Litecoin has been hitting the news a fair bit just recently. It’s hard currency value is in the ascendency. As I write this, one litecoin is worth $60-93. The value has sky-rocketed by around 1,400% this year! But what exactly is litecoin? What are it’s origins and what is it used for?

Most folk I’m sure, won’t have heard of litecoin. I must confess to being one of them. I had vaguely heard of bitcoin and thought maybe it was some distant relative. Turns out that litecoin is the ‘little brother’ of bitcoin. Bitcoin was the first established cryptocurrency (meaning ‘secret’ currency) back in 2009. This cryptocurrency is made up of a secure encryption and a peer-to-peer networking system – a kind of digital asset. It works like a digital key with which you can prove to anyone on the network that a certain amount of bitcoin is yours. If you decide to spend/sell your bitcoin, you tell the entire network that you have transferred ownership. Anyone managing to get hold of your digital ‘key’ would have total irreversible control of your finances. The history of all the transactions made, is a lasting record of who owns which bitcoin. This record is called the blockchain.

Litecoin is a fork of bitcoin, developed by former Google engineer, Charlie Lee in 2011. It is not the only off-shoot. Others include; filecoin, dogecoin, ethereum and altcoin. Litecoin has far more users than any other cryptocurrency, with the exception of bitcoin. It is similar to it’s ‘older brother’ in the use of peer-to-peer networking. Neither is regulated by any central authority. Litecoin differs from bitcoin in three main ways. It uses a different encryption algorithm(scrypt), it has zero payment costs and has transaction times up to four times quicker. This last point is crucial to litecoin’s upsurge. Bitcoin can be problematic if you wish to make multiple transactions. It is not uncommon to have to wait several days for confirmation of a successful transaction.

The fluidity of litecoin means that it is more often used for smaller purchases. In this respect it is the ‘silver coin’ to bitcoin’s ‘gold coin’. Unlike physical currency, there is an agreed finite amount of litecoin – 84 million. This is exactly four times the amount for bitcoin. The set limit means that there cannot be any inflationary stimulus as can happen with hard currency, where banks are able to print money as the government sees fit.

Unfortunately, there are a few major hurdles to overcome if litecoin is ever to make it big in the mainstream. The first is the lack of retailers, websites and businesses who accept litecoin. Once you have litecoin, holding on to it whether markets rise or fall is not far off your only option at this time. Getting hold of litecoin in the first place is not the easiest process. Aside from those in the know and the tech-minded, most people wouldn’t know where or how to start. There are a few online sellers. But for some you have to purchase bitcoin first, before you can exchange them for litecoin. Oh, and you’ll need a digital wallet. Rather a hassle, in a world of time constraints and convenience.

It remains to be seen if the value of litecoin will continue to rise. If it does, will it just be an investor’s short-term dream? Or will litecoin develop and expand to become a genuine universal currency.

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