Profiling the Elevatyr Core 12: Living at the Speed of Litecoin
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The Origin of Litecoin
When Bitcoin was created in 2008, along with the world’s first blockchain, it was envisioned as a means by which people could complete transactions between one another, without the need of a traditional intermediary. The creator (some suggest creators though that story is for another day) designed the Bitcoin blockchain to simultaneously mediate transfers of value in an abbreviated time span, and to protect itself from actions by immoral actors. Each transaction needed to be verify by multiple peers, and only so many transactions could take place in a short span of time to prevent attacks against the network, such as DDOS attacks.
This system worked well at first. Participants in the network were able to transfer Bitcoin between one another, and their peers would confirm the validity of each transaction after a few minutes. The community was small, and the technology still somewhat rudimentary, but it accomplished the goal of becoming the first adopted all-digital currency.
But as more people became aware of Bitcoin and began using it more regularly, the increased network activity began affecting the system’s ability to efficiently handle all the transactions. The 2mb block size, which was implemented to protect the network by limiting the number of transactions that could take place over a short period of time, created a bottleneck as the volume of transactions steadily increased. At moments of peak use, the network would experience dramatic slowdowns, and transactions went from needing a few minutes to fully execute, to hours, or even days.
In 2013, when Bitcoin was just beginning to invade the global consciousness, a talented software developer from Google joined a blockchain company that was barely a year old, called Coinbase, as an Engineering Manager. Within two years he had advanced to become their Director of Engineering, leading the company’s technical needs as their worked towards their vision of providing people an easier way to purchase Bitcoin than ever before.
His name was Charlie Lee, and even before his time at Coinbase, he was already one of the most influential voices in blockchain, a key figure in the advancement of the technology, and most notably, the creator of Litecoin. Lee created Litecoin in 2011, a full two years before his tenure at Coinbase even began, because he foresaw the issues that would eventually plague Bitcoin. He understood that Bitcoin was not as scalable as others believed, that the technology simply could not support use on a global scale, and the increased volume of transactions would inevitably lead to debilitating transactions delays, and the effective death of the asset as a conveniently transferrable currency.
Charlie designed Litecoin to solve the exact issue, long before most people even realized the problem existed.
How Litecoin is Different
Litecoin is to Bitcoin as butter is to cream — sort of. Litecoin indeed is based largely on Bitcoin; much of its code in fact is lifting directly from its predecessor, though the two are not precisely interchangeable in practice.
In many ways, Litecoin and Bitcoin are separated by a factor of 4.
Litecoin, once fully mined will have 4 times the number of tokens in circulation as fully mined bitcoin.
Litecoin’s block time is 1/4 that of Bitcoin, and Litecoin’s block rewards diminish at 1/4 the rate of Bitcoin’s.
Powered by these core features, Litecoin’s transaction times and network fees are usually a fraction of those on the Bitcoin blockchain, even at times of peak activity. Each was implemented with a single goal in mind of making Litecoin a viable currency at a global scale, thus relegating Bitcoin to more of a simple storage of value, rather than a means to conduct transaction. In other words, Litecoin is designed to be the Silver, to Bitcoin’s gold.
Atomic Swaps
Every cryptocurrency-enabled blockchain is designed to interact with a specific, effectively unique token. The Bitcoin blockchain is different from the Litecoin blockchain, which is different from Ethereum, so on and so forth. This is why, generally speaking, attempting to send a token to the wallet of a different token often leads to the cryptocurrency essentially being lost — some exceptions exist, especially for ERC20 tokens, but that discussion is for another day.
Along with opening users up to potential problems when it comes to using and storing their cryptocurrencies, this also creates complications when it comes to converting one cryptocurrency into another. Because different types of cryptocurrencies are programmed with different features, advantages, use cases, etc. it would be convenient if users could simply transform one into another when needed for a specific purpose.
Traditionally the only way to accomplish this was to transfer the first token to an exchange, sell it for Bitcoin — potentially use the Bitcoin to purchase another cryptocurrency — and then transfer that desired token to the end point of choice, all after paying exchange fees. This unwieldy process was forced upon people for years, until Atomic Swaps were created.
An Atomic Swap is the ability to execute near-instant cross-chain transactions, or put another way, the ability to directly transfer one cryptocurrency into another, without passing through an exchange. This process is mediated through a smart contract, and can in theory, eliminate the role of exchanges in handling crypto-to-crypto transfers.
The Bitcoin-Litecoin Atomic Swap is the first successful example of such a transaction, and inherently makes Litecoin a highly compelling “middle man” not just for exchange-related transactions, but for other real-world applications, as well. Imagine having a Bitcoin wallet, with a certain amount of that token within, and wanting to use it to purchase a cup of coffee — something that is becoming increasingly common as more and more vendors and shops begin to accept cryptocurrency for everyday transactions. You are in a rush and cannot wait for Bitcoin’s 10-plus minute transaction confirmation times to complete, nor can to convert your Bitcoin into a more usable cryptocurrency through an exchange on the fly.
This is where an Atomic Swap comes in, you would simply execute an Atomic Swap to Litecoin for an amount equal to the dollar value of your coffee order, and pay for the cup using that Litecoin. Litecoin’s transaction confirmation takes a fraction of the time at Bitcoin at a far smaller cost, and you are on your way, with your coffee in hand in just a couple minutes.
Will Litecoin Win The Crypto Wars?
Since Bitcoin’s inception, people have speculated and debated its ultimate potential. Is it the currency of the future? Will we only use Bitcoin one day?
That discussion transformed after other cryptocurrencies came into existence into is Bitcoin the currency of the future, or is another cryptocurrency the true heir apparent?
As Bitcoin’s network revealed the issues behind its limited scalability as a currency, other cryptocurrencies have emerged to take its place as the digital currency of the future. Yes, Litecoin is one compelling option, but more recently others have entered the fray. Monero, Dash, Nano, and a litany of others have the potential to become — the almighty — the currency of the future. Speed, privacy, reliability, and cost are all key concerns for users, and each boasts differences in their strengths across these and other attributes. Only time will tell which wins out, or if perhaps a new yet unimagined contender emerges to steal their thunder.
Litecoin can be traded on select cryptocurrency exchanges, and will be available for trading via Elevatyr, which will be entering an early access period in July. Visit https://www.elevatyr.io/ to sign up for the closed beta waitlist, and to learn more about how Elevatyr is the simplest way to intelligently trade cryptocurrencies.
For those interested in learning more about Litecoin, you may visit Litecoin’s website at https://litecoin.com
Disclosure: This article does not represent an endorsement of the Litecoin cryptocurrency as an investment, and is for informational purposes only. Trading decisions should be made on an individual basis, and be informed by independent research. Elevatyr makes no recommendation as to trading behavior that should or should not be taken. The author of this article owns a small stake of Litecoin cryptocurrency.
