Litecoin is similar to Bitcoin in many ways – an open-source payment network, available globally, on a decentralised basis like all cryptocurrencies.
Founded a couple of years later than Bitcoin in 2011, Litecoin is a newer token developed by Charlie Lee, formerly an engineer at Google.
However, there are key differences, particularly regarding the proof-of-work mechanism powered by Scrypt and the rapid block generation process.
As one of the original Altcoins – any crypto that isn’t Bitcoin – Litecoin was an early stage currency derived from the Bitcoin source code.
Although it started as a challenger, Litecoin hasn’t quite fulfilled those ambitions, primarily due to the saturation of the cryptocurrency market.
That said, Litecoin is still one of the most-used tokens available, with a market cap of £6.1 billion and a value per LTC coin today of £86.57, according to Coinbase.
Litecoin is one of the oldest and most well-known cryptocurrencies. Whilst built on the same source code as Bitcoin, there is no shared blockchain history between the two cryptos.
The idea behind Litecoin was to develop a token with faster throughput speeds that is more accessible than Bitcoin.
Litecoin is designed for everyday payment transactions and is commonly selected because it’s a helpful token available through most exchanges.
Bitcoin has a maximum supply of 21 million compared to the 84 million LTC cap, which means it’s more liquid, although less valuable than BTC.
The Litecoin network generates one new block every 2.5 minutes, verifying the block and making it visible to all system participants.
Like Bitcoin, the reward for each block mined and verified halves periodically.
Payouts dropped from 50 LTC to 25 in August 2015 and 12.5 in August 2019. Rewards are expected to fall to 6.25 LTC in August 2023.
Traders can buy Litecoin on any big crypto exchanges, usually quoted at a US Dollar price.
There are multiple considerations, with prices impacted by market demand.
While LTC was the first Altcoin and was initially seen as a rival to Bitcoin, much has changed in the decade since, with thousands of crypto coins and Altcoins available, some with a faster throughput than LTC.
Features such as the functionality to build dApps and create smart contracts are in high demand, with advanced computation through newer crypto tokens reducing appetite for Litecoin.
However, while a lower financial reward might be less enticing for miners, Litecoin is still well embedded in the top 20 largest cryptocurrencies by market cap, so it’s not a small player.
Litecoin Investment Risks
As with any cryptocurrency, LTC has risk factors to be mindful of, similar to the challenges relevant to the whole sector.
- Volatility: LTC has seen a low of £0.88 and a high of £315, which shows how quickly things can change. Value forecasts are a key decision factor in judging whether to buy LTC as a speculative investment or a longer-term value store.
- Future uncertainty: the novelty of LTC as an initial rival to BTC has worn away, and there are countless new contenders. It remains to be seen whether Litecoin has enough staying power to stay ahead.
- Regulation: the decentralised crypto market is unregulated, and although Litecoin offers an opportunity to make faster, cheaper payments, the debate around regulation and governmental controls remains relevant.
Benefits of LTC investment include high liquidity and the evidence of over a decade of price appreciation with a fair few blips in between.
Still, it’s important to acknowledge and understand the risks.
The hashing algorithm, Scrypt, means that miners need to use specific software and hardware, using computational power to solve proof-of-work sequences (the hash), which secure the block.
Anybody can mine LTC using central and graphic processing units.
Still, it isn’t as profitable or competitive as joining a mining pool or investing in an ASIC (application-specific integrated circuit) to make mining faster and less resource-intensive.
Solo LTC mining returns meagre profits because although the cryptocurrency is much decentralised, the mining network works the opposite way – usually, ASIC miners group together to maximise returns.
For example, Litecoin Miner L7 mines at about nine gigahashes per second, whereas a mining pool usually operates at over 120 terahashes per second, which is a comparison of nine billion vs 120 trillion hashes.
Mining works similarly to Bitcoin, running a programme on a computer. The software generates random encrypted numbers and letters, so miners need to guess lower values than the nonce (short for number only used once).
A nonce is a two-digit alphanumeric figure contained within the block’s hash, and the miner needs to arrive at a suitable answer to mine and verify the block.
Whoever guesses an answer lower than the target hash, determined by the blockchain protocol, wins the reward – correctly 12.5 LTC but due to half in August 2023.
Rewards drop as more coins reach circulation, as does the difficulty of the hash.
Bitcoin vs Litecoin
One of the biggest variances between BTC and LTC is that it takes four times longer to mine a Bitcoin block than Litecoin – 10 minutes against 2.5 minutes, respectively.
Anybody can mine Litecoin even from a personal computer, although the more processing power available, the more likely a miner is to verify a block and receive a payment successfully.
Bitcoin software means that a new block is limited to one MB, so BTC transactions aren’t always processed within the 10-minute average – it can take up to 90 minutes to verify a transaction if the network is busy.
This factor is an advantage for traders using Litecoin to handle financial transactions.
Litecoin isn’t as congested, so that sort of delay is unusual.
The other element is coin supply, with an 84 million LTC cap vs 21 million Bitcoin, with a higher supply to match the four times faster processing speeds.
Why is LTC so much quicker?
It’s all down to the Scrypt algorithm, a much nippier version than the SHA-256 cryptographic algorithm used by Bitcoin.
The goal of Litecoin is to prioritise transaction speed, so the network can make more blocks simultaneously, owing to the shorter time required to generate each block.
However, Bitcoin has a vastly higher market cap and continues to dwarf every other competing digital currency.
BTC and LTC Metrics
The below table shows the relevant metrics for BTC and LTC side-by-side, updated as of April 2022:
|Block time||Ten minutes||2.5 minutes|
|Coins in circulation||19 million||70.1 million|
|Maximum supply||21 million||84 million|
|Price per coin||£31,850.47||£86.47|
|Market capitalisation||£606.5 billion||£6.1 billion|
The Litecoin Foundation expects that it will take another 120 years for the final LTC to be mined – in 2142.
All You Need To Know About Litecoin FAQ
How many Litecoin are in circulation?
There is a limit of 84 million LTC – once that threshold is reached, there won’t be any new Litecoin tokens in circulation. At the time of writing, CoinGecko reports that the circulation supply is just over 70 million, leaving less than 14 million LTC available to mine.
What is Litecoin used for?
LTC is primarily used for payment transactions, with an almost zero cost to individuals and institutions making global payments, completed instantly. The lack of intermediary or centralised authorisation makes it quicker and cheaper than a conventional bank.
Litecoin uses the same proof-of-work system as Bitcoin and many other cryptocurrencies. However, it leverages the Scrypt algorithm, which requires fewer resources and is significantly faster.
How has the price of Litecoin changed?
In 2013, one LTC cost around £3.30. Today, a Litecoin is worth £86.57, having grown over 26 times its original value.
The all-time high was in May 2021 when LTC hit £315, bouncing back from a low of £0.88 recorded in January 2015.
These different values are typical of a large-circulation cryptocurrency and demonstrate why research and investment expertise are important if you wish to incorporate LTC as part of an asset portfolio.
Which is the better investment – Bitcoin or Litecoin?
Much depends on how much you want to invest, how familiar you are with the crypto trading environment, and what you want to do with your tokens.
Bitcoin is worth significantly more, but LTC is generated much faster. So it’s wise to assess whether you’re interested in owning higher valued crypto or want more coins at a more accessible value.
When is the next Litecoin halving?
Miners receive LTC as a reward for each new verified block. The payment is halved every four years as supply diminishes to preserve purchasing power. The last halving was in August 20,19, when rewards dropped from 25 LTC to 12.5 LTC per block.
Although not yet confirmed, the reward is expected to drop from 12.5 to 6.25 LTC around August 2023.
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