October 19, 2020

What is Litecoin and How Does It Work

What is Litecoin and How Does It Work

Litecoin is one of the most popular altcoins after Ethereum. This cryptocurrency is a full blockchain-based payment method. It allows traders to earn money and invest them in different projects. This cryptocurrency is traded in very big volumes. Litecoin is one of the payment methods, such as PayPal, but based on Blockchain technology. Users can make payments and use Litecoin as a trading asset.

What is Litecoin and How Does It Work

The information about cryptocurrency

Litecoin was created in 2011. Now, this cryptocurrency is often named a digital silver (if you know, Bitcoin is known as a cryptocurrency gold). The Litecoin working algorithm is like Bitcoin. It is named “Scrypt”. The speed of coin production is four times higher than Bitcoin’s. Every block is mined every 2,5 minutes.

In other aspects, the mechanism of mining is similar to Bitcoin. You mine one block, and you get the reward.

The main advantage of Litecoin in comparison to Bitcoin is less need in powerful equipment. Litecoin was created to make mining on CPU more available when people had been able to mine only on graphic cards. Now, this situation is similar. Bitcoin miners need to have a lot of different equipment. At that time, miners who mined Litecoin only needed to have GPU if they wanted to earn money. It is significantly easier than Bitcoin because the most popular cryptocurrency requires more than one ASIC to get more or less high income.

The overall amount of Litecoin is about 84 million coins. That’s much more than what Bitcoin has. It isn’t so important for Litecoin owners than for Bitcoin owners.

Litecoin exchanges

What is Litecoin and How Does It Work

Litecoin is one of the most popular financial assets. That’s why it is very easy to find a place where you can trade this cryptocurrency. Usually, exchanges are used for buying Litecoin at a low price and selling it when it costs more. However, you should be attentive because Litecoin is a very volatile cryptocurrency. The price changes very fast, and it’s hard to predict it.

Also, we recommend analyzing the market to find the most honest exchange and protect yourself from risks not associated with trading.

The most popular cryptocurrency exchanges are:

  1. Coinbase
  2. Binance
  3. Bitfinex.

You can buy a lot of popular altcoins there.

Litecoin wallets

What is Litecoin and How Does It Work

If you want to use Litecoin, you need to have a place where cryptocurrency is stored. This place is named a wallet. There are a lot of different types of Litecoin wallets. The safest is the wallet that is not connected to the internet. Also, wallets can be:

  1. Online. This is a type of wallet that allows storing cryptocurrency on the internet. You should understand that your money can be stolen easily in this case. Due to this, you are supposed to use online wallets only for sending money or purchasing some goods, not for storing them.
  2. Software. This is an application that is installed on your mobile phone or computer.
  3. Hardware. This is a device that stores the cryptocurrency. One of the best such devices is Trezor. It supports the storage of more than 500 different altcoins, including Litecoin.
  4. Paper. This is your public and private key written on your piece of paper. This is a less convenient, but one of the safest types of wallets.

Difference between Litecoin and Bitcoin

Litecoin and Bitcoin have more in common than differences. However, these differences are important. First of all, the algorithm of transactions with Bitcoin is harder. That’s why you need to have more than one ASIC if you want to earn Bitcoin, and you need to have only a GPU and even CPU to mine Litecoin (but now the part of CPU mining decreases regularly).

The second difference is in the speed of transactions. Since every block is generated every 2,5 minutes (in comparison, the time of Bitcoin block generation is about 10 minutes), using Litecoin as a payment method is more effective.

Also, the market capitalization of Bitcoin is higher compared to Litecoin.

Difference between Litecoin and Ethereum

Ethereum is a very popular cryptocurrency that is based on many different altcoins. The main difference between Litecoin and Ethereum is in the goals for which these tokens were created. Ethereum is a platform for decentralized applications. This is also a cryptocurrency, but payments aren’t the main goal of using ETH. Ethereum is a full infrastructure like an internet where data is distributed between different computers around the world.

How to invest in Litecoin?

The easiest method of investing in Litecoin is using cryptocurrency exchanges. A lot of people buy this cryptocurrency for dollars or BTC. That’s why different exchanges have different possibilities of trading. For this reason, you need to check the exchange before you invest in Litecoin.