Litecoin (LTC) is an alternative cryptocurrency created in October 2011 by Charles “Charlie” Lee. Litecoin is a fork of Bitcoin (BTC). Like Bitcoin, Litecoin is based on an open-source global payment network that is not controlled by any central authority. Litecoin differs from Bitcoin in aspects like faster block generation rate and use of Scrypt as a proof of work scheme.
Charlie Lee is a graduate of the Massachusetts Institute of Technology and a former Google engineer who became interested in Bitcoin in 2011. According to Lee, “In October of 2011, I was playing around with the Bitcoin code base, and I guess the short of it was that I was just trying to create… a fork of Bitcoin. It was mainly a fun side project.”
Scrypt Proof-of-Work Algorithm
Scrypt is a password-based key derivation function. According to Tarsnip, “the scrypt key derivation function was originally developed for use in the Tarsnap online backup system and is designed to be far more secure against hardware brute-force attacks than alternative functions such as PBKDF2 or bcrypt.”
Scrypt was developed by Lee specifically to make large-scale, custom-built hardware attacks on the currency more difficult. Bitcoin’s SHA-256 algorithm does not require a lot of random access memory (RAM) as an impediment to parallel processing, whereas Scrypt does.
At the beginning of the 2010s, as mining operations developed specialized hardware, like the application-specific circuit (ASIC) to solve SHA-256 hashing, it appeared that Bitcoin was vulnerable to such an attack. By making Litecoin’s consensus algorithm memory intensive, Lee sought to thwart the hardware arms race, though in practice that didn’t happen as the rise of GPUs answered the need for greater RAM.