According to the Litecoin website, “Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world.” If you’re familiar with the digital currency Bitcoin, the above definition might sound similar.That’s because Litecoin is based on Bitcoin’s open source codebase, but with a few technological differences.Litecoin was never intended to replace Bitcoin but to complement it like the silver to Bitcoin’s gold.This beginner’s guide should help those who are new to Litecoin to understand the high level differences between these two digital currencies.The great thing about open source software projects such as Bitcoin is that anyone in the world can fork the original codebase to include new features they want.The value assigned to each digital currency is determined by the community of adopters that decide to hold and use it.While Bitcoin is currently the largest digital currency by market capitalization, this doesn’t mean that there isn’t room for other digital currencies to coexist or to serve a specific use case or community.Litecoin founder Charlie Lee wanted to modify Bitcoin’s rules in ways he considered beneficial.

Specifically Charlie wanted to reduce the amount of time required to confirm a new transaction as well as change the Bitcoin mining algorithm (the way new coins are generated) to ensure anyone could participate in the network.Bitcoin’s transaction confirmation time is 10 minutes while Litecoin’s is only 2.5 minutes.hacker currency bitcoin crashesLitecoin is able to process a higher volume of transactions due to the faster transaction confirmation time.Bitcoin mining uses the algorithm SHA-256 which is processor intensive while Litecoin mining uses scrypt which is more memory intensive.bitcoin tl degeriEarly on Bitcoin was able to be mined using regular computers (CPUs) and later on more powerful gaming computers (GPUs).bitcoin block forkNow due to the increase in mining difficulty created by competition within the network the only way mining is profitable after accounting for electricity and mining equipment costs is through the use of Application Specific Integrated Circuit (ASIC) miners.bitcoin saint petersburg bowl

These are expensive machines built specifically for mining and won’t be able to be used for anything else.Since only some people have the resources to buy and operate ASICs, Charlie did not want Litecoin mining to be dominated by ASICs.Therefore he created Litecoin with a more memory intensive mining algorithm to make mining Litecoin less efficient for ASICs and was more accessible to everyone.One important aspect of Litecoin is that its creator, Charlie Lee, is publicly known and actively participates in the cryptocurrency community.bitcoin vietnam lua daoThe anonymous creator of Bitcoin, Satoshi Nakamoto, who has since disappeared, isn’t available to provide guidance and leadership over the technical direction of Bitcoin.bitcoin etf effectHaving the founder available is important when it comes to helping others understand and rally behind Litecoin’s vision.Currently, Charlie is pushing the community to support adding an upgrade to Litecoin called Segregated Witness (SegWit) that he and others believe will set the foundation for implementing future innovations.

SegWit is essentially a change to the transaction data format that requires less storage space.This upgrade would allow for adding additional scaling innovations like Lightning Networks (LN) where transactions can quickly settle off blockchain meaning not all transactions will have to go through the public ledger.This upgrade is applicable to both Bitcoin and Litecoin.However Bitcoin requires 95% of miners to signal they are ready to support SegWit for activation to occur while Litecoin only requires 75%.This lower consensus threshold in addition to an active founder means that it will be easier for Litecoin to push forward this change.Charlie wrote a letter to the Litecoin mining community to convince them to support SegWit.The benefits of having decentralized currencies is the creator can’t just implement things on their own.However, there are benefits to having a vocal leader to guide technological progress within a community, especially during a time when it is clear there needs to be a change or there is a major disagreement.

The exciting part is that Litecoin can serve as a way for Bitcoin to see how these changes go.Litecoin has existed for almost as long as Bitcoin.There is already established infrastructure for Litecoin and exciting news that there might be major new developments on it soon.Below are some links that may help you understand Litecoin further and keep up with the development.Thank you to Will Warren and many Coinbase employees especially Charlie Lee and Jordan Clifford.Coinbase has just rolled out full support for Litecoin, its third cryptocurrency.Users will be able to buy, sell, send and store Litecoin from Coinbase’s website or mobile apps, using easy payment methods like a credit/debit card or PayPal.While Coinbase was founded as a platform to transact only with Bitcoin, the company has since announced its intent to add other cryptocurrencies with the broader goal of becoming a “digital currency company.” Last summer Coinbase added support for Ethereum, which is now the second most-popular digital currency with a market cap about one-third the size of Bitcoin’s market cap.

At the time, the reasoning was that Coinbase saw Ethereum’s focus on smart contracts as a tangible improvement over Bitcoin, and not just another alt-coin that doesn’t serve any real function.Interestingly, Litecoin’s creator, Charlie Lee, has been director of engineering at Coinbase for nearly four years.And while there were always ongoing discussions about adding Litecoin to the platform, they didn’t really materialize until recently.Lee explained that it’s been a slow few years for Litecoin.While the digital currency had a heyday in late 2013 with its price spiking to over $50 per coin and over $1 billion in total market cap, it quickly fell back to earth and basically remained flat for three years.So why the sudden change?If you’re familiar with Bitcoin you know that the community is facing an internal struggle with deciding how to scale the currency for the future.Essentially, Bitcoin’s original code wasn’t designed to process this many transactions on a daily basis, and now the network is charging too much per transaction, which takes too long to confirm.

Luckily there are two main proposed solutions: Bitcoin Unlimited, which aims to get rid of the block size limit altogether, and Segregated Witness (SegWit), which wants to slightly increase the block size while also moving some non-essential data out of the transaction and off the blockchain.Both solutions would require a “fork,” meaning the majority of miners would have to agree on the changes and signal to slightly alter the currency’s blockchain.So far the Bitcoin community has been unable to reach a consensus on how to fix the scaling issue.A few months ago Lee and the Litecoin community decided to work on implementing SegWit into Litecoin.And after heated discussions with the biggest players in the Litecoin mining community, the group reached consensus about a week ago to implement SegWit.Last week, miners “voted” with their hash power to signal for SegWit, and the actual code will be implemented next week.While Litecoin is still small enough that it’s not suffering from the same scaling issues as is Bitcoin, the team thought it’d be a good way to bring something exciting to Litecoin.

Plus, SegWit has some other benefits besides just increasing network capacity.It prevents malleability, which is essentially the risk (that currently exists in Bitcoin) that third parties can alter transactions before they are confirmed by the network.Implementing SegWit will also allow Litecoin to experiment with something called Lightening Networks — which would essentially allow for instant Litecoin payments off the main blockchain, with transactions only settling on the chain when they need to.And perhaps best of all, these recent developments have rekindled interest in the Litecoin currency, sending the price (and more importantly, volume) skyrocketing.This increased trading volume is what finally allowed Coinbase to implement Litecoin, knowing they now have a liquid enough market (on the Coinbase-owned exchange GDAX) to supply user demand.Essentially, Lee sees Litecoin’s long-term goal as being able to help Bitcoin alleviate some transactional volume by taking over smaller, less important transactions.