Litecoin, which launched in 2011, aimed to improve on some of the limitations of bitcoin, the most popular cryptocurrency.
Litecoin quickly gained traction owing to several factors. They include Litecoin’s ability to produce comparatively more cryptocoins, faster speed of block generation, and the use of scrypt algorithm, which is an efficient "proof of work" algorithm designed to make miners prove their computing contributions in the mining process of cryptocoins. (For more, see Bitcoin Vs. Litecoin: What's The Difference?)
As per CoinMarketCap.com statistics for February 2018, Litecoin ranks fifth for cryptocurrency valuations based on overall market capitalization, making it one of the most popular virtual currencies.
The Birth of Litecoin Cash
On February 18, the Litecoin network underwent a hard fork that created a new cryptocurrency called Litecoin Cash. The fork occurred at block 1371111 in the existing Litecoin blockchain.
Both Litecoin and Litecoin Cash will continue to exist in parallel after the fork. Participants who wish to go with the newly created LCC system will get 10 LCC coins for each LTC coin they hold at block 1371111. Those who wish to continue with the original Litecoin blockchain will continue to retain their original LTC coins as-is.
Following the fork, the LCC mining switched to SHA256 proof-of-work hashes, an established mining algorithm. This will enable a new lease of life to the now defunct SHA256-based mining hardware devices which have become obsolete due to the use of other mining algorithms, like Scrypt, Equihash, or X13, and due to the availability of new-age hardware for mining cryptocurrencies using SHA256.
Miners who own SHA256-based mining devices will not be required to purchase any new-age costly mining hardware, as the original Litecoin will continue to use the Scrypt algorithm. (For more, see How Do You Mine Litecoin?)
Litecoin Cash retains the predictable block time of around 2.5 minutes of LTC, and will be four times faster than bitcoin, which has 10 minutes of block time. LCC is also retaining the blockchain size of LTC to keep it around 13 GB, and is far lower than the 145 GB blockchain size of bitcoin. This allows for more bandwidth availability within the Litecoin Cash network, and the transactions are claimed to be 90% economical compared to Litecoin.
Litecoin Cash Aims to Be Faster and More Efficient
Immediately following the fork, the mining of Litecoin Cash started at the minimum mining difficulty level for the first 24 blocks. Following that, the dynamic adjustment of difficulty based on the observed time for block generation will ensure that early LCC miners don’t get any undue advantage over the new mining entrants.
The mining difficulty will be dynamically calculated at each block using the DarkGravity V3 algorithm, an integral part of another popular digital currency system Dash.
Eventually, the new Litecoin Cash expects to be faster in processing transactions and in coin and block generation, and more efficient in network performance with higher speed of processing compared to both Litecoin and Bitcoin.
Criticism of the Big Fork
Despite its promising features and claimed superiority over bitcoin and Litecoin, the Litecoin fork that created Litecoin Cash was heavily criticized. Litecoin founder and creator Charlie Lee, in a recent tweet, called the fork a scam, comparing it to all similar “bitcoin forks trying to confuse.”
There were similar sentiments among the Litecoin community on social media platforms like Reddit. (See also: Litecoin Founder Charlie Lee Sold All His Holdings In The Cryptocurrency.)
Meanwhile, the official Litecoin Cash website admits that they are “not associated or affiliated with Charlie Lee or any of the Litecoin team in any way,” and are “using the Litecoin Cash name simply because it has become customary in recent months for a coin which forks a blockchain to prefix its name with the name of the coin being forked.”
Creating new cryptocurrencies through forks is not new in the world of virtual currencies. Bitcoin Cash (BCH), Bitcoin Gold (BTG) and Bitcoin Diamond (BCD) are some of the forked versions of the original Bitcoin (BTC).
The original Ethereum, an extremely popular app-based blockchain network, also underwent a fork that created two versions of blockchain which continue to exist in parallel – Ethereum Classic and Ethereum. (For more, see An Introduction to Ethereum Classic.)
The Bottom Line
New cryptocurrencies and their surrounding ecosystems, can be created from scratch using the standard blockchain technology, or through forked versions of existing virtual currencies that tweak some of the existing features to make room for improvements.
However, irrespective of the origin, the initial opinions and criticism, the success of each new virtual currency depends on its features, which determines its adoption, popularity and valuations. Despite several versions of bitcoin coming to the fore, none have been able to beat the original one. Only time will tell how Litecoin Cash will fare. (See also: Will Bitcoin Undergo 50 Forks In 2018?)
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