Litecoin and Bitcoin are both one of the largest cryptocurrencies in the world. Litecoin is often called the silver to Bitcoin’s gold. Though both coins are inherently similar and have similar objectives, there are few differences between the two.
Bitcoin and Litecoin Origin
The concept of Bitcoin originated as a “peer-to-peer electronic cash system” which was pioneered by an unknown developer or group of developers using the pseudonym Satoshi Nakamoto. At first, a whitepaper authored by Nakamoto surfaced, and soon after, the Bitcoin blockchain came into being. Some of the earliest BTC coins were mined by its creator.
Litecoin, on the other hand, is a fork of the Bitcoin blockchain. Charlie Lee, a former Google employee and former Engineering Director at US-based crypto exchange Coinbase is credited for the release of Litecoin which went live in October of 2011. Technically, Bitcoin and Litecoin are the same as they originate from the same source code, but Litecoin comes with a few modifications.
Bitcoin generates a new block every 10 minutes which means that transactions can only be verified after 10 minutes of completion. This makes Bitcoin one of the slowest payment processing blockchain networks in the world.
Litecoin aims to make the block time go down to 2.5 minutes, a 4x improvement in speed compared to the Bitcoin network. This means that transactions can be verified more quickly, allowing users to make payments without worrying about slow speed on the Bitcoin network. It also makes Litecoin a very attractive option for merchants who could get confirmed transactions faster.
Increased Number of Coins
The Bitcoin network has a hard cap on the total number of BTC to be mined, i.e., 21 million. This doesn’t mean that Bitcoin doesn’t have smaller units. It can be divided up to eight decimal points, and the smallest unit in the BTC network is called Satoshi.
In the Litecoin network, the hard cap for coins was increased to 84 million. Though Litecoin is also divisible, the larger number of coins could provide a psychological advantage to the users who may feel more comfortable sending whole coins instead of a small fraction of a Bitcoin. This prospect was highlighted by IBM executive Richard Brown, noting that the larger number of coins could be beneficial for LTC.
The most significant technical difference between the two blockchain networks is the algorithm. Bitcoin follows an SHA-56 algorithm which takes 10 minutes to process transactions and mine new blocks. Not to mention, the process of generating a new block is extremely difficult and expensive. The Bitcoin algorithm demands a lot of power and is significantly slower.
Bitcoin miners have shifted from the traditional CPUs and GPUs to the new ASICs. These hardware devices were designed specifically for helping mine Bitcoins more efficiently than their predecessors. However, these devices are quite expensive because of which average users find it difficult to participate in Bitcoin mining.
The speed of the algorithm was one of the major reasons why Charlie Lee moved away from Bitcoin. He worked with Scrypt, a new algorithm that was faster than the SHA-256. It is less susceptible to the ASIC-based miners which means that average users can also participate in LTC mining. There are some companies, however, that have come up with Scrypt ASIC miners as well.
Some Bitcoin enthusiasts suggest that SHA-256 is more secure as compared to Scrypt since it takes its time to process transactions. They believe that Scrypt rushes the transactions, which could cause a huge security loophole.
Bitcoin network currently offers a block reward of 12.5 BTC per block which brings at around 1800 new BTC into existence every day. Bitcoin will cut this value by half in 2020.
Litecoin currently offers 25 LTC as block rewards to the miners. While this network offers more coins, the USD value of LTC is far lesser than BTC.
Bitcoin is the largest cryptocurrency in the world with a market capitalization of over $71 billion. Each Bitcoin is valued at approx. $4,000, making the most valuable cryptocurrency in the world. At the height of the crypto mania between December 2017 and January 2018, Bitcoin touched its all-time high price of $20,000 on some exchanges.
Litecoin, on the other hand, is priced at approx. $61 with a market capitalization of over $3.7 billion. This makes Bitcoin about 19x more valuable than Litecoin in the current market conditions. LTC is currently the eighth largest digital asset in the world. Litecoin’s all-time high was approx. $375 reached during December 2017.
Since reaching their historic highs, both currencies have dropped significantly.
Both Bitcoin and Litecoin have are known to focus on creating payment networks, unlike blockchains like Ethereum that focus more on the creation of DLT-based smart contracts. Litecoin, however, has positioned itself as a more merchant-friendly blockchain payments solution, owing to its shorter transaction confirmation times.
However, when it comes to mining, both Bitcoin and Litecoin have significant degrees of centralization. In Bitcoin, a little less than 25% of the hash power is controlled by two mining pools– BTC.com and SlushPool. The top five mining pools, which also include F2Pool, Poolin, and Antpool together control over 50% of the total hash power of the network.
Litecoin is no different. About 18.4% of the total hash power is controlled by F2Pool, followed by LitecoinPool.org and ViaBTC.com which control 14% and 13% of the hash power respectively. The other two large mining pools are LTC.top with 11.8% hash power control and AntPool with 9.2% control. These top five mining pools control over 66% of the total hash power of the network.
The Bitcoin Core development team and the rest of the Bitcoin community are vocal about both problems and pros of the network. Litecoin doesn’t have a community as engaged as Bitcoin. In fact, the creator of Bitcoin noted in December 2017 that he has sold or donated all of his LTC holdings. He said that holding LTC was a conflict of interest for him.
In essence, Bitcoin and Litecoin are two of the largest and most well-known cryptocurrencies in the market that have cemented their reputation owing to their wider adoption and the support of a broad user base.
The post Litecoin (LTC) vs. Bitcoin (BTC) – What’s the Difference? appeared first on TokenMantra.