If you’ve ever asked yourself, “What is Litecoin?”, then you and I have at least one thing in common.
To give you the most succinct answer possible, I’ll say this:
Litecoin is a cryptocurrency created by Charlie Lee that is a direct copy of Bitcoin, with one major alteration. It is four times faster, and therefore is more viable as a payment system for everyday purchases. Many see Litecoin as a testable version of Bitcoin that can be used to quickly implement potential changes to Bitcoin and determine their viability.
With that much under your belt, you’ve pretty much got the gist of things. However, if you want a true understanding of Litecoin, you probably still have some questions. I’ve attempted to answer as many as I could think of below in order to give you a comprehensive overview of the “faster Bitcoin.”
-Litecoin was started by Charlie Lee
-Litecoin was released in 2011
-Litecoin has a supply four times that of Bitcoin
-Litecoin is meant to be sound money, and a test net for Bitcoin
-Litecoin creator, Charlie Lee, sold all of his Litecoin in 2017
-The Flappening was when the market value of Litecoin eclipsed that of Bitcoin Cash
A Brief History of Litecoin
Litecoin was created by Charlie Lee in 2011. The intent was to create a viable alternative to a lot of the other cryptocurrencies that were on the market at that time. According to Lee, other than Bitcoin, none of the other cryptocurrencies in those early days were actually useful, or even safe.
With that in mind, Lee set out to build an alternative to Bitcoin that maintained the properties of immutability, and censorship-resistance. The way that he determined to do that was through building a faster version of the core Bitcoin protocol.
This vision was manifested as Litecoin, which is four times faster than Bitcoin, and also has significantly lower fees than the lumbering giant.
Lee, who worked at Google when he created the Litecoin cryptocurrency, says that he was just having fun playing with the Bitcoin protocol when he realized that a Bitcoin-based currency that was four times faster actually had utility. He then released Litecoin to the world.
In it’s life, Litecoin has enjoyed enormous growth and success. The chart below shows the growth of USD sent on the Litecoin network per day from around $3,000 per day in 2012, to around $300,000,000 per day in the second half of 2018.
If you have ever wondered if anyone is using cryptocurrency, this chart is a good visual representation of the answer. The answer is yes. And the usage is growing all the time.
Now that you know why Litecoin exists, let’s look at a few of the distinctions that separate Bitcoin and Litecoin.
Unlike many other cryptocurrency who were meant to replace Bitcoin, the purpose of Litecoin was always to work in relationship to the market leader. This is because the creator of Litecoin believes that Bitcoin will always be around in first place.
In the view of Charlie Lee, Bitcoin is a store of value that people will use primarily for larger purchases, and Litecoin is a lower-fee version of nearly the same protocol that can be used for daily purchases. In his vision, you will one day use Litecoin to buy everything from coffee to plane tickets, adn you will use your Bitcoin to buy your house, and car.
Litecoin is meant to function symbiotically with Bitcoin in a future world where cryptocurrencies dominate the global economy.
Here’s a few bullet points to succinctly state the ways in which Bitcoin and Litecoin differ.
- Litecoin is faster than Bitcoin.
- Litecoin tests new technology faster than bitcoin.
- Litecoin has a total capped supply of 84 million. Bitcoin’s supply is 21 million.
- Litecoin has a publicly known leader named Charlie Lee, while Bitcoin does not.
- Litecoin is worth significantly less than Bitcoin.
- Litecoin is considered the “silver” to Bitcoin’s “gold.
Litecoin vs. Ethereum (What’s the difference?)
The differences between Litecoin and Ethereum are fewer in number but greater in scope. This is because Ethereum is purposefully not meant to be anything like Litecoin.
Vitalik Buterin, the creator of Ethereum, set out to create a more programable blockchain platform to function as a sort of future-internet. The possibilities with Ethereum are meant to be nearly endless.
Litecoin was designed with an entirely-different consideration in mind. Charlie Lee wanted to create useable, immutable, affordable, sound money.
So, even though there are only a few differences listed here, please baear in mind the vastness of the implications of these points.
- Litecoin is a currency. Ethereum is a platform.
- Litecoin has a limited supply of 84 million. Ethereum is uncapped.
- Ethereum is designed to execute smart contracts. Litecoin is designed primarily to execute monetary transactions.
The Value of Litecoin
The value of Litecoin comes from two primary sources; it’s usefulness as a test-net for Bitcoin, and as a sound form of money.
When I first learned about cryptocurrency, I had no idea what that meant. Since this is a beginner’s guide, I’ll attempt to explain.
– The Test Net for Bitcoin
You will hear this referenced a lot by the believers of Litecoin.
It is a reference to the utility of having a way to test upgrades to the Bitcoin protocol without having to put it in danger.
