Over the past few years, both the use of and interest in cryptocurrencies have grown. One of the most popular currencies used today is bitcoin, which was established in 2009. However, a lot of new currencies have since arisen, like Litecoin, which has remained competitive for a considerable amount of time. Don’t worry if you don’t understand how Litecoin and Bitcoin differ from one another; we’ll explain it in this Litecoin versus Bitcoin article.
Overview of Bitcoin and Litecoin
Over the past few years, interest in cryptocurrencies has grown, especially as more people have learned how useful they may be and how they can be used as investments. One of the most popular cryptocurrencies is bitcoin, which makes sense given that it was the first of its kind to appear.
There are several other cryptocurrencies available right now than Bitcoin, each of which has managed to differentiate itself in some way. However, not every cryptocurrency can stand out, and it can be particularly challenging for new ones to take off given how congested the market is right now. However, one of the currencies that is still in the race is Litecoin, which is also one of the most widely used cryptocurrencies.
Bitcoin’s market cap was $1 trillion in March 2021, whereas Litecoin’s was $13.7 billion. Additionally, the two use distinct algorithms. While Bitcoin uses the SHA-256 algorithm, Litecoin uses the more recent Scrypt method. It is crucial to remember that this is only a strategy to pique the curiosity of investors; it has no bearing on the usefulness or worth of the coin.
How Litecoin and Bitcoin Compare
Despite the fact that they are two separate types of money, Bitcoin and Litecoin have a lot in common. They are decentralized currency, for instance. Fiat currencies like the dollar rely on the support of the central bank for value, legality, and circulation management. This is not the case with cryptocurrencies, though. They rely on the network’s cryptographic integrity rather than being controlled by centralized authority.
Litecoin was once seen as having some connection to Bitcoin. When it first debuted in 2011, Charlie Lee, a former Google employee and the project’s founder, described Litecoin as a “lite version of Bitcoin. This message was published on a well used Bitcoin forum at the time. After all, the creators of Litecoin have frequently announced their intention to produce a silver alternative to Bitcoin’s gold.
As a result, Litecoin and Bitcoin share a number of characteristics, including:
Exchanges and Storage
Investors frequently believe that transactions done using Litecoin and Bitcoin are extremely comparable. They are simple to obtain through mining with a mining ring or purchasing them from the trade. They must be kept in a “wallet” in order to be stored securely in between transactions. As time passes, their prices become even more unstable.
Evidence of Work
The fact that both cryptocurrencies operate on proof-of-work ecosystems is another commonality between them. So, as already mentioned, the technique that makes it possible to mine both currencies is comparable.
Bitcoin and Litecoin distinctions
Although there are some similarities between Bitcoin and Litecoin, these two cryptocurrencies ultimately differ from one another and each has its own special characteristics.
Speed of Transactions
Most of the time, transactions involving Bitcoin and Litecoin are completed instantly. They must still wait until the other network users have confirmed the transactions.
Although it may take a little bit longer during periods of heavy traffic, the average transaction confirmation time for Bitcoin is less than 9 minutes. Litecoin was developed with the intention of accelerating transactions so that users would find it appealing enough to utilize. Transactions with Litecoin complete in under 2.5 minutes, which is one of the factors that contributed to its gradual rise in popularity.
Capitalization of the Market
The market capitalizations of the two cryptocurrencies vary. Litecoin was worth $13.7 billion by the end of March 2021, whereas Bitcoin was worth about $1 trillion.
The network of bitcoin is just bigger than that of other currencies. Long back, in July 2010, the market capitalisation of Bitcoin was barely $42,000. Its expansion has so been truly astonishing.
With a market worth of about $212 billion, Ethereum has a market value that is most comparable to that of Bitcoin. That Bitcoin is more valuable than Litecoin is therefore not surprising.
The algorithms used by Bitcoin and Litecoin are also dissimilar. Bitcoin employs SHA-256, while Litecoin uses Scrypt.
The outcomes of mining new currencies are affected differently by the two algorithms. Both Litecoin and Bitcoin transactions need a lot of processing power to be confirmed. Typically, SHA-256 is a more difficult algorithm than Scrypt.
To effectively mine bitcoins, the miners also explored employing some of the most advanced techniques. ASICs, specialized hardware devices designed to mine Bitcoins, were chosen by miners to accomplish this.
More individuals turned to Litecoin because Scrypt was designed in a way that makes it less vulnerable to ASIC-based mining custom hardware solutions. As a result, Litecoin appears to be more approachable for those who desire to work as miners.
Coin production is different for Litecoin and Bitcoin. There are only ever 21 million coins in bitcoin.Although initially advantageous, since both currencies can be divided into almost microscopic amounts, the consequences may actually be little.