Where did Litecoin come from?

'Litecoin'. It was designed to complement Bitcoin by solving some of its issues like fees and transaction times.

Litecoin was a fork of the Bitcoin Core client. Litecoin was launched after people started using GPUs (graphics cards) to mine Bitcoin. The Litecoin team’s purpose was to create a coin that could be mined from home computers because they were concerned about the implications of more advanced hardware being necessary.

The primary differences are its lower block generation time of 2.5 minutes, the proof-of-work mining algorithm it uses, and the cap on the number of coins that can be created – a maximum of 84 million coins, as opposed to Bitcoin’s 21 million.

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What is the difference between Bitcoin and Litecoin?

While we don’t know who Satoshi Nakamoto, the creator of Bitcoin is, we do know Charlie Lee, the creator of Litecoin.

Litecoin vs. Bitcoin

Feature	Bitcoin	Litecoin
Launched	2009	2011
Creator	Satoshi Nakamoto	Charlie Lee
Coin supply	21 million	84 million
Mining algorithm	SHA-256	Scrypt
Block rewards halved	every 210,000 blocks	every 840,000 blocks
Average transaction time	10 minutes	2.5 minutes

Transaction differences

One of the primary differences between the two cryptocurrencies is that Litecoin takes 2.5 minutes to generate a block of transactions, as opposed to Bitcoins 10 minutes. This means that Litecoin can confirm transactions roughly four times faster than Bitcoin. This difference in transaction time could make Litecoin more attractive to merchants, which is why Litecoin is often regarded as a currency for day-to-day transactions while Bitcoin is currently considered more of a store of value. This is possible because home-use computers can be used for Litecoin mining, whereas Bitcoin requires a specific customised computer.

Proof-of-work algorithm

Another significant fundamental way Litecoin differs from Bitcoin is its mining algorithm. While both are proof of work, Bitcoin uses the traditional SHA-256 hashing algorithm. Litecoin uses a comparatively new algorithm known as Scrypt. Another key difference between the two is that Scrypt requires less computing power, making it possible for regular users to participate in mining with less complexity.

Coin limit and block rewards

Both Bitcoin and Litecoin are 'created' as rewards to miners for verifying and processing transactions during the mining process. Both also have a limited supply. The total limit for Bitcoin is 21 million, while Litecoin has a limit of 84 million. Once these limits are reached, no new coins will be created. These rewards are halved in order to limit the number of new coins released into the circulating supply to create scarcity. Bitcoin block rewards are halved every 210,000 blocks, while Litecoin block rewards are halved every 840,000 blocks

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What is USD Coin?

USD Coin (USDC) is a fully collateralised, US dollar-backed stablecoin that was launched in 2018 by a consortium of companies called Centre. It’s based on Ethereum’s ERC-20 standard, which makes it interoperable with most major wallet and custody services. As of 23 November 2020, it’s the second-largest stablecoin in the world by market capitalisation.

What is a stablecoin?

A stablecoin is a cryptocurrency that’s pegged to a single underlying asset, or a basket of assets. These 'stable' assets can be other cryptocurrencies, local fiat currencies, or even commodities such as gold. In the case of USDC, it's pegged to a single asset: the US Dollar. This means that for every 1 USDC, the issuer of the coin holds 1 US Dollar in collateral.

How is USDC pegged to the dollar?

A USDC token is created when someone purchases a token from an approved issuer. For every US dollar received, the issuer will apply an ERC-20 smart contract to create an equivalent amount of USDC. This is then sent back to the original buyer. The US dollar that was originally sent to the issuer is then held in reserve as collateral. The buyer has their USDC, which is redeemable against the issuer for the equivalent fiat currency US dollars. This guarantees that every USDC token is backed by a US dollar and it’s redeemable on a 1:1 basis.

How do I buy USDC?

USDC tokens can either be bought directly from the issuer as above, or they can be traded on exchanges such as Luno. When USDC is acquired through an exchange, the token is not being acquired from the issuer directly but from a third party, however you still own the token and will always be entitled to redeem it from the issuer, should you choose to do so.

How does USDC differ from other stablecoins?

We encourage you to familiarise yourself with the issuer directly, but USDC differs from other stablecoins such as Tether in that its issuers represent that they are regulated financial institutions with high standards of corporate governance, who are obligated to provide full transparency and who are regularly audited. This ensures that reserves are held on a 1:1 ratio with the fiat currency equivalent. All USDC issuers must report their USD holdings, which are in turn published by accountancy firm Grant Thornton LLP on a monthly basis. These monthly reports are available online to anyone who wishes to view them.

