Litecoin (LTC) has been around as a cryptocurrency since 2011. It launched almost immediately after Bitcoin was launched in 2009, but many people new to the crypto space still have basic questions about what LTC is and how it functions.
In this straightforward explainer article, we will cover the key facts, history and future outlook for Litecoin to address the frequently asked questions about Litecoin newcomers tend to ask when researching this established alternative coin (altcoin).
1. What is Litecoin?
Litecoin (LTC) is a decentralized digital currency or cryptocurrency, that enables near-zero cost payments to anyone in the world. Like its older sibling Bitcoin, Litecoin is built on open-source blockchain technology that records transactions on a secure distributed ledger across a P2P network. Think of it essentially as silver to Bitcoin’s gold - similar capabilities and security, but 4x as many coins in supply for faster and affordable transactions.
2. Who invented Litecoin?
Litecoin was launched as one of the first altcoins in the crypto market in late 2011. It was launched by Charlie Lee - a former engineer at Google. Lee first envisioned Litecoin and authored its source code based on a fork of the Bitcoin Core client. He led Litecoin's development for its first few years before taking a step back to avoid any conflicts of interest while dedicating himself to growing the Litecoin community full-time. Passionate crypto enthusiasts have continued to carry forth his vision today with open-source development coordinated through sites like GitHub. Unlike Bitcoin's anonymous creator Satoshi Nakamoto, Charlie Lee is a public figure actively engaged in promoting Litecoin adoption.
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3. What is Litecoin used for?
Litecoin functions as a secure peer-to-peer digital cash that you can use to send money to family or pay for goods and services anywhere instantaneously. Any vendor that accepts LTC payments essentially becomes their own bank with no costly middlemen. Litecoin also has utility for cheap value transfers across borders – and it is especially appealing in emerging markets with high remittance costs. Some see Litecoin as a backup hedge for Bitcoin much like silver acts as a safe haven asset if gold markets become too volatile.
4. Does Litecoin Use blockchain?
Yes, Litecoin transactions are recorded chronologically on an open, distributed ledger known as a blockchain. This blockchain is essentially a decentralized transaction database shared across a network of computers. Cryptographic validation by miners’ computing power secures the network instead of a central authority. The Litecoin blockchain is able to settle transactions securely without third-party intermediaries like banks. This radical disintermediation is what enables direct peer-to-peer decentralized money transfers.
5. Why does Litecoin have value?
Litecoin, like other cryptocurrencies, derives its market value from a combination of factors such as:
- Usefulness as decentralized digital money.
- Verifiable scarcity, and,
- Perception of future adoption potential as an alternative payment rail to fiat currencies.
Litecoin holds value because people believe that it has utility compared to traditional money and are willing to pay to own LTC coins. The more merchants and users that join the network over time, the greater the reinforced perception of its value proposition.
6. How many Litecoins are there?
Litecoin has a maximum supply cap of 84 million LTC, 4x higher than Bitcoin's 21 million cap. Over 75 million LTC are already in circulation. Like Bitcoin, Litecoin's coin issuance rate is on a fixed decaying schedule that ensures a finite supply while slowing the minting of new LTC over time until the total supply taps out in 2142. Having an algorithmic capped supply prevents inflation by central authorities and reinforces Litecoin’s scarcity as an investable digital asset.
7. What is the Litecoin network? How does the Litecoin network work?
The Litecoin network refers to the end-to-end infrastructure that securely facilitates global transactions between LTC coin owners without intermediaries. It is decentralized across thousands of volunteer computers or “nodes'' that run open-source Litecoin software and synchronize identical copies of the Litecoin blockchain to validate P2P transfers. Special network participants called miners usually bundle pending transactions into timestamped blocks and add them to the blockchain ledger using their computing power. In exchange for providing this computational resource, miners earn Litecoin token rewards plus transaction fees as incentives.
8. How much is the Litecoin transaction fee?
A typical Litecoin transaction fee is just a few cents, thanks to ample network capacity and block size limits 4x higher than Bitcoin (1MB to 4MB). Even when crypto transaction fees on other crowded blockchains shot up to uncomfortable highs in early 2021 amid a bull market, Litecoin fees remained affordable - confirming its usefulness for everyday micropayments. Users can always check LTC fee levels in real-time on monitoring sites before transferring coins from a Litecoin wallet.
9. What is a Litecoin wallet?
A Litecoin wallet allows users to securely store, receive, and send LTC token balances as well as monitor their transaction history. Wallets come in different forms like mobile apps, browser extensions, online web wallet services, desktop software, or hardware devices. But essentially, they provide private key management and interfaces for transacting on the Litecoin blockchain. Some key considerations when selecting a wallet include security practices, ease of use, backup features and compatibility with other services. Make sure to research trusted providers thoroughly first.
10. Is Litecoin a good investment?
Most financial advisors agree that Litecoin looks attractive compared to traditional asset classes. As a well-established blockchain network with strong liquidity and a track record as a faster, leaner Bitcoin alternative after 10+ years, Litecoin offers upside potential beyond as a short-term speculative coin. Of course, there is no guarantee of returns and like any volatile asset, investors should incorporate prudent portfolio management.
Final Thoughts
We hope these provide answers to some Litecoin FAQs for curious newcomers to the crypto ecosystem. As one of the early Bitcoin forks, Litecoin boasts a vibrant global community committed to driving grassroots adoption while refining its blockchain as a fast, cost-efficient platform for peer-to-peer transactions.
Much work remains for Litecoin to fulfill its promise as "silver to Bitcoin’s gold". But its longevity and resilience thus far bode well if the current momentum continues. While risks exist, Litecoin seems poised to disrupt traditional finance as a core decentralized payments network and currency for the Internet age.