There have been several attempts in the past to build digital currencies that completely solves the double spending problem. Bitcoin being the pacesetter in the cryptocurrency space solved this problem perfectly well, but with that came other issues mainly speed of transactions, and ability to make micro payments.
The Litecoin cryptocurrency is built on a distributed ledger technology known as a blockchain. Litecoin is a peer-to-peer decentralized internet currency, hence it is not owned by any single centralized entity. What this also means is that not even a government can control its supply. This digital currency is similar to Bitcoin, but has some basic functional improvement over bitcoin.
Litecoin with its symbol as [ Ł or LTC] came about as an implementation of a soft fork change in transaction format of bitcoin. This was proposed as an improvement on bitcoin’s blockchain size, which was really slowing down speed of transaction. This fork, named a segregated witness, separates the transactions into two. This significantly reduces the block time to 2.5mins compared to bitcoin’s 10mins. Micropayments are also made possible by using a P2P system known as Lightning Network.
In order to add the next block of transactions to the blockchain, special nodes on the Litecoin network called miners must race against each other towards a goal of solving a computationally intensive cryptographic puzzle. The first computer to do this earns a reward, which is some Litecoins. Unlike other fiat currencies which are printed in order to increase cash flow/circulation, Litecoin like most blockchain based cryptocurrencies are mined using the above puzzle solving method.
Unlike bitcoin which uses a SHA-256 hashing algorithm, Litecoin use a hashing algorithm called “Scrypt” pronounced “ess crypt” as a proof – of – work scheme.
As at the time of writing this article, Litecoin is ranked 5th based on a market capitalization of $3,997,013,684.
Mining is the way by which all blockchain based cryptocurrencies are created including Litecoin.
Miners are currently rewarded with 25 new Litecoins per block. This reward for mining gets halved every 4 years, translating to every 840,000 blocks, considering that about 84 million Litecoins is scheduled to be produced by the Litecoin network.
Mining Litecoins requires buying or building a computer rig with a CPU, or GPU hardware components, as well as cooling fans which are more expensive than your everyday desktop computer. Mining rigs can be very noisy and require cold temperature; hence it is necessary to have operators wear ear plugs for safety. Considering that mining becomes more difficult as more coins are being created, making a profit from this venture using CPU and GPU systems tend to become more difficult.
Enter the “ASIC” Scrypt miner, which are special hardware designed specifically for mining cryptocurrencies like Litecoin. Although deploying an ASIC hardware for mining Litecoin is much faster than other hardware and some can even be customized to reduce power consumption, it is also important to understand that there are other requirements needed for successful mining which includes:
CHEAP SOURCE OF ELECTRICITY
With a cheap supply of electricity, a miner with an ASIC hardware can be relatively confident of making some profit from this venture. This is because mining rigs generally requires a high supply of electricity.
It is also important to note that as more and more fast participants with deep pockets setup mining infrastructure, it will generally become more difficult to make a profit. So it is important to look into becoming an early adopter and possibilities of scaling up your mining hardware to meet up with the challenge, as well as knowing when to quit.
These and more are things to consider when embarking on a mining venture. Please endeavor to do your own research before going into mining.
The importance of having digital wallets for storage of value, carrying out transactions, as well as keeping track of transactions cannot be over emphasized.
There are 2 major types of wallets, basically hot storage wallets and cold storage wallets. Hot storage wallets are basically online web, app, and desktop based wallets. Cold storage wallets, are hardware flash drive type wallets (Nano s), and paper wallets. The cold storage wallets are more secured giving that the more important aspect when carrying out transactions is done offline prior to connecting to the internet.
A feature to these wallets is that they are all a form of storage of your private keys. Having access to a Litecoin holder’s private key can be likened to gaining access to his or her bank vault. In a situation whereby someone’s private key gets misplaced, that person will not have access to his or her LTC anymore. However the missing Litecoin would still be part of the entire Litecoin network economy. The above reason is why it is important to have a Litecoin wallet.
The most popular gateway to buying other alt coins like Litecoin is using bitcoin. Buying Litecoin using bitcoin is possible on shapeshift.com and many other known exchanges online.
Purchasing Litecoin with cash is also a common way to buy Litecoins. LitecoinLocal.net a peer-to-peer exchange and Local Litecoins subreddit are popular web links for buying Litecoins via cash deposits in Europe.
Some exchanges like OKPay, Kraken etc. accept purchase of Litecoin via wire transfer. Other common purchase methods but limited to certain exchanges both regulated and unregulated are as follows: international wire transfer, money orders, Perfect money, GIROPAY/EPS, VirWox, and Credit cards.
It is important to carry your personal research and do your due diligence, through reviews on different forums online, in order to avoid scam. Also using the Escrow services such as LitecoinLocal.net can help to reduce risks when doing cash transactions.