Litecoin was created by Charlie Lee, an MIT graduate and former software engineer at Google and Coinbase, in October 2011 as a modified version of bitcoin. Like bitcoin, it is a decentralised blockchain-based cryptocurrency, with Litecoin being generated by mining as a reward for confirming blocks, which add transactions to the blockchain.
He intended it to complement bitcoin just as silver complements gold, seeing the primary purpose of bitcoin as a digital store of value and litecoin as suitable for commercial transactions. So that everyday use transactions will be confirmed quicker than with bitcoin, the block completion time is set to 2.5 minutes as opposed to bitcoin’s 10 minutes. The final total number of litecoins is 84 million, 4 times more than bitcoin, and the hashing algorithm is scrypt, a memory intensive version of bitcoin’s SHA256. This algorithm was chosen in an attempt to make it more difficult to create ASICs for the algorithm and thus to try and prevent the creation of centralized mining pools, though such ASICs have subsequently become available.
Lee’s faster-and-lighter concept is gaining traction with a growing number of merchants, websites, and cryptocurrency ATMs, who appreciate its advantages of rapid transaction confirmation and low fees. (International Business Times, Aug. 2017). Like many other cryptocurrencies, the value of Litecoin also appreciated greatly in 2017, by a multiple of 50.
One of Lee’s intentions for Litecoin is as a test platform for technologies before they are rolled out for Bitcoin. An example of this is Segwit, a method for improving the transaction throughput on the blockchain, as well as a necessary precondition to the Lightning network. Litecoin successfully implemented the Segwit technology in May 2017. Segwit was later adopted on the Bitcoin network in August 2017, partly due to the similarity of Litecoin to Bitcoin.
Charlie Lee’s focus continues to remain on the courting of a mix of merchants and regular users, encouraging them to employ a more daily use of Litecoin due to its fast and inexpensive properties. But other innovations are on the horizon, including new tech features such as MAST, a smart contract initiative, and a collaboration with Lightning Labs allowing the use of the Lightning Network. Another goal is to enable users to perform direct cryptocurrency-to- cryptocurrency transactions on decentralized exchanges between different products without the need for any slowdown from using a centralized exchange.