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Litecoin creator, Charles Lee, does not like to reveal too much about himself. And that goes for the entire team of six people behind the altcoin as well. Lee came to learn about Bitcoin recently, and he got interested. He understood that cryptocurrency is a powerful concept. Like any other online currency enthusiast, he started mining Bitcoin even before he got into the altcoin scene.
It was around that time IXcoin, an altcoin, was launched. Many more altcoins followed, and Lee decided to join, and in September 2011, he created Fairbrix. This altcoin was more of a trial-and-error for Lee as he was trying to test Scrypt as a “proof of work” function. Scrypt was meant to be CPU-friendly, as opposed to Bitcoin’s SHA-256. Unfortunately, Fairbrix failed.
Fairbrix failure was partly because of a software bug. They used Multicoin which supported numerous coins. The bug deterred many initial Fairbrix blocks from generating coins. The project was attacked from the beginning, and that is where it started to fail.
He made another attempt at altcoins in October 2011 when he launched Litecoin, and this time round it was a success. To make sure the bug that killed Fairbrix would not interfere with Litecoin, he used the Bitcoin client’s code.
Lee barely fails to mention fairness in his cryptocurrency discussions. Proof of work algorithm has a play in this. Lee says that Bitcoin was fair when it started because users could profitably mine with CPUs. But with the emergence of GPUs, it became harder. That was the case with Litecoin as well, it was CPU-only when it was launched, but along the way, someone discovered they could mine with GPUs. That is how things are now, although he is expecting to see ASICS in a short time.
According to some experts, Litecoin is fair because of the absence of Litecoin ASIC—but it is only for a short while. With Bitcoin, ASIC machines are much more efficient than GPUs, but for Litecoin the difference will not be drastic because of the Scrypt algorithm.
According to Lee, his relationship with the Bitcoin team is healthy. They may not communicate often, but they are on good terms. Nonetheless, Litecoin has one primary advantage over Bitcoin.
The bitcoin market is worth a lot of money (about $2 billion), so they cannot make any significant changes and risk losing money. On the other hand, since Litecoin community is smaller they can take bigger risks.
For most altcoins, adopting merchants is a holy grail. An altcoin can only make its way out of the speculation phase and start circulating consistently and widely, when traders begin to use it ubiquitously. Simply put, a coin is spent more when merchants take it which leads to a higher liquidity.
Litecoin has an advantage here in that; it is quite similar to bitcoin. So if traders adopt coins, they will accept Litecoin. As long as they ride on Bitcoin’s back and don’t mess things up, Litecoin will be less speculative in a few years’ time. Lee believes that shortly, people will prefer Bitcoins for expensive purchases and Litecoin for micro transactions.
However, for all this to succeed, Litecoin needs to upgrade some of its features like its payment processors. Lee is confident that he is doing his best together with his team and Litecoin is doing well so far.