Litecoin is a fork of Bitcoin's codebase with four times faster block times and a four times larger supply. The project considers itself complementary to Bitcoin as a silver to Bitcoin's gold. It is often used as a pseduo-testnet for Bitcoin, adopting new protocol changes before they are deployed on Bitcoin.
Created in October 2011 by ex Google and Coinbase engineer, Charlie Lee, Litecoin is a fork of Bitcoin's source code that posits itself as "a silver to Bitcoin's gold." Technically, Litecoin is nearly identical to Bitcoin with key differences relating to block time, supply, hashing algorithm, and initial distribution. Litecoin aimed to keep the best aspects of Bitcoin while making some optimizations for its use as a medium of exchange.
Notably, Litecoin implements 2.5 second block times and an 84 million max supply. Charlie Lee's original thinking was that quicker block confirmations would increase transaction throughput and reduce the amount of time merchants would need for block confirmations. Additionally, he thought the 84 million max supply would prevent the coin from becoming too scarce and expensive. Litecoin uses Scrypt, a memory intensive hashing algorithm, in order to better allow individuals to mine Litecoin with commodity hardware (although ASICs have been developed for Litecoin mining over the past few years). Finally, Charlie Lee, recognizing the mistakes of the few altcoins launched prior to Litecoin, wanted Litecoin to be launched in a fair manner, electing to only do a 150 coin (3 block) premine to allow people to get in early.
Charlie Lee left Coinbase in June 2017 to head the Litecoin foundation, which stewards the Litecoin project, and finances Litecoin Core development.
Litecoin, the protocol, is a distributed, time-stamped ledger of unspent transaction output (UTXO) transfers stored in an append-only chain of 1MB data blocks. A network of mining and economic nodes maintains this blockchain by validating, propagating, and competing to include pending transactions (mempool) in new blocks. Economic nodes (aka "full nodes") receive transactions from other network participants, validate them against network consensus rules and double-spend vectors, and propagate the transactions to other full nodes that also validate and propagate. Valid transactions are sent to the network's mempool waiting for mining nodes to confirm them via inclusion in the next block.
Mining nodes work to empty the mempool usually in a highest-to-lowest fee order by picking transactions to include in the next block and racing against each other to generate a hash less than the target number set by Litecoin's difficulty adjustment algorithm. Litecoin uses a Proof-of-Work (PoW) consensus mechanism to establish the chain of blocks with the most accumulated "work" (a.k.a., energy spent on solved hashes) as the valid chain. Other network peers can cheaply verify the chain's work.
Litecoin developement is open to the open source community. Protocol development is governed by a proposal process whereby anyone in the open source Litecoin community can submit Litecoin Improvement Proposals ("LIPs"). After debate by the community, the Litecoin Core editors, whom are supported by the Litecoin foundation, accept or reject the proposals. Decisions from the process are written into the Litecoin specification, as well as the software that runs the network. Finally, protocol changes are "ratified" on-chain when the majority of the network adopts the upgrade and doesn't break consensus.
Although Litecoin Core and the Litecoin Foundation are separate, they work closely together on the Litecoin project with the Litecoin Foundation providing funding to Litecoin core developers.
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