Litecoin vs bitcoin, What’s the difference?
Decentralized cryptocurrencies are at the limelight in the world of finances during the last decade. Despite the lack of strict government regulations, digital assets are increasingly popular. Besides Ethereum, Bitcoin and Litecoin are the most famous cryptos. If you cannot decide whether you should invest in bitcoin or Litecoin, this piece of writing is for you. Also, if you just want a full grasp of these cryptos regarding their market cap, transaction confirmation time, number of coins, etc. Besides, we will get into the more technical aspects like mining and hashing algorithms for the geekiest readers. So, let’s get started with our Litecoin vs. Bitcoin overview.
Litecoin vs. Bitcoin General Overview
Since the creation of Bitcoin, many coins have been forked. One of the Bitcoin forks is Litecoin, the lite version of Bitcoin. They are based on the same underlying blockchains, but still, there are many differences. There is a significant difference in their market capitalization. The current market cap of Litecoin is $6.93B. The market capitalization of bitcoin is 454.42B. Litecoin’s circulating supply is capped at 84 million coins and bitcoins at 19.28M. Both cryptos use a proof of work consensus mechanism. The biggest difference between these consists of hashing functions.
Litecoin: what is it for?
First of all, the primary function of Litecoin is to be a currency that people can use for everyday payments. While most people believe Bitcoin is meant to be a long-term store of value. Some people think Litecoin should be like cash, which we use daily. While to maximalists, Bitcoin is like gold locked away in a vault, Litecoin is treated as something rare that is kept safe and only used for important purposes as and when its value increases.
Before going into the technical details of Litecoin, let’s discover its creator, Charlie Lee. Charlie Lee has loved poker for a very long time. He understands the technical aspects of how it works and has had a good education.
He got himself a job as a software engineer at Google. Later, he would become head of engineering, then chief engineering officer of Coinbase from 2015 to 2017. He, therefore, already had notable experience.
He created Litecoin as a faster, cheaper, and more decentralized version of Bitcoin. We’ll skip many basics, like how Proof-of-Work works and private and public keys, to focus on what makes Litecoin different.
What is Bitcoin used for?
In 2009, Satoshi Nakamoto introduced bitcoin to the world as a digital currency. The code is available for public use, allowing people to modify and use it for their projects. Subsequently, multiple cryptocurrencies have been developed from the same code, some of which have been more successful than others.
Many cryptocurrencies have been launched with modified versions of this code, with varying levels of success. Bitcoins are used as a means of direct payment online. However, they can be converted into dollars or euros on markets provided for this purpose.
Physical coins have even been launched, which can be purchased online using virtual Bitcoins or traditional payment methods. They remain, however, largely in the minority.
Litecoin vs Bitcoin – Transaction speed
Let’s see how Litecoin manages to make its transactions faster, cheaper, and more decentralized.
Bitcoin is designed to collect and process all transactions in ten-minute intervals, grouping them into blocks. A block must wait ten minutes before being added to the blockchain. Litecoin reduces this time to two and a half minutes, making it four times faster.
Litecoin can process a far greater amount of transactions per second than Bitcoin.
Bitcoin can only perform about five transactions per second, at an approximate cost of $2 per transaction, but sometimes as high as $10.
Litecoin has successfully implemented certain enhancements that enable it to process up to 54 transactions in a second at a much lower cost of only one penny per transaction.
Next, Litecoin is “open source.” The open-source nature of Litecoin and Bitcoin allows anyone to examine the code that runs the networks and propose potential changes if they desire. If the suggestion is well-received and more than half of the miners approve it, then the code is accepted. Furthermore, both cryptocurrencies can be divided into eight decimal places, with one Litecoin being referred to as a “photon,” and the same amount of Bitcoin is called a “sat.”
Litecoin and Bitcoin are alike in that they can be divided into eight sections, with one unit of Litecoin referred to as a “photon” and the same amount of Bitcoin being referred to as a “satoshi.”
One of the unique things about Litecoin is that it was the first network to adopt and use the Lightning network. However, the Lightning Network is a Tier 2 solution that allows users to transact in seconds, almost free of charge, and greatly simplifies payments.
