What you need to know about Litecoin
One of the first Altcoins
Litecoin (LTC) was created in 2011 and is one off the first alternative coins (“Altcoins”) to Bitcoin. It was created with the goal of creating a “lighter” version of Bitcoin, to increase scalability and adoption. LTC was founded and created by MIT graduate and former Google employee Charlie Lee, through modifying the existing Bitcoin source code.
Litecoin presents itself as the “digital silver” – complementary to the “digital gold”, Bitcoin. In the last ten years it has become one of the key blockchain protocols, with global adoption.
Litecoin is currently one of the 10 best capitalised crypto assets with a market capitalisation of USD 12.4 billion and a daily trading volume of USD 3.8 billion. The recent bull market in digital assets also led to significant increases in the Litecoin price, rising from around USD 50 in October 2020 to almost USD 200 currently.
How Litecoin differs to Bitcoin
The Litecoin protocol is based on Bitcoin but has some modifications which differentiate it. Namely, the block confirmation time has been reduced from 10 minutes to 2.5 minutes, allowing new blocks to be added to the blockchain faster, with quicker transaction confirmations. This modification increases the transaction throughput of Litecoin and lowers transaction fees, making Litecoin more efficient as a payment system and allowing for use cases such as micropayments.
Another major difference is the maximum supply of Litecoin, 84 million LTC compared to BTC’s 21 million. Like Bitcoin, Litecoin relies on a proof-of-work consensus mechanism for securing the blockchain. However, it uses the scrypt-algorithm whereas Bitcoin uses the SHA-256-algorithm. Litecoin miners therefore use different specialized hardware, increasing the barrier for miners to switch between the networks.
Use cases of Litecoin
Litecoin was created for similar use cases as Bitcoin: A permissionless payment system that cannot be controlled by any centralised institution.
Proponents argue that due to its faster transactions and lower fees, Litecoin has a competitive advantage towards Bitcoin when it comes to mass-adoption as a payment system. Litecoin’s adoption, especially in remote areas with limited banking infrastructure, is increasing globally. In a recent use case, Litecoin partnered with two gaming companies – Atari and CipSoft – who are both using Litecoin as a means of payment.
Litecoin is now part of Sygnum’s offering
Sygnum now offers its clients bank-grade custody and brokerage services for Litecoin. Additionally, clients can use Litecoin as collateral for Lombard loans to increase their liquidity while being exposed to the price movement of LTC.
Sygnum clients can now customize and diversify their digital assets portfolio with yet another core protocol of the digital asset world.
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