What Is Litecoin (LTC) and How Does It Work?

What Is Litecoin (LTC)?

Litecoin is a decentralized peer-to-peer payment network based on the Bitcoin network. That means you can send LTC, the network’s native digital coin, directly to someone else without a bank or company processing the payments.

Transactions end up on a public blockchain. You can think of it as a shared digital ledger: it shows which transactions have been made. New LTC enters circulation through mining. Miners add new blocks with transactions and receive a block reward and transaction fees for doing so.

Litecoin is based on the codebase of Bitcoin, but it has its own rules. For example, Litecoin uses Proof of Work with Scrypt, and the network aims for a new block every 2.5 minutes. A block is simply a bundle of transactions that gets added to the blockchain.

There is no company that runs Litecoin. Participants run software, verify transactions, and choose which version of the software they want to use. Because of that, the network does not depend on one central party.

Key Takeaways

• Litecoin is a peer-to-peer payment network with LTC as its native coin.
• Miners secure the network with Proof of Work using the Scrypt algorithm.
• The network aims for a new block every 2.5 minutes.
• There can be a maximum of 84 million LTC.
• MWEB offers optional privacy, but it had major security incidents in 2026.

How Does Litecoin Work?

When you send Litecoin, you create a transaction from your wallet. That transaction uses LTC you received earlier and is signed with your private key. This is the secret digital key that proves you are allowed to spend that LTC.

Your wallet then spreads the transaction across the network. Computers running Litecoin software are called nodes. They check whether the transaction follows the rules. For example, they verify whether the LTC being used actually exists and has not already been spent.

Valid transactions can be collected by miners into a new block. Miners provide computing work through Proof of Work for this. The miner who finds a valid block gets to add that block to the blockchain. As a reward, that miner receives the block subsidy, meaning newly issued LTC, plus the transaction fees from the block.

Sometimes multiple versions of the blockchain can exist temporarily, for example if two miners find a block at almost the same time. In that case, the network follows the chain with the most cumulative Proof of Work. That is the chain with the most total computing work.

Litecoin aims for one new block every 2.5 minutes. That is a goal of the protocol, not a guarantee that your individual transaction will be confirmed exactly within that time.

Litecoin also uses Segregated Witness, often shortened to SegWit. This has been active since block height 1,201,536. In addition, MWEB has been available since May 2022. MWEB is an optional extension block: an extra section alongside the regular main chain where confidential transactions are possible.

For regular Litecoin transactions on the main chain, addresses, amounts, and transaction relationships are generally visible to the public. Inside MWEB, amounts and address balances are not publicly analyzable in the same way. A deposit into or withdrawal from MWEB is still visible on the main chain.

Litecoin (LTC) Overview

How Does Mining With Scrypt Work on Litecoin?

Mining is the process miners use to try to add new blocks to Litecoin. Litecoin uses Scrypt as its Proof-of-Work algorithm for this, instead of Bitcoin’s SHA-256 algorithm.

A miner creates a candidate block with valid transactions and keeps changing small pieces of data in it. With each attempt, the miner calculates a Scrypt hash. A hash can be seen as a unique digital result of data. The miner has to find a hash that falls below the network’s difficulty target. Whoever does that first can add a valid block.

Difficulty determines how hard it is to find such a valid block. On the Litecoin mainnet, it is adjusted every 3.5 days. In this way, the network tries to keep the average time between blocks around 150 seconds, or 2.5 minutes.

Scrypt uses memory during the calculation. Originally, this was meant to make specialized mining hardware less attractive than with SHA-256. In practice, Scrypt ASICs were later developed anyway. ASICs are devices built specifically for mining, and today they are the most efficient option for Litecoin mining.

Because of that, competitive mining is less accessible for smaller participants. Besides hardware, electricity prices and joining a mining pool also matter. With solo mining, you only get a reward if you find a block yourself. In a mining pool, participants work together and the rewards are split based on each person’s contribution.

Since August 2014, Litecoin miners have also been able to use the same Scrypt Proof of Work for merged mining of Dogecoin. That means a miner can use the same computing work to mine for more than one network. This is an option, not a requirement for miners.

What Is Litecoin’s Maximum Supply?

Litecoin’s maximum supply is 84 million LTC. This is a fixed rule in the protocol. New LTC is created step by step through the block subsidy that miners receive when they add a block.

At the start, that block subsidy was 50 LTC per block. Every 840,000 blocks, the subsidy is cut in half. With the intended block time of 2.5 minutes, that works out to about once every four years. This means the amount of new LTC added per block keeps getting smaller over time.