For example, when Bitcoin was considering adopting Segregated Witness (segwit), Litecoin adopted it first, proved that it was useful and reliable, and thus kept Bitcoin from being endangered by faulty code.
Without a Bitcoin twin like Litecoin, this would not have been possible.
– Sound Money
Bitcoin is obviously sound money. The whole purpose of having a public ledger stored on a blockchain that is validated in a decentralized way by individual miners is to have sound money.
There is only one issue with Bitcoin, and that is scalability. Bitcoin simply isn’t fast, and it is costly to execute a transaction on.
This was the opportunity that Charlie Lee understood in 2011.
Litecoin is four times faster than Bitcoin, and also way cheaper. This makes it a viable option for payments when one is buying things like coffee, or a book, or the latest subscription payment to Netflix.
The fees for executing these kinds of small payments simply aren’t worth it on the Bitcoin blockchain. But they’re affordable with Litecoin.
Litecoin’s immutability, censorship resistance, and the added benefit of low fees make it sound money for a future in which cryptocurrencies thrive.
Who is Charlie Lee?
Charlie Lee is the ex-Google employee that went on to become the founder of Litecoin.
In 2011, Lee released Litecoin to the world while working as an engineer for Google. After releasing Litecoin, he went on to work for Coinbase as the Director of Engineering.
However, before releasing Litecoin in 2011, Lee released another cryptocurrency that few even know existed. It was called Fairbix and was a clone of the Tenebrix cryptocurrency that was around at the time.
This cryptocurrency project failed, but less than a month later, Lee announced the launch of Litecoin. Litecoin quickly gained traction in the cryptocurrency community, and later grew to be one of the largest coins by market cap.
In June of 2017, Lee left his position at Coinbase to focus on Litecoin full time. This decision was controversial, with many thinking that leaving a well-paid position would leave Lee vulnerable to not being able to work on Litecoin. He actually received a $12,000 donation at this time to help him pay his bills while he dedicated his time to his project.
Later that same year, Lee would come under even more criticism for selling his holdings of Litecoin near the all-time-high for the crypto.
Thousands called him a sell-out, and the calims of fraud were nearly constant. However, Lee maintains that this move was to provide him a financial platform from which to dedicate himself fully to realizing the vision of Litecoin.
Lee has continued to work full-time on Litecoin, and the future of the coin remains optimistic according to him.
What is the Litecoin Foundation?
The Litecoin Foundation is a non-profit dedicated to advancing Litecoin “for the good of society by developing and promoting state-of-the-art blockchain technologies.”
Charlie Lee is the head of this organization, and through it he suuports the Litecoin Core development team. While they are separate organizations, the two work closely together, guiding the direction for Litecoin development and adoption.
What is Litecoin Cash?
Largely considered to be a scam, Litecoin Cash is a hard-fork of Ethereum. It has been publicly denounced by Charlie Lee, the creator of Litecoin, and has been mostly rejected by the Litecoin community as well.
If you are interested in learning more about this coin, we suggest you take a look at their website.
Koin Keys does not have any plans of doing an in-depth analysis of this coin in the foreseeable future.
What was the Flappening?
Simply put, the Flappening was the event that marked the overtaking of Bitcoin Cash by Litecoin. This was measured by Total Market Cap.
Charlie Lee famously tweeted that this would occur on February 25th, 2018.
Little did we all know, he would be found to be correct on December 14th, 2018. That day, Lee tweeted “It’s Flappening” when Litecoin finally surpassed Bitcoin Cash in total market value.
*As of time of writing (December 19, 2018) Bitcoin Cash has again overtaken Litecoin in Total Market Capitalization. Which coin is able to gain and hold the higher position remains to be seen.
Litecoin has always been one of my favorite coins. I was particularly drawn to it because of Charlie Lee, its founder. He seems to be an earnest person that is intent on delivering on his vision.
Once I began to really look into Litecoin, I became even more enamored. The possibility of having a payments coin seemed obvious to me, as Bitcoin will likely remain a store of value. In this model, Litecoin would be your checking account, while Bitcoin acts as your savings account.
For this reason, I give Litecoin two big thumbs up. No one in the cryptocurrency space has any ability to see what the future holds, and it is entirely possible that future upgrades to the Bitcoin protocol may render Litecoin useless.
But from where things sit currently, it seems like a real contender in the cryptocurrency-rich global economy of the future.
(No information, product, or service produced or sold by Koin Keys is meant to be construed as financial advice. It is possible that the author of this, and any other article on Koin Keys, owns the cryptocurrency they are writing about, or discussing. Neither the owners of Koin Keys, the employees of Koin Keys, nor the contractors of Koin Keys are financial advisors. Therefore, neither Koin Keys, nor the owners thereof may be held liable for any financial or personal decisions made by our readers. Cryptocurrencies are volatile assets, and caution should be exercised in the decision to make any purchases.)