Litecoin: what is behind the growing Bitcoin alternative
In the last hours, the value of Litecoin is soaring so much that even its creator Charlie Lee has had to go to social networks to ask us not to do crazy things. But despite the warnings, the reality is that the cryptocurrency has been shooting for two days. Only in the last 24 hours has its value increased between 70 percent.
But what exactly is Litecoin and what is behind this low-cost alternative to Bitcoin?
Litecoin is a decentralized P2P cryptocurrency created by Charlie Lee in October 2011. Designed as an open source project inspired by Bitcoin, it is virtually identical in most of its technical aspects. In the end, what is involved in both cases is to allow a person to send money to another without intermediaries such as banks and anonymously and safely.
However, there are at least four fundamental differences between Litecoin and Bitcoin. It’s speed, the number of coins, the market capitalization and changes in the algorithm. They are not significant differences, but they are enough to change their philosophy slightly.
The first big difference is the speed of transactions.
The Litecoin network performs the processing of a block every 2.5 minutes instead of every 10 minutes. This means that it generates the blocks of its chain four times faster than Bitcoin. The number of Litecoins is also finite.
2. Second is the number of coins you plan to generate.
One of the things that give Bitcoin more value than conventional currencies is that it produces a fixed amount of new currencies every year and that the amount is finite. Bitcoin will stop creating new units when it reaches 21 million coins, while Litecoin will stay at 84 million.
3. Then there is the fact that the Litecoin was the first coin that changed the hashing algorithm and used scrypt.
The primary benefit of this change is that it makes any PC able to dedicate itself to mining. Turning its back on professional miners and democratizing the creation of the cryptocurrency. Besides, verifiers are more distributed than with coins based on SHA-256.
4. And then we have its market capitalisation.
Bitcoin right now is 288,687 million dollars, while the Litecoin is only 17,842 million. Despite that, the Litecoin is now the fourth cryptocurrency with more value in the market, which is not bad either.
Why is it growing so much?
That is the big question that everyone is asking. Why suddenly the value of the Litecoin has started to shoot. Some media suggest that it may be due to the exaggeratedly high amount of Bitcoin. This is causing many to see their little brother as an exciting opportunity to get on the cryptocurrency train with another that has the same potential to start growing.
This escalation in the value of Litecoin is making many of the platforms that, like Coinbase allow their purchase, begin to warn their users to take the necessary precautions when investing. Even Charlie Lee himself, the creator of the cryptocurrency, has warned users of the dangers of going crazy and we are aware that their price can collapse as has happened before.
It will be interesting to see how the events are happening in the coming days and how the value of the new success cryptocurrency evolves.