Bitcoin is the most well-known cryptocurrency, and it is not a surprise that it gets all the publicity. But although there are dozens of other digital coins, taking into account market capitalization, only a few can compete. And Litecoin (that was a fork of the Bitcoin Core client) is one of them.
Believe it or not, Litecoin has its advantages over Bitcoin. So what is Litecoin, and how exactly it differs? The Litecoin network went live in October 2011, and today it is the sixth-largest cryptocurrency after Bitcoin, Ether, Ripple, and a few others. You can distinguish it from Bitcoin mainly by an increased number of coins, hashing algorithms, and decreased block generation time.
Because of that, Litecoin can handle more transactions, and it has a barely noticeable transaction fee – only 1/1000 of a coin to process any transaction. Naturally, Litecoin also operates as an online payment system.
And now, it is time to ask what is Litecoin core. Litecoin Core is open-source software that enables the use of the Litecoin cryptocurrency. At the same time, it's a cryptocurrency wallet that supports Litecoin, and that is available on many platforms.
Mining for Litecoin
The same as Bitcoins, Litecoins are created by a process called mining, the process that consists of verifying Litecoin transactions. And unlike traditional currencies, its supply is fixed, so there will never be more than 84 million Litecoins.
The Litecoin network generates a block (a ledger entry of recent transactions) every 2.5 minutes. Then this block is verified by software and made visible to everyone else in the network. Once a miner verifies it, the next block enters the chain, which contains a record of every transaction ever made in the network.
The incentive for mining, of course, is a reward. Today it is equal to 12.5 Litecoins. Before October 2015, it was 50 Litecoins, while in August 2023, it will become only 6.25 coins. The number of coins awarded reduces at regular intervals after every 840,000 blocks, and this process is called halving.
So far, approximately 63 million Litecoins have been mined, which is about 75% of all possible supply.
What is Litecoin halving?
A Litecoin halving is a process of reducing the number of generated Litecoins as a reward per block. The purpose of a Litecoin halving is to fight inflation and hence preserve Litecoin's purchasing power. Because Litecoin's supply is fixed, it is a relatively scarce asset that is inherently deflationary. If its supply weren't capped, its purchasing power would erode over time, as it happens to any fiat currency.
The halving occurs every four years, with the last one taking place in 2019 when the mining reward reduced to 12.5 Litecoins per block. The next halving is expected to happen on August 6, 2023, when the reward will decrease to 6.25 coins.
In the end, any currency is only as valuable as the demand for it. If the Federal Reserve started circulating too many US dollars, its value would significantly drop. It is the same as with any product or service: when it is readily available, it becomes less valuable.
"What is the price of Litecoin?" - you might ask. Well, it is rising while you are reading this, if you are reading this in April 2020, of course.
