Litecoin: A Crash Course In Its History and Viability

To best understand Litecoin and other peer to peer cryptocurrencies, we are best served going back to where it all began; The internet. Small, but powerful, designed to relay data faster than a telephone, as clear as day. With the dawn of the 90s came hyper-commercialization; media outlet broadcasters like Comcast, and Time Warner, united isolated networks and helped bring about a digital revolution.

As time continued, the internet grew. Within 10 years, it had become the fastest and most prolific source of information in the world, integrating itself into every aspect of one’s life. With integration, however, came those who sought to push the limits of personal privacy and security on the internet.

In 1997, a hacking convention and event gala, known as DEF_CON, displayed an exhibition by which a hacker named Khan C. Smith used network request protocols and spammed them thousands of times per second, disrupting Internet access to the Las Vegas Strip for over an hour.

This in turn brought about the idea, and eventually, the use of proof-of-work systems, designed to mitigate DDOS attackers by needing some work from the service requester; processing time by a computer. An early proof-of-work system was using Hashcash- a basis used today for Bitcoin’s algorithm processing, which uses SHA-256 as opposed to SHA-1.

In 1998, Wei Dai published a description of “b-money”, an anonymous, distributed electronic cash system. BitGold arrived shortly after. Like bitcoin and other cryptocurrencies that would follow it, BitGold was an electronic currency system which required users to complete a proof of work function. A currency system based on a reusable proof of work was later created by Hal Finney.

Charlie Lee, a former employee at Google and MIT Graduate, first noticed Bitcoin through a news article about the infamous dark web market, SilkRoad. He was not all that interested in what the black market exchange had to offer, but rather fascinated about the technology behind this new payment system they used to perform the service.

A payment system with no bank or other central authority. No one person or entity owned the system, but everyone could take part in running it and using it. This was Bitcoin; the internet of money.

Charlie Lee thought that Bitcoin could use a handful of alternatives, but found no good ones with a fair launch. All who came after Bitcoin, seemed to hoard most of their coins themselves, before launching/dumping their cryptocurrency on the market. Most seemed to be happy with making money in the short term, not caring if their coin would last or not. And most didn´t last. In many ways, this emerging alternative market of greed resembled the upscaled version we have come to know later as the market of ICOs (Initial Coin Offerings).

Charlie´s solution became to create Litecoin, a different version of Bitcoin with a 100% fair launch. In October 2011, when Litecoin was released, Charlie held exactly zero coins. He chose to acquire the coins by his own means, instead of giving himself a head start. Not only did Litecoin have more of a fair launch than all the altcoins, it even had more of a fair launch than Bitcoin itself, as Satoshi held one million Bitcoin during its launch.

Charlies strategy was to surpass the other altcoins by branding and positioning his coin as close to Bitcoin as possible. Bitcoin was considered (and still is) a better Gold, and so Charlies strategy was for his coin to be considered a better Silver or the “Silver to Bitcoins Gold” if you will.

Charlies creation was designed to both support and make up for bitcoin’s shortcomings as a cryptocurrency. It utilizes scrypt as its hash function instead of SHA-256, as well as a modified GUI.

Litecoin is one of the top cryptocurrencies in use, behind Ethereum and Bitcoin, the big-fish in Cryptocurrency. Litecoin shares many of the same qualities as bitcoin, however, there are significant unique traits that sets this unique coin apart from her contemporaries. Its final total comes in at 84 million available coins that can be tapped until it is gone from its digital existence, making the price for one increase exponentially over time. One Litecoin today could be worth a fortune tomorrow, thanks in part to its deflationary behavior, which in normal economic terms, would spell doom for most currencies. But Litecoin is nothing like most currencies.

Litecoin shares a few unique traits, such as the adoption of Segregated Witness, and the Lightning Network, a means of processing Peer-to-peer transactions faster by opening a payment channel via committing a transaction within a blockchain, followed by making any number of Lightning transactions that update funds, followed by closing the payment channel.

This effectively allows a greater number of transactions(millions to eventually billions per second) processed by the network within a short amount of time. At the time of Launch for Litecoins Lightning Network (September. 2017), Visa and Mastercard handled thousands to the tens of thousands of transactions per second.

Litecoin costs next to nothing for a transaction, and using the Lightning Network, is capable of processing payments four times faster than Bitcoin. Rewards for mining a new block is halved every 840,000 blocks, which means miners can expect a consistent reward for a longer period of time.

Litecoin is a welcome price for those simply put off by the blue-blood prices of bitcoin and Ethereum on the market. Since there are more litecoins in circulation, and thus, its value is less than bitcoin, its affordability can draw new investors to the market, potentially maximizing profits for everyone involved.

For a long time, Litecoin was considered a testnet for Bitcoin, as most upgrades where tested out on Litecoin before the developers working on Bitcoin decided to implement them. In 2017, the price of Litecoin rose with over 1800%, giving it a market cap value well over 4 billion dollars.

As the value and usecase for Litecoin continues to develop, it will not only benefit Bitcoin but also take great lessons from Bitcoins challenges at its scale in order to prevent that Litecoin goes through the same when it reaches the same popularity.

In an investment sense, the marketability of Litecoin seems good, as it can offer a stepping stone to its more lucrative counterparts; but its stability is what makes it so practical as a currency. Sure, one could dump their money into bitcoin and watch the price fluctuate like a jackhammer on a trampoline, but if one is looking for a long-term investment in altcoins, Litecoin has proven to have staying power, and if there is anything in a market that keeps investors and finds new ones, it’s the ability to ride the highs and lows of the market’s ever-changing environment- a port in the storm.

A writer.

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