What is Litecoin?

Released on

Jun 15, 2020

What is Litecoin? How does Litecoin work? How do you store it, and can you pay with it? We satisfy your curiosity about one of the world’s most popular cryptocurrencies.

Introduction to Litecoin

Litecoin is a cryptocurrency that makes peer-to-peer transfers instant and at almost no cost. It is largely inspired by Bitcoin and both cryptocurrencies have nearly identical technical aspects. According to Litecoin.org, Litecoin is meant to be a “medium of commerce complementary to Bitcoin”.

A popular analogy: If bitcoin was gold, litecoin would be silver.

Who created Litecoin?

Charlie Lee, a former employee of Google, created Litecoin in October 2011. He worked using the core code of Bitcoin, making his changes to the code so that it would create a new cryptocurrency that he felt would work best for mainstream, large-scale adoption.

Why was Litecoin created?

Litecoin was created to complement Bitcoin, solving some of the issues with Bitcoin, such as long transaction times and higher fees.

One of Charlie Lee’s main goals for Litecoin was to increase the number of transactions that could be confirmed. While Bitcoin takes an average of 10 minutes for block confirmation, Litecoin takes 2.5 minutes. This means that Litecoin is approximately four times faster than Bitcoin in processing transactions.

Litecoin also has lower fees than what is charged by credit card companies and banks for international transfers, for example: A person in Germany can send a payment to someone else in China in seconds. Both parties will receive non-editable proof of the transaction, stored on the blockchain.

Litecoin was created to enable quick and cheap payments, that take as long as sending an email.

Who owns Litecoin?

Nobody owns Litecoin. Litecoin is an open-source, international payment network that is fully decentralized without any central authorities or governments. Yet, at the same time, anybody can participate in owning and using litecoin.

How much litecoin (LTC) exists?

There will only be a maximum supply of 84,000,000 LTC. Unlike the euro or any other existing fiat currencies, it is not possible to ‘print out’ any additional litecoin beyond the 84 million supply limit.

How can I buy litecoin?

The most common way of buying litecoin is on exchanges, most of which operate online. Exchanges are platforms that allow you to trade an asset (such as euros) for litecoin, and vice versa.

When you buy litecoin, always make sure to check that you are buying from a trusted and verified exchange. You can verify their legitimacy by checking for official business licenses and looking up user app reviews.

How to store litecoin?

You would store litecoin in a crypto wallet, which is essentially an interface that lets you send, receive, and store amounts of litecoin.

There are various types of wallets, most commonly known as hot wallets and cold wallets. It is recommended that you store litecoin in both types of wallets, depending on the situation.

Store a convenient amount of litecoin in a hot wallet

For convenience and ease of use, you can store some litecoin in a hot wallet, so that you can access it easily when needed.

Note that your cryptocurrency balance on exchanges is also stored in hot wallets, and according to best practices should not be stored there long-term.

Store majority of your litecoin in a cold wallet

A cold wallet is the safest way to store your litecoin as you are the only person who has full control of the wallet. If you own a large amount of litecoin, we recommend that you store most of it in a cold wallet.

How can I pay with litecoin?

A crypto card is the simplest way to pay for goods and services using litecoin. This is because it typically uses an existing payment network (such as Visa or Mastercard) to process your payment, with the crypto card company acting as the middleman and helping you to convert your cryptocurrency to cash.

The TenX Visa Card, for example, makes it possible for you to spend litecoin at more than 54 million Visa merchant locations in over 200 countries.

You can also pay individuals by sending the amount of litecoin directly to their crypto wallet.

To do this, you will need to get their litecoin wallet address. As the payment is irreversible, make sure to check that:

  • You have gotten the complete and accurate litecoin wallet address
  • The wallet you are sending to supports litecoin

How secure is Litecoin?

Litecoin as a technology is extremely secure, as evidenced from the last 9 years of history.

In fact, most of the security issues are caused by third-party service providers such as centralized exchanges, wallet developers, or the user’s personal mismanagement of their private key.

Here are some precautions that you should take to keep litecoin safe:

  • Make sure that you are sending litecoin to the correct wallet address
  • Check that you are always on legitimate websites when keying in any login credentials
  • Do not store litecoin on an exchange long-term
  • Learn about the different litecoin wallets and how to use them
  • Do not share your private key with anyone, ever
  • Complete backup instructions by your cold wallet provider

Pros and Cons of Litecoin

Pros of Litecoin

  • You truly and completely own litecoin, no one can confiscate it from you or limit your access to it
  • Litecoin gives you freedom from banks and unnecessary fees
  • Litecoin is not subjected to inflation because there is a fixed maximum supply of 84 million litecoin
  • You do not need to trust a third-party when transacting using Litecoin
  • It is cheaper to do international transactions using litecoin than traditional bank transfers
  • Litecoin has no borders and can be seen as an international currency
  • Litecoin has quicker transaction speed than bitcoin

Cons of Litecoin

  • Because you own litecoin yourself, you need to take full responsibility for taking care of your own money
  • There are high risks and high volatility
  • It is not regulated in every country at the moment