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Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities. Mathematics secures the network and empowers individuals to control their own finances. Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency. With substantial industry support, trade volume and liquidity, Litecoin is a proven medium of commerce complementary to Bitcoin.
A. Design and Working
Litecoin uses the same code base of Bitcoin with minor deviations in the protocol to improve on the gaps identified in Bitcoin. The aim of Litecoin was to provide faster transactions and reduce the impact of 51 percent attack. Litecoin blocks are generated at 2.5 minutes as compared to traditional 10 minute
mark of Bitcoin. The faster block creation in Litecoin allows faster confirmation of transactions as blocks gets accepted into the block chain 4 times faster than Bitcoin. The working of Litecoin is quite similar to the working of Bitcoin which is explained in the previous sections. The key difference between
the working of two crypto currencies lies in the difference of Proof-of-work mechanism explained in the Litecoin Mining section.
B. Litecoin Mining
Litecoin mining traditionally follows the same trajectory as Bitcoin mining with one major difference in the Proof-of-work mechanism. Bitcoin uses SHA-256 as its hashing algorithm in the Merkle Tree of the block chain, whereas Litecoin uses SCRYPT [28] as its hashing algorithm. SCRYPT favors large amount of RAM memory and works in a serialized manner as compared to SHA-256 which is dependent on parallelization and computational power alone. This deviation of hashing algorithm led to the decentralization of Litecoin mining as it gives a chance to ordinary users with low computational power
to participate in the mining process. Like Bitcoin, the Litecoin
too rewards its mining nodes a sum 50 coins on solving a block. The sum is due to be halved every four years.
C. Advantages of Litecoin
Litecoin has a number of advantages over bitcoin which were highlighted in the previous sections but explained in this
section:
• SCRYPT
mining is more feasible than SHA-256 mining. The reason for this is that SCRYPT uses fast access to large amounts of memory rather than depending on fast amount of arithmetic operations as required by SHA-256. With the development of ASICs (Application-Specific Integrated Circuit) for bitcoin mining, the modern computers and GPUs cannot participate in the Bitcoin Minining. However, ASICs are more expensive to design for SCRYPT as the device would require large amount of expensive RAM. This would allow modern GPUs and CPUs to participate in the mining process and get rewarded.
• Since the ASICs are not feasible for SCRYPT, it would decentralize the mining power and consequently limiting the dreaded 51% attack. This would imply that no entity could be investing such a high amount of money to accumulate the mining power in order to carry out the double spending attack.
• Blocks are processed at 2.5 minutes rather than 10 minutes mark in Bitcoin. This allows faster confirma- tion of transaction. Also it allows more granularity in the network, e.g. a merchant can wait for two confirmations by the network and consume 5 minutes.
only as compared to one confirmation in Bitcoin that takes 10 minutes.
• The protocol implies that a total of 84 million Lite-coins will be created in the life time, an amount four times greater than 21 million Bitcoins due to be created.
• The block re target was 2016 in both Bitcoin and Litecoin. Since Litecoin blocks are generated 4 times
faster, the difficulty mark needs to be adjusted every 3.5 days. The relatively quick adjustment in difficulty of the hashing function works fairly well in the event of a large number of miners suddenly dissipating from the network.
D. Limitations of Litecoin
The above advantages of Litecoin have some limitations associated with themselves, some of which are discussed below.
• In case of a Botnet attack, the owner could utilize the controlled bots for mining purposes and achieve a greater mining pool for itself. This would yield a higher benefit for the botnet owner as it would increase the probability of attacker solving the blockchain problem. Where this attack is beneficial for the attacker, it also supplements the Litecoin network as the botnet controller brings with itself computational resources into the network. However the aim of cryptocurrency should be to put the greater good in front of individual benefits.
• The faster block generation results in bigger blockchain. Accordingly, the block chain size would be 4x
the block chain size of Bitcoin