What is litecoin, what is its difference from bitcoin and how this currency can change the crypto industry.
According to the official website, litecoin (LTC / USD) is “a peer-to-peer Internet currency, which includes almost zero-cost payments to anywhere in the world. Litecoin is an open source code, a global payment network that is completely decentralized and does not the controlled of any central authorities. ”
If you have heard about bitcoin (Bitcoin), then this definition will seem familiar to you. The fact is that litecoin is based on the same open source code as bitcoin, but with some technological differences. Litecoin was not created in order to replace bitcoin, but to become an additional means of payment, a kind of silver. This instruction will help you to understand the difference between the two cryptocurrencies.
One of the main advantages of projects created on the basis of open source code, such as Bitcoin-networks, is that anyone can use the source code base in order to add those options that he needs. The cost of each cryptocurrency is determined by the community of users of the system, which by mutual agreement use this currency.
Although today the highest capitalization among the cryptocurrencies bitcoin has, but this does not mean that there is no place for other cryptocurrencies that can co-exist with bitcoins or be used for some special purposes of the community.
The developer of Litecoin network Charlie Lee decided to improve the system of bitcoins. Its main task was to reduce the time it took to confirm a new transaction, as well as to change the algorithm for mining bitcoins so that all participants in the system could participate in the mining.
The confirmation of the transaction in the Bitcoin network takes 10 minutes, while in the Litecoin network it is 2.5. Also, due to the speed with which transactions can be confirmed in Litecoin, more operations can be performed.
For bitcoin mining, the SHA-256 algorithm is used, using the processor, while the litecoins mining are mastered by the scrypt algorithm, which requires large amounts of memory. Earlier, it was possible to extract bitcoins on ordinary computers (CPUs), and then on more powerful graphics processors (GPUs).
Now, because of the increased competition, the mining process has become much more complicated, and users need to buy devices with integrated circuits for special purposes (ASIC-miners) in order to benefit from bitcoin mining (taking into account the cost of electricity and the cost of equipment for mining).
This is an expensive equipment that can only be used for mining and for nothing more. Since not everyone can afford ASIC-miners, Charlie Lee wanted the production of litecoins to be conducted using a different technology. Therefore, the algorithm for litecoin mining is based on the use of memory, and anybody can get litecoins even if there are no ASIC-miners.
Speaking of litecoin, it is important to keep in mind that the creator of this cryptocurrency, Charlie Lee, is a public figure and actively participates in the further development of his project. Satoshi Nakamoto, an anonymous bitcoin developer, has long since disappeared from the radar and does not control what happens to his brainchild. The presence of a real creator plays a big role in the fact that people have an understanding of how the litecoin is constructed and what it strives for.
Currently, Charlie Lee is actively encouraging the community of miners to use the Segregated Witness (SegWit) protocol, which will improve the work of peer-to-peer payment systems. SegWit is, in effect, a change in the format of the transaction, which allows you to use less space for data storage.
This protocol will allow the introduction of other innovative scaling technologies, for example, Lightning Networks (LN), which will make it possible to quickly conduct transactions outside of the blockchain, that is not all transactions will pass through the distributed registry. This technology will be available for both bitcoin and litecoin.
However, in the Bitcoin network, 95% of the miners are required to activate the SegWit protocol, while 75% of the Litecoin network is required. The smaller threshold of agreement and the active position of the founder mean that it will be easier to press these changes into Litecoin.
Charlie Lee wrote a letter to the litecoin community, in which he called to support SegWit. One of the advantages of the existence of a decentralized currency is that its creator cannot make this decision alone.
At the same time, having an active leader who encourages the community to change technology is also good, especially in a situation like today, when it is obvious that changes are necessary and there is no agreement among the miners. Thus, now litecoin can become a benchmark for bitcoin and show what these changes should be.
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