Throughout the brief history of crypto, Bitcoin has been used as the base software for the creation of an ever-expanding library of variations, of which Litecoin is one of the most prominent.
Launched as a fork of Bitcoin, Litecoin was an attempt by its creator, Charlie Lee, to address some of the daunting issues of efficiency and scaling that Bitcoin has faced since its inception.
Because it is a fork of Bitcoin, Litecoin operates in the same manner as any Proof-of-Work coin (meaning it is cryptographically secured through a decentralized mining process). It is also a UTXO coin, meaning it uses the same “unspent transaction” distributed ledger structure for keeping accounts of the sending and receiving of Litecoin.
The main distinguishing characteristic of Litecoin, when compared to Bitcoin, is its much shorter block times of two and a half minutes, compared to Bitcoin’s ten minute block times. Litecoin also has a much larger total supply of 84 million, as opposed to Bitcoin’s limited supply of 21 million coins. This makes Litecoin relatively cheaper and faster to transact than Bitcoin. Litecoin is also similar to Bitcoin in that it is SegWit and Lightning Network compatible.
Recent developments with Litecoin have focused on experimenting with improving privacy and scaling via the MimbleWimble protocol. Charlie Lee expressed his excitement for the impending innovations:
“I think MimbleWimble technology is actually pretty cool. So when I first learned about it, seems like a good way to get both privacy and scaling and privacy that doesn’t make scaling hard or much worse which is very cool. So I’m yeah happy to see where where this technology goes”(source)
Charlie Lee ventured into blockchain following a career with Google, working there as a software on projects like Youtube Mobile and ChromeOS. Like many in the cryptocurrency field, Lee had a strong interest not only in computer sciences but also in economics. With this combination of interests, it was only natural for Lee to pursue the concept of creating a unique cryptocurrency that would address some of the limitations of Bitcoin such as its relatively slow block transaction time.
Charlie Lee’s first foray into creating a unique cryptocurrency – Fairbix – was pretty much a failure. Fairbix was created with significant problems in its software design that left it vulnerable to 51% attacks and was criticized for being pre-mined by a few select miners who then unfairly held a disproportionately large portion of the market cap for the coin.
Soon after this failure, Charlie Lee launched the much-improved Litecoin. Due to the open-source nature of Bitcoin, Lee was able to copy source code from the Bitcoin blockchain and then adjust it as necessary to make the improvements he wanted. He reduced the block transaction time by using a different algorithm called Scrypt and increased the maximum circulation of the coin to 84 million – four times the maximum supply of Bitcoin’s 21 million.
To this day, Litecoin serves as a silver to Bitcoin’s gold, being relatively cheaper, more plentiful, and comparatively faster and easier to use in everyday transactions. It remains one of the top cryptocurrencies in the market in terms of transaction usage, volume, and market cap. Litecoin continues to be a reliable, secure, and trusted currency with considerable hashing power, protecting it from security vulnerabilities such as 51% attacks.
In late 2017, Charlie Lee stepped back from directly holding large quantities of Litecoin due to what he said could be perceived as a “conflict of interest” (source). Remaining actively involved in the cryptocurrency industry, Lee has proven in recent months that he is just as dedicated as ever to the further development of Litecoin and cryptocurrency technology in general.