What’s the point?

Essentially, what USDC is doing is tokenising US dollars and putting them on the blockchain. This makes them easier to transfer, so they can be moved anywhere in the world almost instantly – unlike the traditional 'fiat version' of the US dollar, which moves relatively slowly as it has to contend with traditional financial institutions and their legacy processes. Tokenising the US dollar also provides additional functionality, making it easier to program with and to use in dApps.

From a user perspective, people use USDC for a wide variety of reasons. One of the primary reasons is to hedge against volatility during market dips – either in cryptocurrency or your own local currency. Another is that when selling crypto, you may want to keep your funds on the platform ready for your next play. If you keep it on there as USDC, you don’t have to pay fees for fiat on and off ramps.

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What is the difference between Bitcoin and USD Coin?

Bitcoin was originally developed as a digital decentralised currency with the aim of paying for goods and services (i.e. as a means of exchange). Its purpose has evolved since its creation, however, and today it is also used for a variety of other purposes as well – including as a store of valu

USD Coin, on the other hand, was created as a way to put US dollars on the blockchain. This was done to enable them to be moved anywhere in the world within minutes. They were also designed to bring stability to cryptocurrencies. The USD Coin website explains that: “A price-stable currency such as the US dollar (and similar stable currencies such as EUR, GBP, JPY, RMB, etc.) is critical for enabling mainstream adoption of blockchain technology for payments, as well as to support maturation in financial contracts built on smart contract platforms, such as tokenised securities, loans, and property.”

The two cryptocurrencies also differ significantly in how they were created and how they are maintained.

Bitcoin was created by a pseudonymous person or group of people known as Satoshi Nakamoto, but designed to be decentralised. This means Nakamoto is no longer a controlling influence, rather it is developed and maintained by the Bitcoin community. The Bitcoin network is maintained by a group of developers distributed around the world who contribute to its management on a voluntary basis. It is not governed by any bank, government or entity.

Bitcoin as a cryptocurrency is created when it is ‘mined’ by members of the network. Where fiat currencies are issued by central banks, new bitcoins are issued to miners via a block reward for adding new blocks filled with verified transactions to the Bitcoin blockchain. They do this by using special hardware to solve a complex computational problem, which produces a hash - a seemingly-random 64 character output. To get this number requires many, many attempts. Once the hash is found, the block is closed and it is added to the blockchain. After successfully mining a block, miners are rewarded with newly-created bitcoins and transaction fees.

USDC, meanwhile, relies on an issuer and an underlying pool of collateral and is therefore centralised. It’s based on the open source asset-backed stablecoin framework developed by the Centre Consortium. It is based on an open membership scheme that eligible financial institutions can participate in. It offers a solution with detailed financial and operational transparency, operating within the regulated framework of US money transmission laws, with established banking partners and auditors.

Unlike Bitcoin, USDC is not designed to be mined at all, rather it is simply issued. A USDC token is created when a customer ‘buys’ a token from an approved issuer. For every US dollar received, the issuer will apply an ERC-20 smart contract to create an equivalent amount of USDC. This is then sent back to the customer The US dollar that was originally sent to the issuer is then held in reserve as collateral. The customer has their USDC, which is redeemable against the issuer for the equivalent fiat currency US dollars. This guarantees that every USDC token is backed by a US dollar and it’s redeemable on a 1:1 basis.

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Where did USD Coin come from?

by Coinbase, a US-based cryptocurrency exchange, and Circle, a blockchain-focused financial services and payments company.

Circle was founded in 2013 by the entrepreneurs Jeremy Allaire and Sean Neville. They have raised over $135 million over 4 funding rounds from a list of investors which includes Goldman Sachs. Circle is a licensed Money Transmitter – US money service businesses that must comply with federal laws and regulations. Before the issuance of USDC, the equivalent amount of USD is held by one of Circle’s accredited partners. As a result, the issuer represents that all USDC tokens are regulated, transparent and verifiable.

Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam. It was named after the Bitcoin (BTC) coinbase transaction that rewards miners for validating blocks. It’s one of the oldest and largest cryptocurrency exchanges, having supported tens of millions of users since its launch. Coinbase is registered as a Money Services Business with FinCEN.

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