What is Litecoin?


Quick Answer

Litecoin is a cryptocurrency invented by former Google engineer Charles Lee in 2011, who sought to improve upon Bitcoin. Litecoin is not regulated or managed by any central entity. As of 2014, LItecoin has the second-largest market cap of any cryptocurrency in the world.

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Full Answer

Despite many similarities, Litecoin and Bitcoin have differences that set them apart from one another. One of these differences is that Litecoin takes only one-quarter of the time that Bitcoin does to generate a block. This shorter block generation time allows Litecoin transactions to be faster than Bitcoin transactions, resulting in the potential for a higher volume of Litecoins to be traded on a daily basis.

Litecoin's faster transaction speeds are due to a different algorithm than that which Bitcoin uses. Litecoin's algorithm is called scrypt. Scrypt includes components of SHA-256, the algorithm that is used to generate blocks of Bitcoin, but applies more serialised calculations, which makes it less valuable to mine Litecoin with computers that possess high amounts of raw processing power. Instead, scrypt relies more on RAM to be effective, making the production of specialized machines to mine Litecoin more difficult, resulting in a delay for those machines to enter the market.

Litecoin is frequently used to trade for other currencies, and transactions are irreversible.

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