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Getting Started with Bitcoin.

What is Bitcoin?

Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. [1]

WHY USE BITCOIN?

Bitcoin the currency was the first of its kind: a global, decentralized cryptocurrency. While this sounds strange, it actually makes sense. As the world becomes less dependent on states and borders, the internet is a shared space where anyone in the world can communicate or create business. A universal currency not dependent on any single country makes more sense if you view the internet as its own nation-state. Just like temperature, distance, and weight are measured the same way across the world, why shouldn’t there be one unit of account for value?

What specific advantages does bitcoin offer as currency, besides the fact that it’s global?

Bitcoin Isn’t Controlled by a Central Authority

Unlike fiat currencies, which are controlled and issued at will by politicians or policy makers, Bitcoin is just a network of computers. Bitcoin’s rules are set in its code, and can only be changed with consensus agreement. This seems unimportant to most westerners, who are lucky enough to be using decently stable currencies. However, in countries like Russia, Venezuela, or Argentina, government abuse of money supply has sapped the wealth and savings from hundreds of thousands of families.

Bitcoin is different, because it requires consensus and no single organization or authority has the power to issue new money, block or filter transactions, or create new rules. This leads us to the next reason…

Bitcoin’s Supply is Capped at 21 Million Bitcoins

Unlike fiat currencies, which almost always die out due to inflation, Bitcoin’s consensus rules ensure that there will only be 21 million bitcoins. How do we know this? Let’s look at what would happen if someone were to try to create new bitcoins.

Since Bitcoin is open source code, anyone can copy the current Bitcoin code and create their own version. Let’s imagine your friend Bob created a new version of Bitcoin. He decided that this version of Bitcoin will give him, and only him, 10 bitcoins per day, in addition to the already set 21 million cap. Why wouldn’t this work? Couldn’t Bob get rich? No, since Bitcoin requires consensus rules, and Bob changed the rules. Other instances of the Bitcoin software would treat any transactions created by Bob’s version of Bitcoin as invalid.

Anyone can try to create new rules, increase Bitcoin’s supply, or block transactions. But in order for this to happen, the entire Bitcoin network must agree. Since any change that gives an unfair advantage to any one party wouldn’t be agreed upon, we can be positive that Bitcoin’s supply cap will remain at 21 million.

With a limited supply, Bitcoin eventually becomes a deflationary currency. Unlike fiat currencies, which encourage spending, debt, and lending, deflationary currencies encourage saving. Assuming the number of Bitcoin user’s continues to grow, the price of one bitcoin must increase in order to absorb new investors and users. Like gold, commodities with fixed supplies retain value by providing stability and predictability to investors.

No Capital Controls

Capital controls are another topic that most western countries don’t understand or care about. But for citizens in countries like Greece or Cyprus, capital controls are real and limit how people can use their own hard-earned money. Because Bitcoin is just a network and not controlled by a single authority, there are no send limits and no transactions can be blocked. Bitcoin may be the only way to send an unlimited amount of money anywhere in a place with capital controls.

“I believe so much strongly in mathematics and purity and science… Bitcoin is mathematically defined. It’s pure. There’s no human and company run in it. To me, that’s natural and more important than human conventions,”Steve Wozniak, Apple Co-Inventor

WHAT IS LITECOIN?

The launch of Bitcoin as an open source software gave developers the opportunity to fork the original codebase and add whatever features they wanted; thereby creating a new cryptocurrency. And that’s precisely what Charlie Lee did. Even before it was three-years-old, Bitcoin was being bogged down by a few pestering problems. Among them, the most constant were the long transaction times and the mining of bitcoins being skewed in the favour of mining conglomerates. Recognising the market potential of a cryptocurrency that solves these problems, Charlie Lee came up with Litecoin.

The first problem Litecoin addressed was transaction time. While the Bitcoin network processes a block every 10 minutes, Litecoin does it every 2.5 minutes. This four-fold increase in block generation results in quicker transactions and enables the network to handle higher transaction volumes while scaling. Litecoin also has a maximum supply of 84 million tokens (four times that of Bitcoin’s) of which 54.26 million are currently in circulation. While it may seem like the network will soon run out of new coins, analysts predict that this will happen only around 2142. And that’s considering the current mining difficulty rate.