Bitcoin vs Bitcoin Hashing power
Just like bitcoin, Litecoin is a virtual currency generated by mining Litecoin. Charles Lee, a former Google engineer, developed Litecoin in October 2011 to improve bitcoin. It is a virtual currency mined like Bitcoin but has a much quicker block generation time, taking only 2.5 minutes instead of bitcoin’s 10. Lee now works for Coinbase, a widely used bitcoin wallet. The hashing power of bitcoin’s network is far greater than that of Lite coins, with 20,000 Terra Hashes per second compared to 95,642 Mega Hashes per second.
Currently, the entire hashing power of the BTC network is significantly higher than the Litecoin network, with the former producing 20,000 Terra Hashes in a second, compared to the latter’s 95,641/second.
At the moment, “state-of-the-art” LTC mining rigs are in the form of custom PCs equipped with multiple graphics cards (e.g., At one point, GPUs were used to mine Bitcoin, but with the introduction of ASICs, this became an inefficient method. GPUs can still deal with the calculations necessary for the script and can access specialized memory integrated into the cards.
In the past, it was possible to profit from bitcoin mining with GPUs, but the introduction of ASICs rendered this approach inefficient and obsolete.
Litecoin vs Bitcoin hashing algorithm
One of The most significant alterations to Litecoin is the type of hashing algorithm employed. Mining is the process of the computer attempting to solve a particular problem through this algorithm. Litecoin is a Proof-of-Work (PoW) consensus cryptocurrency, meaning miners use their computing power to try to guess the solution of the next block.
When Litecoin was designed, miners who used the Bitcoin system saw they could create machines specifically built to extract Bitcoin quicker. This exclusive and specific hardware was costly but much more efficient than a regular computer at resolving Bitcoin’s puzzle. Charlie Lee sought to implement a new hashing algorithm to even the playing field and allow miners to use their computers to mine competitively and add blocks to the chain.
He chose the Scrypt algorithm to make the blockchain more open to anyone with a computer to join the network, allowing them to receive Litecoin as a reward for mining. They could create ASICs specifically to solve the Scrypt hashing algorithm.
Unfortunately, it is no longer very profitable to mine Litecoin with your computer today. However, it is worth noting that you can do something called “merge. Merging two different cryptocurrencies can be done on the same hardware without needing extra energy, known as merge mining. Dogecoin, the second most common cryptocurrency that uses the Scrypt hashing algorithm, is often mined alongside Litecoin, meaning many miners are simultaneously mining both.
Litecoin vs Bitcoin Tokenomics
One of the best things about Litecoin is its tokenomics. Litecoin has not done any prelaunch, pre-mining, or ICO.
Instead, they launched very evenly, basically saying anyone can start mining Litecoin on this date. In this way, the miners obtained the first batches of Litecoins. This is exactly how Satoshi launched Bitcoin in its early days.
Unfortunately, when the cryptocurrency was at its peak value, Charlie Lee chose to offload his entire Litecoin holdings. He claims he did it to see how much influence he had on the coin, but many investors were upset that he sold all of his coins on the market at once and for no other good reason. Nevertheless, he is still working on improving the protocol.
Furthermore, there will only ever be 84 million Litecoins created, which is exactly four times more than Bitcoin. Litecoin also follows the same four-year schedule where mining rewards are halved every four years (Halving).
And since all transactions are public, we can check individual wallets and see that there are not many whales; most of the biggest holders are known exchanges.
Litecoin has closely followed Bitcoin’s price development as it is almost the same thing with some minor differences, including different use cases. It will therefLitecoin is a type of digital currency secured through a process called Proof-of-Work (PoW), where miners use computing power to attempt to solve the next cryptographic puzzle.
In addition, the Litecoin Foundation is overwhelmingly managed by volunteers who support the project. Thanks to this and the Fair Launch, you will never see expensive marketing budgets spent on Litecoin. If you have heard of it, it is because the community members are passionate about the project and are, in fact, very active.
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