"Why do people always assume I am lying?"
Adopted by Odin and Frigga at the end of the Asgardians' war with the Jotuns, Loki was treated as a prince of Asgard and was never informed of his true heritage throughout his youth.
Loki is smaller and thinner than Thor and most Aesir, and has darker eye and hair colour while paler in complexion than the Asgardians and is treated with less respect and acceptance because of it.
Throughout their childhood it is implied that Loki spent much of his time trying to prove himself as Thor's equal while being ridiculed for his obvious inadequacies which led to him studying sorcery and magic instead of trying to acquire strength that he would never attain.
Admittedly jealous of his step-brother, Thor, and anxious about a kingdom ruled by the loud and violent God of Thunder, Loki allowed several Jotuns to enter Asgard who then proceeded to try and steal the Casket of Ancient Winters during Thor's coronation. This does not mean however, that he doesn't still love his brother. Heritage
As the son of the Frost Giant Laufey, Loki holds no blood relations to anyone within the House of Odin. Having not been told of his true parentage for over a millennia, he did not react well at all to finding out the information mostly by himself. In his anger at being lied to, he managed to cause Odin to fall into the Odinsleep, partly due to stress. Powers and Abilities
As he is physically more inferior to all Asgardians, many believe Loki to be weak. However this is not true. While nowhere near the peak of Thor's physical prowess, Loki is actually stronger than the average Asgardian male. Though this is often unseen, due to his preferred way of battle which is mainly long distance.
Loki's magic is quite possibly the strongest in the entire realm and as a master of magic, many spells that would be difficult for most are child's play for Loki. His magical stamina also allows him to perform powerful spells continuously without becoming extremely fatigued after a short period. His most common form of sorcery is Illusion, being able to create endless copies of himself, disguise his appearance and that of others and casting an illusion over an area.
Proficient with throwing knives that he can summon to his hands, Loki is a deadly long distance opponent. As seen during the battle in Jotunheim, he is able of shattering a Frost Giant's ice encased hands with merely one small knife. He is also frighteningly accurate in his throws, as seen when he first comes to Earth and throws several knives at once, all of which hit the S.H.I.E.L.D Agents in the throat.
He is also seen to be adept at close combat, having easily overpowered Captain America, being able to hold his own against Thor and taking out several Dark Elves with nothing but a small dagger. While engaging in close combat, he is usually seen with either Odin's spear, an unnamed Sceptre and a dagger. His physical attacks have been proven to be quite damaging at close range, so he is not defenceless when close to his foes.
Loki is also vastly intelligent, easily achieving a genius level intellect. He is one of Asgard's greatest minds and knows many things that others don't, such as the secret paths through the realms. He is a brilliant strategist and knows how to make difficult decisions. Thor describes that he also understands how a King must rule off of the battlefield. Loki's mastery of magic also counts towards his intellect.
Loki is also a brilliant liar, and his words are often backed by illusions.