Litecoin: All The Information To Start Trading Today In One Go-To Guide


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This page covers some of the basic facts and technical details about Litecoin (LTC), one of the top 10 cryptocurrencies.

We start by discussing 5 important facts about Litecoin, what LTC actually is, and how they’re created through a process called minting.

We’ll also take a look at expert traders’ and traders’ views on Litecoin as a cryptocurrency and commodity to get a better overview of it’s position as a financial instrument.

5 Interesting Litecoin Facts You Might Not Know

  1. Litecoin was the brainchild of a former Google employee Charlie Lee
  2. The cryptocurrency went live on October 13th 2013 and incorporated some of Bitcoin’s code
  3. There was no pre-mine and the launch was intended to be as fair to the community as possible
  4. In 2013 Litecoin experienced fairly explosive growth and achieved a market cap of $1 billion
  5. In 2017 Litecoin adopted SegWit and was the first cryptocurrency to make a transfer using the Lightning Network

What is Litecoin?

Litecoin (LTC) is a decentralized, open-source payment network, or cryptocurrency. It allows you receive, store, and send money to other people.

It’s one of the three largest cryptocurrencies, together with Bitcoin (BTC) and Ethereum (ETC). Litecoin was designed to improve on many of the perceived failings of Bitcoin and to be the silver to Bitcoin’s gold.

To this end Litecoin has a cap of 84 million tokens, this is in comparison to the 21 million capitalization used by Bitcoin. It also has a block generation time of  2.5 minutes compared to Bitcoin’s 10. The aim was to make Litecoin easier to obtain and trade than Bitcoin.

Why Was Litecoin Created?

Litecoin was also created with an aim to reduce the centralization of mining. The cryptocurrency was designed to use a code called Scrypt.

This was designed to be more CPU friendly to encourage more users to mine and prevent ASIC miners from dominating the network. The hope is that Scrypt can make mining more dynamic and prevent wealthy miners from controlling the direction of the currency.

How is Litecoin Mined?

The way that Litecoin is made is not all that different from Bitcoin. Whereas banks and governments are centralized governments that can physically print currency, Litecoin is a decentralized currency that is created digitally by its community.

The technology behind Litecoin is called a blockchain. This acts as a general ledger, recording every transaction ever made. These transactions are processed by “miners” who create new blocks to add to the chain. These miners are then rewarded with some Litecoin.

This acts as an incentive for users to process new blocks and regulates the creation of new tokens. This process is called proof of work where users are rewarded for using their own computing power to create new blocks.

Litecoin’s Proof-of-Work Consensus

Where Litecoin differs is in how it calculates the proof of work function. Bitcoin uses SHA-256. The problem with this is that miners can take advantage of ASICs.

litecoin gridseed mining setup
A typical Gridseed 5 chip Scrypt ASIC Miner setup

An ASIC is a specialized piece of hardware designed for a specific task, in this case, mining cryptocurrency. The creators of Litecoin were concerned that this could lead to ASIC using miner’s dominating the network.

Their solution was to use Scrypt. This rendered existing ASIC mining rigs useless and theoretically allowed the blockchain to be more democratic. Although there are currently ASIC rigs available for scrypt and AMD graphics cards are capable of mining the scrypt algorithm.

Litecoin vs Bitcoin: Similarities and Differences

How does the silver to Bitcoin’s gold compare? What are the key differences to Bitcoin? See below for our head-to-head comparison:

 Litecoin (LTC)Bitcoin (BTC)
PurposeCreated as an "upgrade" to BitcoinDecentralized digital currency
Founded20112009
FounderCharlie LeeSatoshi Nakamoto (alias)
Market CapOver $15 billionOver $250 billion
Current Price
All time High$366 (December 2017)$19,908 (December 2017)
All Time Low$1.20 (Jan 2016)$0.06 (July 2010)
How long did it take to hit $100?74 months51 months
Notable SupportersJeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
Supply Cap84,000,00021,000,000
Initial DistributionMiningMining
Mining MethodGPUASIC
Consensus MethodProof of workProof of work
Network Hash Rate*Over 295 Litecoins per hourOver 40 BTC per hour
Difficulty increaseEvery 2016 blocksEvery 2,016 Blocks

What is the Price Outlook for Litecoin, and What Do Experts Say on Prices?

