The cryptocurrency litecoin made national news headlines this year, mostly for its rapid growth. News outlet CNBC reported that “Litecoin hit a record high, up nearly 1,400 percent this year.” Litecoin rose in rankings to the fourth-largest cryptocurrency in the world, and it wasn’t the only cryptocurrency experiencing growth – bitcoin, ethereum and many others were inching up as well.
The litecoin community, however, activated a technology upgrade this year, which sparked additional interest. Segregated Witness, which is also known as “SegWit,” increased the cryptocurrency’s capability and transaction speed, which are important factors in the mining process.
Prospective miners just starting out and those who have mined other cryptocurrencies but not litecoin in the past may wonder, “What is the best way to get started?” Here is a helpful guide to review before setting up a litecoin mining rig of your own.
Litecoin is often compared to the digital currency bitcoin, and for good reason. Litecoin was heavily influenced by bitcoin when Charlie Lee developed it in 2011. The theory and the setup are similar to that of bitcoin; however, there are a few major differences that set the two cryptocurrencies apart.
The lifetime cap of the currencies is different. Litecoin has a lifetime cap of 84 million coins, which is about four times more than bitcoin. In contrast, bitcoin has a cap of 21 million coins, and the currency is further along in its growth cycle, meaning that fewer coins are available. Fewer coins available can translate to a higher value for each coin.
Litecoin has faster block generation. The holy grail of mining is faster block generation. Rewards are earned only when blocks are generated, so the faster you can generate those blocks, the better. Litecoin’s block generation time is 2.5 minutes instead of bitcoin’s 10 minutes. As a result, litecoin transactions are confirmed about four times faster than those of bitcoin.
The proof of work algorithm is different. Bitcoin uses the SHA-256 algorithm, and litecoin uses a scrypt algorithm; they are very different. Here is a quick breakdown of the two algorithms.
Computers with powerful graphic cards (GPU mining) that were used frequently in the past for bitcoin mining but are rarely used today can be repurposed for litecoin mining. In addition, the scrypt approach to mining makes it easier for people with basic home computers to participate.
Are you new to mining cryptocurrencies? If so, you’ll find out quickly that the computers used to mine are called “rigs.” A personal computer can also be used to start mining by simply uploading the right software and joining a mining pool – or you can purchase one of these rigs.
Opting for a mining computer does have benefits, including the ability to keep the computer cool, since it runs for long periods of time. Prolonged heat can decrease the life span of a computer, so the ability to cool it is something to consider if you’re getting started with mining.
One popular option for litecoin mining is the ASIC Scrypt Miner. This is a dedicated machine that helps increase mining power. A low-power model can also help save on electricity bills and help increase your ROI when you calculate all the expenses associated with mining.
A benefit of using a dedicated ASIC Scrypt Miner instead of a personal computer is that the technology can typically mine other types of cryptocurrencies as well (some can even mine two simultaneously). Some new miners opt to purchase a secondhand unit from a dependable seller to minimize startup costs.
In addition to the hardware, you’ll also need to consider litecoin mining software options. If you purchase an ASIC device, many of the setups come with preinstalled software, so you should be set. If you don’t have software installed, here are a few options to consider.
Cgminer. This program was originally designed for bitcoin but can mine for litecoin via scrypt as well.
CUDAminer. This mining program is designed for a variety of cryptocurrencies, but also has the ability to mine litecoin.
Cpuminer. This program can mine for litecoin, bitcoin, and a variety of other cryptocurrencies.
Once you have a computer and your software set up, it’s time to start thinking about where you’ll keep all the litecoins that you’re awarded during the mining process. At this point, you may wonder, “How can I set up a wallet?”
With fiat currencies, you have a physical place where money is stored. Maybe it’s a bank or a simple wallet inside a purse or a back pocket. Cryptocurrencies are similar in that you need a place to store the altcoins; however, the storage method is much different.
Wallet encryption allows you to secure your wallet and view balance information and transactions from a desktop or mobile device. The wallet is password protected, requiring you to enter key information prior to sending litecoins, but it also offers protection from viruses and Trojans that may try to infiltrate and steal your altcoins.
Download a wallet at Litecoin’s website, which allows you to securely store litecoin on your computer, tablet, phone or laptop. Here is a link for download.
On the download page, there is also a visual at the top left-hand corner that verifies the current price per litecoin so you know today’s current value or if you are liking to buy litecoin.
Now that you’ve secured a litecoin wallet, let’s discuss the mining process in more depth. At some point, you will question whether working alone is the best choice or if you should join a group. The answer to this question will depend on your experience with cryptocurrencies and a few other factors. Let’s take a look.
Working alone is an attractive option, mostly because you don’t have to share the rewards, which adds more money to your wallet. But don’t be fooled by this appeal, especially if you’re totally new to mining.
Mining pools are beneficial to new miners because everyone’s resources are combined and block discoveries occur more frequently, meaning you are lowering the litecoin mining difficulty. For example, working alone, you may discover a block once a year, but when you work in a group, those discoveries – and mining outputs – are more frequent. Key to joining a group is understanding how the rewards are paid and split. Here is a breakdown of the two most common methods.
The proportional system. Everyone in the pool works, and once a user finds the block, the reward of that block is distributed among all users. The amount of payment received by each person is proportional to the number of shares that each member submitted.
The drawback to this type of setup is that it’s easy for a person to cheat the system. For example, “pool hopping” may occur, which is a method in which miners exploit payment mechanisms of various pools to increase their personal profits.
Pay-per-share system. For this approach, users are not rewarded based on how many blocks the pool actually finds, but instead on how many the group is mathematically expected to find. As a result, the group is paid a fixed number of litecoins, which is determined by the mathematical laws of probability.
The advantage of this approach is that users can enjoy a steady stream of mining outputs without the need to wait for blocks to be found and confirmed. The drawbacks affect mostly the operator of the group because he or she takes on the risk of having bad luck.
If you’re new to mining or want to start out slowly, join a group and measure the results. Payment is more frequent, and you can earn as you start to learn more about the mining process. Most headaches are off-loaded to the administrator of the pool, so the learning curve isn’t so intimidating.
What Is Genesis Mining? Genesis Mining offers you a smart and easy way to participate in mining. Our solution is suitable for those who are new to the world of cryptocurrencies, as well as for cryptocurrency experts and large-scale end users. Genesis Mining is the world’s first large-scale multi-algorithm cloud-mining service, offering an alternative to those who would like to engage in bitcoin and altcoin mining.
For more information, visit us at www.genesis-mining.com today.