Their solution was to use Scrypt. This rendered existing ASIC mining rigs useless and theoretically allowed the blockchain to be more democratic. Although there are currently ASIC rigs available for scrypt and AMD graphics cards are capable of mining the scrypt algorithm.
Category: 1. Basic
Litecoin’s Proof-of-Work Consensus
Where Litecoin differs is in how it calculates the proof-of-work function. Bitcoin uses SHA-256. The problem is that miners can take advantage of ASICs. An ASIC is a specialized piece of hardware designed for a specific task, in this case, mining cryptocurrency. The creators of Litecoin were concerned that this could lead to ASIC using miner’s dominating the network.
How is Litecoin Mined?
The way that Litecoin is made is not all that different from Bitcoin. Whereas banks and governments are centralized governments that can physically print currency, Litecoin is a decentralized currency that is created digitally by its community. The technology behind Litecoin is called a blockchain. This acts as a general ledger, recording every transaction ever made. These transactions are processed by “miners” who create new blocks to add to the chain. These miners are then rewarded with some Litecoin. This reward incentivizes users to process new blocks and regulates the creation of new tokens. This process is called proof of work where users are rewarded for using their own computing power to create new blocks.
Why Was Litecoin Created?
Litecoin was also created with an aim to reduce the centralization of mining. The cryptocurrency was designed to use a code called Scrypt. This was designed to be more CPU-friendly to encourage more users to mine and prevent ASIC miners from dominating the network. The hope is that Scrypt can make mining more dynamic and prevent wealthy miners from controlling the direction of the currency.
What is Litecoin?
Litecoin (LTC) is a decentralized, open-source payment network, or cryptocurrency. It allows you to receive, store, and send money to other people. It’s one of the three largest cryptocurrencies, together with Bitcoin (BTC) and Ethereum (ETC). Litecoin was designed to improve on many of the perceived failings of Bitcoin and to be the silver to Bitcoin’s gold. To this end Litecoin has a cap of 84 million tokens, this is in comparison to the 21 million capitalization used by Bitcoin. It also has a block generation time of 2.5 minutes compared to Bitcoin’s 10. The aim was to make Litecoin easier to obtain and trade than Bitcoin.