A Litecoin wallet is where you manage your Litecoin. To understand the concept of a wallet, one can compare a wallet with the use an email account. With your email account, you can receive and send emails. A Litecoin wallet is similar in that you can receive and send Litecoins. On a technical level a wallet foresees in six functions.
- Create private keys.
- Create public keys derived from the private keys.
- Generates Litecoin addresses from these public keys.
- Sends Litecoin by approving transactions, verified by the special signature derived from your private key.
- Shares, or broadcasts, this information with the Litecoin network.
- Receives and keeps track of your Litecoin.
Like an email account having a email address, the Litecoin wallet provides an Litecoin address. Similar sending email to email addresses, Litecoin can be send to Litecoin addresses.
Two possible ways are used in order to generate Litecoin addresses. The first way is via seed keys, a set of words which must be kept in order and spelled correctly. Your wallet uses the seed key to generate a set of private keys. The public key is derived from the private key. Next the Litecoin address is a string of alphanumeric numbers that are derived from the public key.
In short, Seed Keys > Private Keys > Public Keys > Litecoin addresses.
IMPORTANT: Keep your seed keys private. Never share your seed keys (or private keys) with anyone!
The second way of creating Litecoin addresses is by randomly generating a number which is then used to generate a private key.
In short, Random Number > Private Key > Public Key > Litecoin Addresses.
Currently there are two types of Litecoin addresses. The first is L-addresses. These are non-SegWit (Segregated Witness) which are also referred as legacy addresses. The second type of addresses is M-addresses. These are Segregated Witness addresses that allow you to send Litecoin with lower fees.
Note: Some exchanges have not supported M-addresses yet.
Different types of wallets
Litecoin wallets are available on numerous platforms including web based and online exchanges. Online exchanges are one of the easiest ways of buying Litecoin. Some exchanges allow to link your bank, making it easy to buy Litecoin with fiat.
One can make a distinction between types of wallets.
- Hot wallets are connected to the internet and/or use servers of third parties. Although one has full control over the wallet, these wallets are not recommended for storing large amounts of Litecoins.
- Cold wallets are a better option because the private keys are stored externally on paper. Still when creating these wallets there is a (very) small likelihood that the private key is shared to the outer-world.
- Hardware wallets are the solution for store large amounts of Litecoins and other cryptocurrencies like Bitcoin or Ethereum.
Note: Some wallets are specifically for Bitcoin. However the questions addressed are valid for Litecoin.
Hot wallet (software)
Desktop (Windows, Mac OS, Linux)
Litecoin Core is maintained by the Litecoin Core development team. This wallet is full node and serves the Litecoin p2p network. Litecoin Core when once installed, synchronizes with the network and joins it to relay transactions. As a newcomer, you should probably stay away from this wallet as it is a bit technical.
Electrum-LTC is available for Windows, Mac OS X and Linux. It is a simple but powerful Litecoin wallet. Compared to Litecoin Core the wallet requires no lengthy blockchain downloads and no syncing to the p2p network. A twelve-word security passphrase or seed is your backup.
Mobile (Android, Apple iOS)
LoafWallet is the first standalone Litecoin wallet built for iOS and Android. The wallet is maintained by the Litecoin Foundation. LoafWallet makes a direct connection to the network. Free to download in the Apple App Store or Play Store.
Jaxx IO offers a multi-wallet and supports many of the leading cryptocurrency platforms including Litecoin. The integration of ShapeShift is providing the exchange service for converting between blockchain tokens and coins. Jaxx IO is available for other platforms including Windows, Apple and Linux.
Coinomi is also a multi-wallet with native support for Bitcoin and most major altcoins. Coinomi also makes use of ShapeShift. Coinomi is available for Google Android and Apple iOS.
LiteVault is a web-based wallet, which functions inside the webbrowser. Full worldwide access to your Litecoins. LiteVault cannot access your Litecoins. The wallet is encrypted on their servers.
Hardware wallets store the private keys in the device and cannot be transferred out of the device. This makes them also immune to computer viruses. The use of hardware wallets is easy and interactively, compared to paper wallets which at some point must be imported in order to execute transactions. Next to the safety and easy of use, hardware wallets provide a platform for storing multiple cryptocurrencies like Bitcoin, Litecoin and Ethereum. Ledger provides best quality/price hardware wallets for multiple cryptocurrencies.