The second major difference between Litecoin and Bitcoin is in the Proof-of-Work algorithms they use. While Bitcoin uses the processor-intensive SHA256 algorithm, Litecoin makes use of the memory-intensive scrypt algorithm. In its nascent stages, Bitcoin could be mined by CPUs and GPUs. However, as competition in the network increased, specially-built FPGA and ASIC devices - with vast processing capabilities, had to be used to mine bitcoins. And since these devices are expensive and require large amounts of electricity to operate, those who could afford to run them quickly monopolised the Bitcoin mining community.

To prevent the same from happening with Litecoin, Charlie decided to adopt the scrypt algorithm instead. Scrypt was specifically designed to make it difficult and expensive for processor-intensive devices to mine Litecoin. It does so by requiring large amounts of memory, something which ASIC miners and the like are short on. So miners with several ASIC miners can’t mine Litecoin efficiently and hence can’t control more of the network. This makes the cryptocurrency more accessible to everyone and thereby contributes to a more decentralized system.

Currently, Litecoin has 4 distinct advantages over Bitcoin:

  1. Speed - Litecoin is confirmed faster than Bitcoin because it generates a block every 2.5 minutes as opposed to Bitcoin’s 10 minutes. This means you get your money quicker.
  2. Liquidity - Litecoin will produce a total of 84 million coins as opposed to Bitcoin’s 21 million. This means that it will be more readily available for daily purchases instead of being hoarded like Bitcoin.
  3. Equality - Litecoin miners use a slightly different mining protocol which creates a fairer distribution of coins.
  4. Technology - Litecoin is capable of testing and implementing technology faster than Bitcoin. For example, Litecoin pioneered the way for the technology called Segregated Witness by implementing it three months before Bitcoin. This technology is significant because it allows both Bitcoin and Litecoin to scale by allowing more transactions to be processed at once as well as second layer solutions such as the Lightning Network.

With all that being said, it is important to note that Litecoin was created to complement, not replace, Bitcoin. The reason for this is because Bitcoin can’t scale to become a global currency. In light of this, Charlie believes Bitcoin should be treated like gold; a store value. It should be used for larger purchases, such as houses or cars, because it is so expensive and takes longer to confirm. Litecoin, on the other hand, should be used for your everyday purchases such as groceries, meals, and gas. In this way, Charlie envisions Bitcoin and Litecoin co-existing together by serving different purchasing purposes.

what is litecoin?

Now that you have a basic understanding of what Bitcoin and cryptocurrency is and does, I recommend to research further into the technology, use case and application of the world's best store of value. Below are some helpful links to getting started.

RESOURCES

PURCHASE BITCOIN

Bitcoin ATMs

Coin ATM Radar - Find Bitcoin/Crypto ATMs near you.
Bitcoin ATM Map - Find Bitcoin/Crypto ATMs near you.

Fiat to Cryptocurrency Exchange

Coinbase - Buy, sell Litecoin/LTC & Bitcoin/BTC with USD and other fiat currencies.

Crypto to Crypto Exchanges

Binance - trade various alternative cryptocurrencies. No fiat pairings.
Kucoin - trade various alternative cryptocurrencies. No fiat pairings.
Cryptopia - trade various alternative cryptocurrencies. No fiat pairings.

STORE BITCOIN

Ledger Nano S - Hardware wallet for storing cryptocurrencies offline. One of the safest ways to store your crypto long term.
Trezor - Hardware wallet for storing cryptocurrencies offline. One of the safest ways to store your crypto long term.
Exodus - One of the best desktop hot wallets. Not recommended for large quantities of crypto.
Loaf Wallet - Mobile wallet for litecoin. Useful for day to day use.
Jaxx Wallet - Mobile & desktop wallet for various popular cryptocurrencies.

RESEARCH

Websites

Litecoin School - Educational site for understand litecoin and its technology.
The Chart Guys - Learn cryptocurrency & traditional market trading.
The History of Bitcoin - Visual timeline of Bitcoin's history.
The Complete Satoshi - Collection of writings from Bitcoin's anonymous creator Satoshi Nakamoto.

Videos
Bitcoin for Beginners - Video series explaining the ins & outs of Bitcoin.
"Magic Money" The Bitcoin Revolution - Documentary film
The Bitcoin Phenomenon - Documentary film

Articles
Essays on Bitcoin - Collection of essays from some of the best minds in Bitcoin.
Cryptocurrency Wallet Guide - Explanation of the various types of cryptocurrency wallets.