WHAT IS LITECOIN?
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Introduction and historical
Following Bitcoin and its two main ‘Forks’, Bitcoin Cash and Bitcoin SV (see article published December 6, 2019 ), Ethereum and XRP (see article published January 23, 2020), ranked by the size, Litecoin is currently the sixth largest crypto currency now.
Litecoin has been created and coded through an ‘open source’ client on Git Hub, October 7, 2011 by Charlie Lee, formerly employed by Google. In fact, Litecoin coding comes from Bitcoin coding modification (a Fork of Bitcoin)
-In April 2017, the Litecoin foundation has been created in Singapore in order to promote Litecoin.
-February 18, 2018, Litecoin realized its first Fork, Litecoin Cash, which has been realized by a group of developers, independant from the Litecoin foundation.
-In July 2018, Google has added Litecoin to its currency exchange module.
Google shearch volume for Litecoin and Bitcoin Halving
Source : Google Trends
General characteristics
Litecoin allows instant payments all over the world for low costs (close to zero). Like with Bitcoin, Litecoin is also an ‘open source’ network, fully decentralized and without any central authority. Then, Litecoin users can control their own accounts, through a fully secured manner and also through a cryptographic system backed by a mathematical resolution.
But compared to Bitcoin, the Litecoin transactions are generated and confirmed faster; they also benefit from a much more efficient warehousing. Additionnally and compared to her ‘Grand sister’, Litecoin is a medium of payment and transfer that has proven himself.
But beyond the transactions efficiency and speed, the major points that characterized Litecoin conception are fully comparable with those of Bitcoin, as Litecoin is a Fork of Bitcoin.
Let see now a list of its main characteristics :
- Maximum Quantity of coins to be issued : 84 000 000 units
- Quantity issued : 62 983 450 units as of 08/05/2019 (or 74.9% of the maximum units to be issued)
- Decimalization: each Litecoin is divided by hundred million smaller units, equivalent to 8 decimals (like the Satoshis for Bitcoin)
- Algorithm : Scrypt
- Type of proof : POW (‘proof of work’) equivalent to the mining process for Bitcoin
- Halving every 840 000 blocks , or every 4 years
- Last halving occured August 5, 2019 and halved the block reward to 12.5 Litecoins per block (from 25 previously).
- End of mining : Year 2142 (during the previous halving, roughly 21 million Litecoins to be mined remained )
- Unanonymous Crypto currency
What are the major differences with Bitcoin ?
Because we can find some differences between Litecoin and Bitcoin :
- Litecoin network is targeting a block every two minutes and thirty seconds compared with the ten minutes needed for Bitcoin.
- Transaction fees are very small, even compared with those of Bitcoin.
- The modified interface allows coins mining from anywhere and any computer. Therefore, mining Litecoin is possible with a standard harware equipment.
- The mining algorithm can be executed and run simultaneously and with the same computers than those that are mining Bitcoins.
- And above all, transactions confirmation is going much faster
About the transactions, they are recorded on a specific Litecoin blockchain.
Up until 2016, the Litecoin blockchain recorded an average of 7500 daily transactions, a daily volume of 10 000 000 Litecoin units and a confirmation time lapse of 2.5 minutes.
In 2018, number of daily transactions rose up to 200 000 roughly.
Mining Litecoins
Similarities with Bitcoin are also clear concerning the mining, as Litecoin can be mined individually or by combined players, called pools (or polls of mining).
Identically, the rate of Litecoin units issued follows the same logic, that is a quadratic function that reduces by half every 840 000 blocks (Halving), or approximately every four years, and this up to a total of 84 millions LTC.
The SCrypt algorithm that is used by Litecoin was conceived in such a way that its memory consumption is high, and in such a way to hamper repeated new ASIC (hardware used to mine coins). Nvertheless, new ASICs have been launched in order to use the Scrypt algorithm, like with Bitmain L3.
At a price of $78.84 (as of 02/13/2020 – see chart ), Litecoin market capitalization is USD 5.051 Billion
Graphique du Litecoin depuis 2014
About the editor…
A passion : Economics, behavioural finance and emerging digital assets
Yves started his career in the asset management in 1986 where he worked at different positions as manager of equity funds and diversified funds. at Crédit Commercial de France and later, at Barclays group in Paris. In 1998, he took the lead of equity funds and diversified funds, then of the whole fund management business at the French team of the Dutch Robeco group before joining Natixis Asset Management in 2012 as Director of the Equity Investment business unit. Yves left Natixis AM in 2018 to start as an independant player for professional investors and corporates (advisor and fund raiser).
He likes to engages in sports that test his endurance like running and swimming, Yves is also fascinated by social sciences, and more specifically by history and economics. But this is the economics mechanisms behavioural aspect and the markets behavioural analysis that are a constant source of thought and discussion. Since few years, the blockchain issue and emergence of crypto assets is a new field of passion and opportunities for him.
Yves Maillot
Financial markets and asset management
Yves Maillot
Financial markets and asset management