From time to time, we here at Coinpursuit like to turn our spotlight on a specific type of cryptocurrency, focusing not only on their history and features, but also what sets them apart from other digital currencies. Today, we're gonna take a look at Litecoin.
Litecoin was introduced to the public on October 7th, 2011. As this was over two-and-a-half years after the introduction of Bitcoin, the comparisons between the two digital currencies have been inevitable. As this article from CryptoNerd points out, Litecoin was not introduced with the intention of replacing Bitcoin, but more as a complement to the older currency. Nonetheless, the competition between the two is fierce.
Litecoin's biggest standout when compared to other cryptocurrencies is its block chain setup. Blocks of data contain transaction information, and these blocks are linked to one another in a way that assures not only the validity of the transaction data, but the security of the transactions themselves. Compared to other digital currencies—according to Litecoin's website—Litecoin's block chains support a higher number of transactions, and also offer quicker transaction approval times to vendors. Their goal is to have a full block of data analyzed and approved every two-and-a-half minutes; other cryptocurrency transaction approval times can run as high as ten minutes.
Litecoin also uses an algorithm set called Scrypt, as opposed to the SHA-256 system used for Bitcoin. Scrypt is less hardware-intensive, so “miners” of Litecoin data can do so efficiently with a regular CPU setup, rather than having to install specific hardware for higher efficiency. The potential downside here is that Scrypt hasn't had the rigorous in-field testing that SHA-256 has, and there are some industry insiders who suggest over time that it may reveal some security flaws. This is a very young field, and a lot of the processes and systems haven't been thoroughly tested yet. It's also not completely unheard-of for competing currencies to issue negative information about their competitors.
Speaking of mining, the current mining reward for Litecoin data blocks is 50 Litecoins—a reward that is projected to be cut in half every four years, or after the analysis of 840,000 blocks. The currency-creating mining process is scheduled to ultimately create a grand total of 84 million Litecoins. If this holds true, there will be approximately four times as many Litecoins as Bitcoins out there, once both currencies hit their “mintage” caps.
Litecoin payments have their own unique digital signatures. Each transaction is identified by a 33-character alphanumeric string, all of which begin with the capital letter “L.” Transactions made with this digital currency cannot be reversed; this protocol is in place to remove the possibility of charge-backs. Do keep this in mind if you intend on buying Litecoins; your currency can always be exchanged later, of course, but the initial purchase cannot be “undone.”
In April of 2013, a distributed denial-of-service (DDoS) attack on Mt. Gox, one of the largest cryptocurrency exchanges in the world, delayed their plans to support their addition of Litecoins to their exchange. The addition of Litecoins to their exchange was then supposed to take place in July 2013, but other issues and financial setbacks at Mt. Gox kept that from happening. At the time of this writing (December 2013), Litecoin's status at Mt. Gox is still in limbo. Details on this situation can be found in this Ars Technical article.
Finally, we'd like to take a look at claims that the entire Litecoin currency is a “pump-and-dump” scheme. Here's what that means: Those who invest in the currency early on will reap the rewards as it gains in value, whereas those who invest later will be left with coins of little or no value. This entire scenario relies upon the ultimate failure of the digital currency. We'd like to point out two very important points here. First, this information was found on Bitcoin's Wiki —so a healthy grain of salt is recommended. Second, when applied in a general sense, this argument could be made against any type of cryptocurrency. While there's risk involved in any type of investment—and we heartily endorse being aware of those risks—we also believe claims of utter failure or wild success early in the game are a bit reckless, and can cloud the issue.
Discuss this topic and others on SliceFeeds, Coin Pursuit's Cryptocurrency network for miners, traders and enthusiasts. Register today and begin Slicing!
Not a member? Get started today! You can post comments here and join in the discussion over at out forums.
Login or Register