Litecoin is a decentralized digital currency like Bitcoin. It uses the same encryption techniques to transfer and create funds and to confirm transactions.
Next to the very similar cryptocurrency Bitcoin, Litecoin has the second largest market capitalization. This makes it one of the smarter cryptocurrencies in which to invest in 2015. As of June 2015, Litecoin can be traded for $1.50 USD. At it’s highest, it was worth about $10 USD. Aside from a few periods of volatility, Litecoin has seen a rise in value since its inception in 2011.
How is Litecoin Different From Bitcoin?
Without getting too technical, there isn’t much of a difference between Litecoin and Bitcoin. Key differences include:
The rate at which transactions are confirmed: Bitcoin’s algorithm allows for one transaction to be added to the public ledger every 10 minutes, Litecoin has a faster rate of confirmation at one per 2.5 minutes. In theory, this helps avoid one of the only types of fraud that can happen with cryptocurrency: “double-spending”.
The number of coins that can ever be created: Litecoin’s algorithm will allow for a total of 84 million Litecoins to be created. This max capacity is 4 times greater than that of Bitcoin, mirroring the 4 times faster rate of transaction confirmation (confirming transactions creates new coins via a process known as “mining“).
Slight differences in cryptography algorithms: Both coins use a proof-of-work algorithm, but while Bitcoin uses the SHA256 hashing algorithm, Litecoin uses the scrypt hashing algorithm. In essence, this makes confirming Litecoin transactions more CPU-intensive on machines designed to mine Bitcoin.