What Is Litecoin?

By Lyle Daly – Updated Dec 13, 2025 at 4:11 PM EST

Key Points

Litecoin uses blockchain for low-cost, fast transactions; mined via Scrypt algorithm.
Litecoin risks include limited merchant acceptance and potential loss of value.
Despite being an early Bitcoin alternative, its competitive advantage is questioned.

Litecoin (LTC -1.04%) is a cryptocurrency that launched in 2011 to complete cryptocurrency transactions quickly and cheaply. It was developed using a copy of Bitcoin's (BTC -0.20%) source code, and it is one of the first altcoins, a term used to refer to every cryptocurrency other than the market leader Bitcoin.

Litecoin in its early years frequently ranked as the second-largest cryptocurrency. Its similarity to Bitcoin makes Litecoin popular among those looking for an affordable Bitcoin alternative. If you're considering an investment in Litecoin, keep reading to learn everything you need to know.

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Financial Institution

Financial institutions help keep the economy running efficiently, by pairing money with people and companies that need it.

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Litecoin miners use immense computing power to solve complex mathematical problems and earn the right to verify transactions, which adds new blocks to the blockchain. Litecoin miners are compensated in Litecoin.

As a currency, Litecoin can be bought, sold, and used for purchases with some merchants. Most Litecoin holders use one of these cryptocurrency apps or exchanges to purchase or sell the cryptocurrency:

Coinbase (COIN +0.02%): Publicly traded cryptocurrency exchange that began offering Litecoin in 2017.
Gemini: Crypto exchange that started offering Litecoin in 2018.
PayPal Holdings (PYPL +1.39%): Global payments app that began enabling users to buy and sell cryptocurrency, including Litecoin, in 2020.

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Cryptocurrency Metric	Litecoin	Bitcoin
Coin release date	Oct. 7, 2011	Jan. 9, 2009
Maximum coin supply	84 million	21 million
Average transaction time	2.5 minutes	10 minutes
Halving interval for block rewards	840,000 blocks	210,000 blocks
Mining algorithm	Scrypt	SHA-256

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Data source: Litecoin.info.

The coin supplies of Litecoin and Bitcoin are capped, with Litecoin's maximum being four times greater. Litecoin transactions also process in about a quarter of the time as Bitcoin transactions.

Due to this difference in transaction times, Litecoin halves its rewards to miners every time 840,000 blocks are mined, whereas rewards to Bitcoin miners are halved with the mining of every 210,000 blocks. Rewards are halved to maintain the relative scarcity of these cryptocurrencies and preserve their value.

Litecoin's mining algorithm, Scrypt, is newer than the SHA-256 algorithm used by Bitcoin. It also doesn't require as much computing power. Mining algorithms are sets of rules that govern the computational work performed to mine a cryptocurrency and verify its transactions.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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@LyleDaly

Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and PayPal. The Motley Fool recommends Coinbase Global and recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.