A few years after the concept of bitcoin was introduced in a paper by Japanese Satoshi Nakamoto, the litecoin was invented to become a secondary cryptocurrency. Just like bitcoin, litecoin is not controlled by the government nor is it managed by a monetary authority, making it a decentralized currency. It is also not backed in value by assets like gold or other precious metals, but it derives its value from the market factors of supply and demand.
There will be approximately 84 million litecoin available and these generate components of a block or code every 2.5 minutes. Compared to bitcoin, this is a faster speed, although there are fewer bitcoin in circulation and its value is higher.
Litecoin vs. Bitcoin
Similar to the bitcoin blockchain, the litecoin network is able to generate a new block or entry into the public ledger, which is verified by a mining software. A litecoin can be mined by first creating a bitcoin account and the going rate is at 146 litecoins to one unit of bitcoin.
One advantage of litecoin over bitcoin is its speed of block generation, making transactions faster and more efficient. Litecoin also carries a smaller transaction fee at 1/1000 of a litecoin to process each transaction or roughly two cents.
However, bitcoin is more widely accepted compared to litecoin as more online merchants and shoppers have adopted this mode of payment. More bitcoin startups are also in operation, although some also cater to other digital currencies such as litecoin, darkcoin, and dogecoin among many others.
For both cryptocurrencies though, the threat of increased regulation and potential centralization could weigh on their value and usage. While cryptocurrencies have gained the negative perception of being used in illegal transactions or criminal activities, its enthusiasts say that it could revolutionize the financial system and eventually replace traditional fiat currencies.