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Is Litecoin Decentralized (Explained)

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Litecoin is one of the first cryptocurrencies to enter the market, right after the inception of Bitcoin. It uses a similar peer-to-peer model as Bitcoin, which it was initially built to replace.

Although these two coins share plenty of features, is Litecoin decentralized? Read on to find that out and more.

Is Litecoin Decentralized?

Yes. Litecoin is fully decentralized. 

Launched to improve or compete with Bitcoin, Litecoin’s layer 1 network runs on an independent blockchain, the Litecoin network.

So, what makes Litecoin decentralized?

The Litecoin blockchain registers all transactions on a secure, unedited, open ledger. The ledger helps participants on the network to track transactions.

As one of the pioneer peer-to-peer cryptocurrencies, Litecoin runs on open-source software under the MIT/X11 license. Litecoin is a digital asset available round the clock to trade, but no one controls the network.   

Litecoin offers faster permissionless transactions when compared to traditional fiat currencies. Investors can move large sums of Litecoin in a single call, unlike traditional banks which require multiple authorizations. .  

What Makes A Coin Decentralized? 

Several key features make a crypto coin decentralized. Let’s explore them below.

Governance

For a coin to maintain stability long-term, it needs good governance. Decentralization allows all users to participate in the governance of the coin. They get a chance to vote or decide on any future changes to the protocol. 

Security

Decentralized coins, most times, are secure digital assets. Decentralization enables coins to run on a peer-to-peer model with varying encryption methods. That makes it incredibly difficult for a hacker to manipulate and take advantage of the blockchain system.

Trustless

Anonymity is another critical aspect of blockchain technology. The main idea behind cryptocurrencies is to allow users to interact without exposing their identities.

All decentralized tokens let you trade, stake, or hold them without leaving an identity footprint. Anonymity safeguards users’ investments and safety. 

Ledger

Decentralized crypto uses a ledger to keep track of transactions and events within a specific network. You can’t edit or alter the register, which means transaction records are available permanently.

They’re also logged without alerting other participants on the network. Every user can access the ledger, which makes it impossible to manipulate the network. 

Digital Asset

Decentralized coins are not tangible, which makes them easy to access and store. All you need is a digital wallet. You can also store them on your home computer, mobile app or USB drive.

Are All Crypto Decentralized?

Most cryptocurrency in the space today are decentralized. However, there are few which aren’t. 

Such centralized crypto include;

  • Binance Chain (BNB)
  • KuCoin Token (KCS)
  • Cronos (CRO)
  • FTX Token (FTT)

Are Decentralized Coins Better?

Decentralized crypto coins are a fairly new concept. They’re excellent for certain purposes that centralized coins can’t serve. Let’s explore them below.

Anonymity

One commonality all decentralized currencies have is the lack of control by a central authority. That eases any restrictions that centralized coins have. You can send, receive or convert your crypto coins without meeting the Know-Your-Customer (KYC) requirement.

Also, investors holding or trading decentralized coins can bypass regulatory bodies and use trading tools unavailable on centralized platforms. 

Ownership

Unlike centralized coins, decentralized coins allow you to manage your own investments. Decentralization lets participants own private crypto-wallets with keys only in the individual’s possession.   

Security

Decentralized tokens use peer-to-peer mechanisms to safeguard the network. this security feature is essential for fending off attacks or manipulation of the coin.  

Fees

You pay lower fees on transactions that use decentralized crypto coins. That makes it incredibly cheaper to trade decentralized currencies compared to centralized ones.

Learn more: Is Litecoin A Stablecoin?

What Is The Most Decentralized Cryptocurrency?

Most cryptocurrency enthusiasts view Bitcoin as the most decentralized crypto. Until now, Bitcoin boasts of having over 15,000 active nodes spread globally. 

Bitcoin runs a secure decentralized ledger where all transactions on the blockchain go to record. Participants can check and flag illegal transactions, which secures the network. 

Also, the art of the founder Satoshi being a ghost to date makes Bitcoin a wonder.

Is Litecoin Better Than Bitcoin?

