This article is outdated.January 2015)(
Official Litecoin logo
|Date of introduction||7 October 2011|
|Inflation||Limited release (geometric series, rate halves every 4 years reaching a final total of 84 million LTC)|
|Method||Increasing difficulty per every 2016 blocks produced.|
Litecoin (LTC) is a peer-to-peer cryptocurrency and open source software project released under the MIT/X11 license. Inspired by and technically nearly identical to Bitcoin (BTC), Litecoin creation and transfer is based on an open source protocol and is not managed by any central authority. Litecoin is intended by its developers to improve upon Bitcoin, offering several key differences. As of November 2013, Litecoin had received extended coverage by mainstream media with agencies such as the Wall Street Journal, CNBC and The New York Times citing it as an alternative (or possibly even successor) to Bitcoin.
Litecoin was released via an open-source client on GitHub on October 7, 2011 by Charles Lee, a former Google employee. It was a fork of the Bitcoin-Qt client, differing primarily by having a decreased block generation time, increased maximum number of coins, different hashing algorithm (scrypt, instead of SHA-256), and a slightly modified GUI.
During the month of November 2013, the aggregate value of Litecoin experienced massive growth which included a 100% leap within 24 hours.
Litecoin version 0.8.5.1 was released in November 2013. The release included fixes for vulnerabilities and added enhanced security to the Litecoin network.
The Litecoin developer team released version 0.8.6.1 in early December 2013. The new version offered a 20x reduction in transaction fees, along with other security and performance improvements in the client and network. The source code and binaries were released early to people in the "#litecoin" IRC channel, on the official Litecoin forums, and on reddit, with information for "power users" to add a Litecoin supernode to the configuration file, while the main site was to be updated after enough of the network was running the new version. This release method was used to ensure that the low fee transactions from version 0.8.6.1 clients would not be delayed by clients running older versions.
In April 2014, a new version of Litecoin was released, version 0.8.7.1, which fixed some minor issues along with an important fix related to the Heartbleed security bug.
Differences from Bitcoin
- The Litecoin network aims to process a block every 2.5 minutes, rather than Bitcoin's 10 minutes, which its developers claim allows for faster transaction confirmation. The drawbacks of faster block times are increased blockchain size, and an increase in the number of orphaned blocks. Advantages include greater resistance to a double spending attack over the same period as Bitcoin, but only if both networks have the same hashrate.
- Litecoin uses scrypt in its proof-of-work algorithm, a sequential memory-hard function requiring asymptotically more memory than an algorithm which is not memory-hard.
- The Litecoin network will produce 84 million litecoins, or four times as many currency units as will be issued by the Bitcoin network.
The original intended purpose of using scrypt was to allow miners to mine both Bitcoin and Litecoin at the same time. The choice to use scrypt was also partially to avoid giving advantage to video card (GPU), FPGA and ASIC miners over CPU miners.
Due to Litecoin's use of the scrypt algorithm, FPGA and ASIC devices made for mining Litecoin are more complicated to create and more expensive to produce than they are for Bitcoin, which uses SHA-256.
A peer-to-peer network similar to Bitcoin's handles Litecoin's transactions, balances and issuance through scrypt, the proof-of-work scheme (Litecoins are issued when a small enough hash value is found, at which point a block is created, the process of finding these hashes and creating blocks is called mining). The issuing rate forms a geometric series, and the rate halves every 840,000 blocks, roughly every four years, reaching a final total of 84 million LTC.
Litecoins are currently traded primarily for both fiat currencies and other cryptocurrencies, mostly on online exchanges. To avoid the danger of chargebacks, reversible transactions, such as those with credit cards, are not normally used to buy litecoins as Litecoin transactions are irreversible.
Payments in the Litecoin network are made to addresses, which are based on digital signatures. They are strings of 33 numbers and letters which always begin with the letter L.
Litecoin transactions are recorded in the Litecoin blockchain (a ledger held by most clients). A new block is added to the blockchain roughly every 2.5 minutes (whenever a small enough hash value is found for the proof-of-work scheme). A transaction is usually considered complete after six blocks, or 15 minutes, though for smaller transactions, fewer than six blocks may be needed for adequate security.
The most common Wallet available today is Litecoin-Qt for Linux, Windows and Mac OS. Litecoin-Qt is an offline wallet based on the Bitcoin wallet.
On January 19, 2014, the Litecoin Android wallet was released. This new release replaces the old Android client which contained major security issues.
A new Litecoin Electrum client—a lightweight wallet for Litecoin—was released for beta testing on April 10, 2014. As with other Litecoin Dev projects, the client is based on the Bitcoin source and the Litecoin developers fix issues upstream in order to make it easier to keep the Litecoin version updated. As with the Litecoin Android wallet, this new version of Electrum for Litecoin replaces the old and unsupported version created in the first year of Litecoin's release.
As of February 2015 there are many exchanges that deal with Litecoin. Although most exchanges allow only trading between litecoins and bitcoins, some exchanges provide trading between litecoins and US dollars (Bitfinex, BTC-e, OKCoin), Euros (Kraken, Yacuna), and Chinese Yuan (Huobi, BTC China, OKCoin).
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Using Scrypt allows one to mine Litecoin while also mining Bitcoin.
- "Block hashing algorithm".
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These hash functions can be tuned to require rapid access a very large memory space, making them particularly hard to optimize to specialized massively parallel hardware.
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