As one of the most popular cryptocurrencies in the market, Litecoin has been making waves since its inception in 2011. Its founder, Charlie Lee, created Litecoin with the aim of addressing some of the limitations of Bitcoin, particularly in terms of transaction speed and scalability. In this article, we’ll delve into the history of Litecoin, its underlying technology, and the coin’s supply curve. We’ll also take a closer look at the technical analysis of Litecoin’s performance and what the future might hold for this digital currency.
Based on the current market analysis, it appears that the price of the asset in question is in an uptrend. There is a possibility that the price may revisit the resistance zone between $100-$105. The momentum indicator, MACD, shows a bullish trend as the MACD Histogram is rising. Additionally, the Relative Strength Index (RSI) is above 50, indicating that the asset is currently in a bullish phase. Based on this trade setup, it may be a good opportunity for traders to consider opening a long position on the asset. It is important to note that trading carries risks and traders should always use proper risk management techniques.
Trend: Uptrend across all time horizons (Short- Medium- and Long-Term).
Momentum is Bullish but inflecting. MACD Line is above MACD Signal Line and RSI is above 55 but momentum may have peaked since MACD Histogram bars are declining, which suggests that momentum is weakening.
Support and Resistance: Nearest Support Zone is $80 (previous resistance), then $70. The nearest Resistance Zone is $90, which it broke, then $100.
Overview
Litecoin is a cryptocurrency that was created in 2011 as a fork of the Bitcoin codebase. The main difference between Litecoin and Bitcoin is that Litecoin has four times faster block times and a four times larger supply. The project aims to complement Bitcoin by serving as a more efficient and faster alternative for everyday transactions, while Bitcoin remains a store of value for long-term purposes.
Litecoin is often considered a pseudo-testnet for Bitcoin, as it is known for adopting new protocol changes before they are deployed on Bitcoin. This allows developers to test and refine new features on a smaller network before they are implemented on the larger and more widely used Bitcoin network.
Despite its similarities with Bitcoin, Litecoin has its own unique features and benefits. It has gained popularity among cryptocurrency traders and investors due to its fast transaction times and low transaction fees. Litecoin also has a strong and active development community that continues to work on improving the network and adding new features.
Overall, Litecoin serves as an efficient and reliable option for those looking to make quick and inexpensive transactions with cryptocurrency, while also contributing to the ongoing development and innovation of the broader cryptocurrency ecosystem.
History
Litecoin has an interesting history that started back in October 2011 when Charlie Lee, a former Google and Coinbase engineer, created a fork of Bitcoin’s source code. Charlie’s vision for Litecoin was to create a complementary cryptocurrency to Bitcoin that would function as “silver to Bitcoin’s gold.” Litecoin was built with the same underlying technology as Bitcoin but with a few key differences to make it optimized for use as a medium of exchange.
One major difference is the block time, which is 2.5 minutes for Litecoin, compared to 10 minutes for Bitcoin. Charlie believed that quicker block confirmations would increase transaction throughput and reduce the time merchants would need to wait for confirmations. Another difference is the maximum supply, which is 84 million for Litecoin, compared to 21 million for Bitcoin. The larger supply was intended to prevent Litecoin from becoming too scarce and expensive.
To allow for mining with commodity hardware, Litecoin uses a memory-intensive hashing algorithm called Scrypt. However, over the years, ASICs have been developed for Litecoin mining, making it less accessible to individuals with basic hardware. In terms of initial distribution, Charlie wanted Litecoin to be launched in a fair manner and elected to do only a 150-coin (3 block) premine, allowing people to get in early.
In June 2017, Charlie left Coinbase to head the Litecoin Foundation, which oversees the project and finances core development. Today, Litecoin remains a popular cryptocurrency and is often used as a testbed for new protocol changes before they are deployed on Bitcoin.
Technology
The Litecoin protocol operates as a distributed, timestamped ledger that records unspent transaction output (UTXO) transfers. These transactions are stored in a 1MB append-only chain of data blocks. A network of mining and economic nodes maintains this blockchain by validating, propagating, and competing to include pending transactions in new blocks. Economic nodes, or full nodes, receive transactions from other network participants, validate them against network consensus rules, and check for double-spend vectors. They then propagate the transactions to other full nodes that validate and propagate them as well. Valid transactions are added to the network’s mempool where they wait for mining nodes to confirm them via inclusion in the next block.
Mining nodes are responsible for emptying the mempool by selecting transactions to include in the next block, typically in the highest-to-lowest fee order. These nodes race against each other to generate a hash less than the target number set by Litecoin’s difficulty adjustment algorithm. The network uses a Proof-of-Work (PoW) consensus mechanism to establish the chain of blocks with the most accumulated “work” or energy spent on solved hashes as the valid chain. Other network peers can cheaply verify the chain’s work.
Supply Curve Details
Litecoin was created as a clone of Bitcoin meant to have four times the supply, as well as generate blocks four times as fast. Bitcoin’s parameters were changed in order to achieve this, with the result that eventual supply will top out at no more than 84 million coins. On average, it generates new blocks every 2.5 minutes, rewarding miners with 12.5 new LTC and the total transaction fees from the preceding block. Each block has a 1MB limit and block rewards are halved every 840,000 blocks (approximately 4 years).
Litecoin’s first halvings occurred on August 2015 and August 2019. The next halving will occur in August 2023. Eventually, once the 84 million LTC hard cap has been reached, block rewards will transition entirely to transaction fees shifting the security model of the protocol to one based on demand for block space versus one based on demand for LTC. Similar to bitcoin, Litecoin’s supply dynamics are known with great precision, and the vast majority of all eventual coins will be minted in the first two decades.
Consensus Details
Litecoin employs Nakamoto Consensus as its consensus mechanism, which means that the longest chain with the most accumulated proof-of-work is considered the valid chain. However, this consensus is probabilistic in nature, as there is always a chance that a new and longer competing chain could emerge with more accumulated proof-of-work, thus invalidating the current chain.
In Litecoin, mining is conducted using a Scrypt algorithm, where miners compete to solve computational puzzles to generate new blocks. They race against each other to generate a hash that is less than the target number set by Litecoin’s difficulty adjustment algorithm. Similar to Bitcoin, the difficulty level is adjusted every 2016 blocks, but due to the 2.5-minute block times in Litecoin, the difficulty level adjusts more quickly than in Bitcoin.
Originally, Litecoin implemented the Scrypt algorithm for its memory-intensive properties, which made it more resistant to ASICs. However, over time, its ASIC-resistant properties have eroded with Scrypt-capable ASICs having been developed. Additionally, in order to smooth individual miner revenue as mining has become more competitive, mining is now done in pools. In these pools, participants contribute hash power to the pool and receive a proportional share of the profits if the pool finds a valid block.
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