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Litecoin

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Litecoin
"Litecoin Accepted Here" logoLitecoin client (overview tab)
Unit
PluralLitecoin, litecoins
SymbolŁ‎
NicknameLTC
Denominations
Subunit
 0.001mLTC (millicoin)
 0.000001μLTC (microcoin)
 0.00000001Smallest unit
Demographics
Date of introduction7 October 2011
User(s)International
Issuance
Central bankNone. The Litecoin peer-to-peer network regulates and distributes through consensus in protocol.
Valuation
InflationLimited release (Geometric series, rate halves every 4 years reaching a final total of 84 million LTC)
Litecoin Logo

Litecoin (sign: Ł; abbrv: LTC) is a peer-to-peer cryptocurrency and open source software project released under the MIT/X11 license. Inspired by and technically nearly identical to Bitcoin (BTC), Litecoin creation and transfer is based on an open source encryption protocol and is not managed by any central authority. Litecoin is intended to improve upon Bitcoin and offers three key differences. Firstly, the Litecoin network processes a block every 2.5 minutes, rather than every 10 minutes, which allows for the faster confirmation of transactions. Secondly, the Litecoin network will produce 84 million litecoins which is four times as many as currency units as will be issued by the Bitcoin network. Thirdly, Litecoin uses scrypt in its proof-of-work algorithm: a sequential memory-hard function first conceived by Colin Percival, that makes mining easier to carry out on less-sophisticated computers than Bitcoin requires. Each litecoin is subdivided into 100,000,000 smaller units, defined by eight decimal places.

Transactions

A peer-to-peer network similar to Bitcoin's handles Litecoin's transactions, balances and issuance through Scrypt, the proof-of-work scheme (Litecoins are issued when a small enough hash value is found, at which point a block is created, the process of finding these hashes and creating blocks is called mining). The issuing rate forms a geometric series, and the rate halves every 4 years (every 840,000 blocks) reaching a final total of 84 million LTC. The memory intensive nature of Scrypt means that unlike with Bitcoin, Litecoin is better suited for GPU mining. FPGA and ASIC implementations are more expensive to create for Scrypt than for SHA-256 as used by Bitcoin.

Litecoins are currently traded for both fiat currencies and bitcoins, mostly on online exchanges. Reversible transactions (such as those with credit cards) are not normally used to buy litecoins as Litecoin transactions are irreversible, so there is the danger of chargebacks. As of 25 April 2013, 1 LTC is worth approximately 3.97 USD or 0.028 BTC. This makes Litecoin the second largest cryptocurrency by market cap with a cap of 35,000,000 USD.

History

Litecoin was released via an open-source client on Github on October 7th 2011. The current version of this client (as of 19th April 2013) is v0.6.3c.

Other clients have also been released.

More recently Litecoin has been covered in the news as a Bitcoin alternative.

Development

The Litecoin Developers have a new release 0.8.1 in the works which will help to modernize and enhance the network. This major upgrade will include all enhancements made in recent Bitcoin releases.

Criticism

This article's "criticism" or "controversy" section may compromise the article's neutrality. Please help rewrite or integrate negative information to other sections through discussion on the talk page. (April 2013)
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Redundancy

Some believe that Litecoin does not provide any features over what Bitcoin already provides. Because of this lack of innovation, some believe Litecoin is unlikely to match or surpass Bitcoin's value or user-base.

Vulnerability to mining monopoly

Similarly to Bitcoin, Litecoin can be attacked by an entity that can match or exceed the hash rate of the network, though such a 51% attack becomes more difficult to launch and maintain as the hash rate of the network grows. Some have argued that because Litecoin is designed to be inefficient on all common computers, a malicious entity need only produce a small batch of specialized hardware to overtake all the commodity mining systems combined. On the other hand, others have argued that the scrypt function simply makes it infeasible to create any specialised hardware, some have also argued that specialised hardware can only strengthen the network, which happened with Bitcoin and ASICs.

Pump and Dump Scheme

Some people claim that Litecoin is a pump and dump scheme, rewarding those who get in sooner at the expense of those who adopt it just before it fails.

It's important to note, generally these critics do not think that blockchain currencies are pump and dump schemes per se; but rather that the existing network effect of Bitcoin, combined with the lack of meaningful differentiation between Litecoin and Bitcoin as well as Litecoin's adoption of a "designed to fail" proof-of-work algorithm; that Litecoin is bound to fail in the end. Bitcoin does not suffer from these flaws and therefore does not fall under the pump and dump scheme, according to this argument.

See Also

References

  1. ^ "Litecoin.org". Litecoin.org, April 2013. Litecoin.org. Retrieved 24 April 2013.
  2. (April 13 2013). Mining digital gold. The Economist. The Economist Newspaper. Retrieved April 27 2013.
  3. Satoshi, Nakamoto. "Bitcoin: A Peer-to-Peer Electronic Cash System" (PDF). Bitcoin.org. Retrieved 24 April 2013. {{cite web}}: Cite has empty unknown parameter: |1= (help)
  4. Simonite, Tom. "Bitcoin Isn't the Only Cryptocurrency in Town". Retrieved 24 April 2013. {{cite web}}: Cite has empty unknown parameter: |1= (help)
  5. Powers, Shawn. "Cryptocurrency: Your Total Cost Is 01001010010" (PDF). Linux Journal, March 2012. Linux Journal. p. 29. Retrieved 21 October 2012.
  6. BATR. "Bitcoins Risk Reward". Retrieved 24 April 2013. {{cite web}}: Cite has empty unknown parameter: |1= (help)
  7. Percival, Colin. "Stronger Key Derivation Via Sequential Memory-Hard Functions" (PDF). Retrieved 24 April 2013. {{cite web}}: Cite has empty unknown parameter: |1= (help)
  8. Dan Goodin. "Potent DDoS attacks on Mt. Gox delay rollout of new virtual currency". Ars Technica. Retrieved 27 April 2013.
  9. (21 October 2012). Litecoin Miner Status. FishGuy876's Blog. Retrieved April 27 2013.
  10. (21 October 2012). Using scrypt for user authentication. Retrieved April 27 2013.
  11. Coventry, Alex. "Nooshare" (PDF). MIT. Retrieved 21 October 2012. These hash functions can be tuned to require rapid access a very large memory space, making them particularly hard to optimize to specialized massively parallel hardware.
  12. (21 October 2012). Comparison of online payment methods. Blockchain. Retrieved April 27 2013.
  13. ^ "LTC/USD". BTC-E. Retrieved 25 April 2013.
  14. "BTC/LTC". Vircurex. Retrieved 15 April 2013.
  15. (15 April 2013). Bitcoin Isn't the Only Cryptocurrency in Town. MIT Technology Review.
  16. "Search Results: Litecoin". Abe Search. Retrieved 20 October 2012.
  17. litecoin-project: litecoinn: Download Packages. 21st October 2012.
  18. electrum-client-litecoin. 21st October 2012.
  19. (April 13 2013). Mining digital gold. The Economist.

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