Litecoin isn’t necessarily better than Bitcoin. Depending on what you’re looking for as an investor, you may prefer one over the other. 

Consensus Mechanism

Litecoin and Bitcoin use the exact mining consensus mechanism. However, the slight difference between the two is that Litecoin uses a better and faster mining algorithm called Scrypt.  

Transaction Speed

On transaction speeds, Litecoin takes the win. To date, Litecoin is four times faster in confirming block production. While Bitcoin manages to confirm a block in 10 minutes, Litecoin comes in at 2.5 minutes. The downside to blockchains with fast transaction speeds is they become vulnerable to attacks. 

Coin Supply

Litecoin has a higher coin supply on its network than its predecessor, Bitcoin. Litecoin has a coin supply cap of 84,000,000 LTC, while Bitcoin has 21,000,000 BTC. 

Market Share

As of this writing, Bitcoin has a larger market share than Litecoin. Bitcoin has always been the leading cryptocurrency, and it’ll likely retain that position for years to come.

Learn more: Is Litecoin A Fork Of Bitcoin?

Why Is Litecoin So Much Cheaper Than Bitcoin?

Despite Litecoin having a lighter and less resource-intensive algorithm and more scalability on its blockchain, it still struggles to match Bitcoin.

Lack of originality

The idea of borrowing its source code from Bitcoin and more renders Litecoin inferior crypto to Bitcoin. Also, Bitcoin is the gold of crypto. It introduced blockchain technology and stood the test of time.

Higher supply and low demand

Any product with a higher supplier and low demand leads to a lower price value. Today, Litecoin trades cheaper against the dollar, which means you need more LTC to get 1 USD. On the other hand, Bitcoin has more value than the dollar, making it more appealing to investors.

Popularity

By the time Litecoin came to exist, Bitcoin was already a trend. Most new investors were excited about the Bitcoin wave that Litecoin didn’t seem to be a significant point of investment. 

Can Litecoin Overtake Bitcoin?

Although possible, it’s unlikely.

Litecoin was launched after Bitcoin, and its core purpose was to improve transaction speed on its own blockchain.

Although Litecoin has a higher coin supply and runs a lighter algorithm, it has an uphill task of outcompeting Bitcoin in the future. 

Bitcoin has the highest adoption of any cryptocurrency, dominating the market on its value and market share. Litecoin is still far behind, but with innovations on its network, it has the potential to grow to be as big as Bitcoin, or even bigger.

What Blockchain Does Litecoin Use? 

Litecoin runs on the Litecoin network, which is decentralized.

Some people falsely believe that Litecoin runs on Ethereum. But that’s not the case. To learn more about this, read our comprehensive guide: Is Litecoin An ERC20 Token ?

Who Was The Founder Of Litecoin?

Charlie Lee founded Litecoin between 2015 and 2017.

He has a past with companies like Google and Coinbase, where he worked as a Software engineer and director of engineering, respectively. Other Litecoin co-founders are Alan Austin, Xinxi Wang, and Zing Yang. 

How To Invest In Litecoin?

Below are the two main ways to invest in Litecoin:

Mine

Mining is the most common way of investing in Litecoin. Litecoin requires specific computers and mining software to make the process fast and profitable.

Learn more about mining Litecoin in our guide: Is Litecoin Easy To Mine?

Buy and Hold

If you lack the technical knowledge or the capital to buy mining equipment, you can still buy LTC directly or on an exchange platform like Coinbase or Uniswap. 

Which Cryptocurrencies Are Decentralized?

Hundreds of cryptocurrencies are decentralized. While we cannot list them all, here’s a quick list of some common ones:

  • Bitcoin (BTC)
  • Litecoin (LTC)
  • Ethereum (ETH)
  • Cardano (ADA)
  • Solana (SOL)

Final Thoughts

Litecoin is a decentralized cryptocurrency. It uses a peer-to-peer trustless and permissionless model to operate, unlike centralized currencies. Trading using Litecoin is faster, and charges cheaper fees than centralized currencies.

Although not better than Bitcoin, Litecoin certainly has its uses. And just like Bitcoin, you can either mine it, or buy and hold it.