Litecoin is the second largest cryptocurrency based on its market capitalization just behind Bitcoin. Released on October 7, 2011 by former Google employee Charles Lee, Litecoin is nearly identical to Bitcoin as far as the technical aspects are concerned, which is not unusual since it was inspired by Bitcoin in the first place. Its creation and transfer is also based on an open source protocol, and just like bitcoins, is also beyond the reach of any central authority.
Though it only received lukewarm reception during the onset of its launch, litecoins achieved further mainstream attention in November 2013 as media coverage became prolific with such media agencies as the Wall Street Journal, CNBC, and The New York Times calling it an alternative to Bitcoin. It was also during this period that Litecoin’s value experienced steep growth, including a 100% increase within 24 hours. By the end of 2013, Litecoin has a market cap of $1 billion.
Since being noticed for its promising features, Litecoin has been considered the silver to Bitcoin’s gold. Many believe that it even has the potential to serve as Bitcoin’s successor. However, it uses a different proof of work algorithm. While Bitcoin uses the SHA-256 hashing algorithm, Litecoin uses the script algorithm, which also includes the SHA-256 algorithm, but with more serialized calculations.
Furthermore, Litecoin also differs in its transaction speed, in which it can confirm transactions much faster than bitcoins. This is because Litecoin can handle a higher volume of transactions courtesy of its speedier block generation. However, faster block generation poses a downside– an increased blockchain size, as well as an increase in the number of orphaned blocks. Nonetheless, litecoins will generate 84 million coins, four times as many of the total coins that will be produced by the Bitcoin network.