Like Bitcoin, the short-term price outlook for Litecoin is fairly volatile. You should expect to see plenty of ups and downs as speculators engage in profit-taking.

In the medium, to long term, it is likely that Litecoin, Bitcoin, and other currencies will generally continue on an upward trajectory, even if it is a rocky road.

If Litecoin becomes adopted as a common payment method then you should expect to see speculation decline as the cryptocurrency begins to stabilize.

Does Litecoin Have A Future As A Financial Instrument?

It is difficult to fully predict the future of Litecoin and any trader should brace themselves for plenty of ups and downs and keep a well-hedged portfolio.

Experts are generally quite positive upon the future of LTC, although not all believe that it is through Litecoin’s own merit.

Charlie Lee on CNBC
Charlie Lee on CNBC 16th Dec 2017

Litecoin’s creator Charlie Lee told CNBC:

“I don’t like to speculate on prices because I’m always wrong.”

A whole swathe of experts from Tim Henneking to Charles Hayter have all stated some variation of the opinion that when Litecoin rises in value it is largely due to the success of Bitcoin.

“Litecoin is just cruising in Bitcoin’s wake”, said Tim Enneking, managing director of Crypto Asset Management.

There is some backing to their view, Coindesk has found a strong correlation between BTC and LTC prices although they did note that they did not always rise in tandem.

Litecoin’s Rise With Other Cryptocurrencies

Charles Hayter has also made the point that “a rising tide lifts all the boats.” When the cryptocurrency market is doing well then Litecoin will rise along with it.

Gavin Yeung, founder and CEO of digital asset management firm Cryptomover, said:

“Investors may be using Litecoin as a hedge in case Bitcoin suffers a correction”.

 

Litecoin is one of the currencies at the forefront of the crypto-charge. Thomas Glucksmann, head of marketing at cryptocurrency exchange Gatecoin, told CNBC by email.

“Litecoin is one of the major alternative cryptocurrencies, or altcoins, that competes with bitcoin on transaction efficiency so naturally, it is a strong choice for diversification. Litecoin has always been one of the most underrated cryptocurrencies given its advantages over bitcoin.”

Seeking Alpha analyst Geoffrey Caveney says:

“Litecoin is a worthy option to consider as a third currency after Bitcoin and Ethereum. A small slice of litecoin, say half of 1% of your portfolio, is worth considering with the slice of profits you may be taking on your bitcoin right now.”

Litecoin’s High-End Social Media Exposure

Litecoin creator and former Google employee, Charlie Lee tweeted an image of data from Coinmarketcap.com on December 12th showing  Litecoin volumes for the past 24 hours:

Charlie Lee - Litecoin creator
Charlie Lee via Twitter

Charlie then tweeted the following warning to his followers:

“Sorry to spoil the party, but I need to reign in the excitement a bit…,” he wrote. “Buying LTC is extremely risky. I expect us to have a multi-year bear market like the one we just had where LTC dropped 90% in value ($48 to $4). So if you can’t handle LTC dropping to $20, don’t buy!”

Business Insider reported, the popular exchange, Coinbase, was forced to temporarily halt trading of litecoin and ether on Tuesday 11th December when high traffic volume, disrupted their service. Ether hit $600 a token, while litecoin gained more than 40% to $312.

Litecoin chart
LTC – USD source: Markets Insider

Further Reading

If you want to buy or trade LTC, see our exclusive Litcoin Trading Guide.

To learn more about cryptocurrencies in general, see:

And here are some other cryptocurrency-specific guides from Commodity.com:

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