How Litecoin Works
April 07, 2020
Litecoin is one of the veterans in the digital assets world. Created back in 2011, Litecoin is a digital assets that is very similar to Bitcoin. In fact, Litecoin was a fork from the Bitcoin blockchain itself. Initially, there was not much development on the Litecoin network. However, since 2016, there has been a lot of interest seen for Litecoin by investors as well as developers.
While slow transaction speeds have plagued the Bitcoin blockchain in the past, transactions on the Litecoin blockchain are speedy. In this article, we will explain how Bitcoin works and it’s advantages over Bitcoin.
Introduction to Litecoin – What Exactly Is It?
Litecoin is a digital assets that can be closely compared with Bitcoin itself. Bitcoin came to the scene to solve the problem that the centralised financial system had created. However, it was never able to handle the enormous load that it would receive once more people jumped on the digital assets bandwagon.
That is why Litecoin was born. Litecoin is a hard fork of the bitcoin blockchain. That’s why it is one of the few digital assets that can be closely compared to Bitcoin. Many even say that Litecoin is the silver to Bitcoin’s gold.
One of the many problems that Litecoin aims to solve is the scalability issue that is faced by most of the blockchains out there. Since most of the digital assets make use of a proof of work consensus mechanism, they require a lot of processing power as well as time to verify a transaction. The downfall of Bitcoin in comparison to Litecoin: miners need deep pockets to fund mining infrastructure and to pay for excessive power bills.
Since proof of work is the most secure way to confirm a transaction, removing this would make the entire blockchain a little less secure. The developers of Litecoin have come up with workarounds to this problem. There are ways that the Litecoin blockchain has implemented to increase the transaction speed while decreasing the fee that users have to pay.
Unique features of Litecoin
The Technology Behind Litecoin
Just like all the other digital assets out there, Litecoin makes use of the revolutionary blockchain technology. As Litecoin aims at providing people access to a better financial system, the use of blockchain technology fits perfectly. Unlike centralised financial systems such as banks, the blockchain network can never be shut down. Due to its decentralised nature, someone can’t shut down all the nodes on the network.
Hence, you will be able to use the Litecoin network for making payments anytime you want. This is certainly not the case for centralised financial systems. If the centralised server of such a system is down, then the entire network comes crumbling down. Thus, making it a liability.
A Fast Transaction Speed
While it has not reached the speeds of its centralised counterparts (in case of domestic transfers), Litecoin is undoubtedly faster than most of its rival digital assets. The block time on the Litecoin network is just two and a half minutes. It means that every two and a half minutes, a new block of transactions is created on the Litecoin network.
A single block on the network contains hundreds of transactions. So, if you send or receive funds on the Litecoin network, it won’t take more than a few minutes for it to arrive in your wallet. When it comes to transferring money to someone who lives in a different country, then Litecoin certainly has the upper hand over the centralised financial systems.
A Testing Ground for New Features
While most of the digital assets often compete with their competitors to attain dominance, Litecoin, and more importantly the community of supporters take a different approach.
Since Litecoin was a very early fork of the Bitcoin blockchain, it has inherited some of the core features of the Bitcoin network. That is why Litecoin is also used as an experimental ground for features on the Bitcoin network.
Take, for example, the implementation of the lightning network. The main reason behind the implementation of the lightning network is to make transactions instantaneous. This minimal delay in transactions and the low fees mean that we could now use digital assets such as Litecoin to make micro-payments.
Before the implementation of this feature on the Bitcoin network, it was on the Litecoin network. After seeing the success of this feature on the Litecoin network, it’s development on the Bitcoin network was complete.
Just like most of the other digital assets, Litecoin makes use of Proof of Work consensus for verifying transactions on the network. As most of the professional miners have started to make use of ASICs (Application-Specific Integrated Circuits) to mine digital assets, it has become tough for the smaller miners to mine digital assets.
Litecoin makes use of the SCRYPT algorithm for mining – a unique system that can make mining digital assets more efficient. For this type of mining, a user does not need any expensive ASIC miners. Miners using a single graphics card alone would be able to make money on the Litecoin network.
How Can I Send and Receive Litecoin?
You can store digital assets in secure places called the digital assets wallet. Litecoin also makes use of wallets to send and receive funds. To start with Litecoin, you can make use of a wallet that they give when you open an account on any digital assets exchange, such as Zipmex.
Additionally, you can also make use of hardware wallets such as the Ledger Nano S or Trezor. Once you have a wallet set up, you will have a wallet address. The public address is the address that you would give others to receive funds. Within Zipmex you can find this address within your wallets.
You should not share your wallet’s private key with anyone. To send funds to someone, you need to specify the number of Litecoins and the address of the receiver. Within minutes of sending, the funds would have arrived on the receiver’s wallet.
Litecoin has been around in the digital assets world for quite some time. It is one of the few digital assets that can be compared with Bitcoin itself. With regular development on this network, you can be sure that if you face any issue, it is going to be quickly fixed. If you are planning on getting some Litecoin for yourself, consider making use of Zipmex’s low transaction fees. The process is simple and when you store Litecoin with Zipmex you can be rest assured that your investment is safe. Zipmex is one of the only exchanges to offer insurance.