Besides the block subsidy, miners also receive transaction fees. The issuance of new LTC continues according to this schedule until around 2142. After that, the block subsidy drops to zero and miners’ income comes only from transaction fees.

The 84 million LTC limit does not change easily. For that to happen, modified software would have to be widely accepted by the network. However, LTC can become permanently unspendable if someone loses their private keys. That does not reduce the protocol supply, but it does mean those specific coins can no longer be spent.

Who Founded Litecoin?

Litecoin was founded and created by Charlie Lee. He announced Litecoin on October 9, 2011, under the name coblee.

Litecoin was set up as a new, clean fork of the Bitcoin codebase. A fork here means that existing software is used as the starting point to create a new network with its own rules. Charlie Lee had already gained experience with Fairbrix before that.

The source code was already available before the planned network launch, so participants could prepare. Litecoin’s genesis block, the very first block of the blockchain, was mined on October 13, 2011. That date is considered the start of the Litecoin network.

What Is the Difference Between Litecoin and Bitcoin?

Litecoin and Bitcoin are technically similar. Litecoin is based on Bitcoin’s codebase, and both networks use Proof of Work to process transactions and secure the blockchain. Still, Litecoin has had a number of its own rules from the start.

One important difference is the mining algorithm. Bitcoin uses SHA-256, while Litecoin uses Scrypt. Litecoin also has a lower intended block time. The Litecoin network aims for a new block every 2.5 minutes, compared with about 10 minutes for Bitcoin. Because of that, new transactions on Litecoin can, on average, be included in a block faster.

In addition, Litecoin has developed features that are not part of Bitcoin in the same way. One example is MWEB, an optional extension block that makes amounts and address balances less publicly visible. Litecoin can therefore be seen as a network that shares many technical foundations with Bitcoin, but has added its own choices and features over the years.

What Are the Benefits of Litecoin?

Litecoin has a few features that are important to understand:

• Fixed maximum supply: there can be a maximum of 84 million LTC. The block subsidy also follows a preset halving schedule.
• Shorter intended block time: Litecoin aims for a new block every 2.5 minutes. That is shorter than Bitcoin’s intended block time of 10 minutes.
• No central operator: the network works peer-to-peer with Proof of Work. So there is no central party managing transactions or the issuance of LTC.
• Open-source software: Litecoin Core is open source and is licensed under the MIT license. That means others can review the implementation and protocol rules.
• SegWit and optional MWEB transactions: SegWit is active, and MWEB makes confidential amounts and address balances possible within the extension block.
• Merged mining with Dogecoin: Scrypt miners can use the same Proof-of-Work computing work for Litecoin and Dogecoin.

A shorter intended block time does not mean that a payment is always irreversible after one confirmation. How many confirmations are appropriate depends on the use case and the risk.

What Are the Downsides of Litecoin?

Proof-of-Work mining requires specialized equipment and electricity. Scrypt was once meant to make ASIC mining less attractive, but Scrypt ASICs are now the standard for competitive mining. Access to such equipment, cheap electricity, and mining pools can make it hard for small-scale miners to participate.

MWEB also brings practical trade-offs. Optional privacy can raise questions for service providers and trading platforms around compliance and integration. After the MWEB upgrade, several South Korean exchanges delisted Litecoin in 2022.

There were also serious security incidents around the MWEB extension in 2026. In March 2026, a critical validation flaw was exploited for an incorrect peg-out of 85,034.47285734 LTC. In April 2026, a new attempt through the same error path led to an invalid chain of 13 blocks, which was later reorganized. Additional fixes in Litecoin Core followed after that.

These incidents affected MWEB and were not a general flaw in all regular Litecoin transactions on the main chain. They do show, though, that optional privacy features can also bring extra technical risks and maintenance.

Finally, the regular Litecoin main chain is public. For normal transactions, addresses, amounts, and transaction relationships are generally analyzable. Anyone who does not want that openness has to deliberately use MWEB; it is not a default replacement for the regular main chain.

Conclusion

Litecoin is a decentralized payment network with LTC as its native digital coin. It is based on the Bitcoin codebase, but uses Scrypt for Proof of Work and aims for a block time of 2.5 minutes.

Miners secure the network by providing computing work, including transactions in blocks, and adding new blocks to the blockchain. The supply is limited to 84 million LTC, and the block subsidy is cut in half every 840,000 blocks.

Litecoin has no central operator, uses open-source software, and offers optional privacy with MWEB. There are trade-offs, too: competitive mining requires specialized hardware in practice, regular transactions are public, and the MWEB extension had major security incidents in 2026. So Litecoin is a network where you need to understand both the basics of Proof of Work and the limits of optional privacy.