Introduction to Litecoin (LTC)
Litecoin is a decentralised cryptocurrency initially introduced as a more efficient alternative to Bitcoin, with the purpose of offering faster transaction turnaround times. This decentralised cryptocurrency was launched by Charlie Lee on October 13, 2011, as a hard fork developed from the Bitcoin’s blockchain. This means Litecoin uses Bitcoin’s open-source code, but with some major alterations, to limit the centralisation of cryptocurrency farming.
Defining Litecoins’s Differences from Bitcoin
Litecoin, considered to be a “lite version of Bitcoin”, includes some essential differences. One of the key differences is the verification algorithm, which speeds up transaction time and alters the total mineable coin cap, as well as the halving interval for block rewards.
The notable distinction is Litecoin was the first cryptocurrency to adopt the scrypt algorithm, rather than Bitcoin’s SHA-256 hash function. This scrypt algorithm is thought to create a more efficient cryptocurrency, enabling higher transaction processing and relying significantly on empty disc space.
Unravelling the Mechanism of Crypto Transactions
To understand the process of Litecoin’s transactions, it’s important to understand the workings of cryptocurrency transactions. On the blockchain network, public-key cryptography is used to ensure the reliability of transfers. A chain of blocks, or sections of information, such as transaction amounts, timestamps, and wallet information, makes up the blockchain. Transactions go through verification via Proof of Work Consensus Mechanism before further management.
Delving into the Proof of Work Consensus Mechanism
The Proof of Work (PoW) consensus mechanism is a blockchain protocol that initially rose to popularity through Bitcoin. The PoW algorithm derives its name from the computational workload, with the nodes producing a new block approximately every 10 minutes. Despite the continuous advancements in consensus mechanisms like Proof of Stake (PoS), Proof of Capacity (PoC), and the Ripple Protocol Consensus Algorithm (RPCA), PoW proves to be in constant use, especially in mining of coins.
Understanding Hash Functions in PoW
The essential feature in PoW is the hash function, a mathematical function that converts an input into a compact, fixed-sized output. The most popular hash functions include scrypt, SHA-256, IOTA’s Curl, and Ethereum’s Keccak-256. These hash functions play a vital role in keeping the blockchain ledger secure and reliable.
The difference between scrypt and SHA-256, the primary hash functions, lies in their complexity. Whereas SHA-256 is more complicated, scrypt proves to be quicker and easier, making it advantageous for small transactions.
The Addition of the Lightning Network
The use of the Lightning Network, an upgrade on the blockchain technology, in Litecoin enhances transaction speed, even during high network traffic. This additional set of rules built on the primary network handles smaller transactions to reduce overload on the blockchain. This Lightning Network was first proposed for Bitcoin, but has also been successfully utilised in Litecoin, with the first transaction made on May 10, 2017.
Processing Times of Litecoin Transactions
Depending on the network congestion, a Litecoin transaction, without the Lightning Network, can be completed in about 2 minutes. During network peak times, this transaction duration can extend up to about 8 minutes. If transactions are taking longer than expected, tools like Block Explorer, Blockchain Explorer, or BTC.com can be used to check the network load.
While Litecoin might not be the fastest cryptocurrency available today, it has paved the way for innovations in cryptocurrency technology. By offering a well-proven cryptocurrency and a store of value, Litecoin remains an important player in the crypto market.
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