What Is Litecoin?

Litecoin is one of the most popular digital currencies at this point in time, and was created by Charles Lee, a former employee of Google. It has taken the idea behind Bitcoin, but changed a few key component, such as the block time, which is 2.5 minutes versus 10 minutes for Bitcoin.

 The mining algorithm is also different than Bitcoin, as Litecoin was the first coin to use scrypt, which is a mining algorithm that requires more memory than SHA256, thus making the creation of ASICs (Application-Specific Integrated Circuit) more difficult.

While these differences may seem inconsequential to an individual that is not involved in the digital currency community, they are actually very important. Litecoin was developed to be an alternative to Bitcoin, and expected to be the silver to Bitcoin’s gold. Thus far, this seems quite accurate. Litecoin has a cap on total coins that is around 4 times Bitcoin, and has occupied a price point that is similar to silver vs gold for the recent past. At the current moment 1 Litecoin is worth around 0.0257 Bitcoin, or around 2.5% the worth of a Bitcoin. This is a ratio of 40:1, which fits perfectly with the general range of 35-50:1 for the gold:silver ratio.

Update:  Since the time this article was written, the LTC to BTC ratio has fallen significantly out of sync.  Beyond that, ASICs for scrypt are now available, and are quickly racing toward state-of-the-art.