability
190+ countries
Fees
0%-0.4%
Withdrawal fee
0.002 LTC
Minimum withdrawal
0.01 LTC

Bitget

Best for
Availability
100+ countries
Fees
0.1%
Withdrawal fee
0.001 LTC
Minimum withdrawal
0.1 LTC

What is Litecoin?

litecoin guide
Litecoin market cap: CoinMarketCap

Litecoin is a first-generation altchain designed to support peer-to-peer transactions. As opposed to other blockchains like Ethereum and Solana, Litecoin has limited state and scripting capabilities. Therefore, it cannot support decentralized applications (DApps) and is solely used to process simple transactions.

History of Litecoin (LTC)

Litecoin (LTC) was created by Charlie Lee, a former Google engineer, and launched on Oct. 13, 2011. As one of the earliest altcoins, Litecoin was designed to improve upon Bitcoin’s model.

The network accomplishes this by addressing perceived shortcomings and offering a more efficient alternative for everyday transactions. Lee’s vision was to create a crypto that was the “silver to Bitcoin’s gold,” emphasizing speed and cost-effectiveness.

Litecoin emerged from a modified version of Bitcoin’s open-source code. It introduced a few key differences. Some of these included a reduced block generation time of 2.5 minutes and a different hashing algorithm called Scrypt. This approach aimed to decentralize mining by making it more accessible, as Scrypt was initially resistant to ASIC mining rigs dominating the network.

Over the years, Litecoin has undergone various updates and improvements. These include the adoption of Segregated Witness (SegWit) in May 2017, which enhanced scalability and transaction speed.

Litecoin has also become a testing ground for new technologies, such as the Lightning Network, which offers instant transactions and reduced fees.

Litecoin Guide: How does Litecoin (LTC) work?

Litecoin operates on a decentralized, peer-to-peer (P2P) network that facilitates the transfer of value without the need for intermediaries like banks or payment processors. It has a fixed supply of 84 million LTC.

Litecoin uses the UTXO (Unspent Transaction Output) model, which tracks the ownership of coins through individual transaction outputs, ensuring efficient and accurate accounting of user balances. This approach can enhance privacy and reduce the risk of double-spending, as each UTXO is uniquely identifiable and traceable.

Inputs always have two equal outputs. When a transaction is validated, one of the validation methods is to make sure that the lock time has actually happened, that you’ve passed the lock time. Another validation point is that inputs are greater than or equal to outputs. If outputs are greater than inputs, the transaction will not be validated. The digital signatures have to be validated…

Gary Gensler, Chairperson of Securities and Exchange Commission (SEC), on UTXOs

The UTXO (Unspent Transaction Output) model is often compared to cash transactions. In the UTXO model, each transaction output can be thought of as a discrete piece of digital cash that can either be spent in its entirety or used to create new transaction outputs.

Litecoin guide: Mining and transactions

The blockchain is maintained by a network of nodes (computers) that validate and propagate transactions. Miners, who are crucial to this process, compete to solve complex cryptographic puzzles using the Scrypt hashing algorithm.

This proof-of-work (PoW) mechanism ensures the network’s security and integrity. Once a miner successfully solves a puzzle, a new block is added to the blockchain, and the miner is rewarded with newly minted Litecoins, along with transaction fees.

Litecoin transactions are relatively quick and cost-effective due to its shorter block generation time. When a user initiates a transaction, it is broadcast to the network, where nodes verify its validity. Verified transactions are grouped into blocks by miners and added to the blockchain, ensuring a transparent and irreversible record.

The use of Scrypt as the hashing algorithm helps maintain a level playing field by reducing the dominance of specialized mining hardware, promoting greater decentralization.

What makes Litecoin (LTC) unique?

Several features distinguish Litecoin from other cryptocurrencies, particularly Bitcoin. Here are a few of the most obvious:

  1. Faster transaction times: Litecoin’s block generation time is 2.5 minutes, compared to Bitcoin’s 10 minutes. This allows for quicker confirmation of transactions, making Litecoin more suitable for everyday use.
  2. Scrypt algorithm: Unlike Bitcoin’s SHA-256, Litecoin uses the Scrypt hashing algorithm, which was designed to be more memory-intensive. This characteristic initially kept mining more accessible to a wider audience. However, over time, ASIC miners for Scrypt have emerged.
  3. Lower transaction fees: Litecoin typically offers lower transaction fees compared to Bitcoin, which can make it more appealing for smaller transactions and frequent use.
  4. A bought-in and passionate community: As one of the oldest cryptocurrencies, Litecoin has built a strong and active community. Its longevity and track record contribute to its enduring credibility. However, Litecoin’s community pales in comparison to that surrounding BTC.

LTC price potential

As of June 6, 2024, Litecoin (LTC) is priced at $85.19 (LTC/USD), with a live market capitalization of approximately $6.35 billion. The 24-hour trading volume is $281.3 million, showing a 10.46% decrease. The crypto’s circulating supply is 74.6 million LTC.

litecoin guide prediction
Litecoin price prediction: BeInCrypto

According to BeInCrypto’s expert Litecoin price prediction, the asset’s price is expected to show moderate growth in the coming years.

In 2024, the price is projected to range between $90.04 and $106.75, with an average price of $92.83. In 2025, our experts anticipate that the price of LTC will hover within the range of $99.05 to $117.43, averaging at $102.11.

These projections are based on a number of factors, including market trends, historical data and performance, and technical and fundamental analysis. They also hinge signficantly on potential further adoption of the Litecoin network.

So should you buy Litecoin? In summary, while in the short-term, our predictions indicate some volatility, the long-term prospects for the asset are positive, with steady growth anticipated in the years ahead. Remember to assess your own personal situation and risk tolerance before parting with your cash. Crypto is volatile, and you should never invest more than you can afford to lose.

Litecoin’s lasting impact

In 2024, the Litecoin network remains a significant player within the decentralized ecosystem, offering a blend of speed, cost-efficiency, and innovation — despite being one of the oldest blockchains around. The native LTC crypto continues to hold a prominent position as one of the top assets in terms of market cap. While Litecoin faces challenges such as ASIC mining dominance and market competition, its faster transaction times, lower fees, and reputation for security make it a valuable asset for everyday transactions and long-term investment.

Frequently asked questions

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Ryan Glenn
Ryan Glenn is a journalist, writer, and author. Ryan is motivated to educate as many people as possible on the benefits of web3 and cryptocurrency. He has authored “The Best Book for Learning Cryptocurrency,” and runs an educational platform, web3school.us, dedicated to demystifying the crypto space. Ryan built the platform to transition tech-savvy and non-tech individuals into crypto and give everyone a baseline understanding of the different fields in the cryptosphere. Ryan is also an...
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