Undoubtedly, the world of cryptocurrency has reached a relevant maturity throughout these past 10 years in which everything began when Bitcoin was presented to the world. Today, there are many other virtual currencies for different purposes. In this post, we’ll talk about the differences between two of the biggest, Litecoin and Bitcoin.
First of all, we want to point out that, in the digital world, the possibilities for creating something innovative and disruptive are great. Initiatives in this sense are already part of crypto economics. This allows for the rapid creation of cryptocurrencies and applications that serve different types of audiences, solve problems and seize market opportunities.
Continue reading this post to understand better how this applies in the world of two of the most famous cryptocoins: Litecoin and Bitcoin as we create a list including the main differences between them.
In this article, you will read about:
- What are Litecoin and Bitcoin?
- What are the differences between Litecoin and Bitcoin?
- Limit of existing cryptocurrencies
- Mining Algorithm
- Average time to generate a transaction block
- Transaction Processing Capability
- Block Reward
- Creation date
- Market Potential
- Analogy with gold and silver
What are Litecoin and Bitcoin?
First of all, we’ll talk a little about each of the cryptocurrencies. So that you can better understand what their differences are.
Litecoin (LTC) is an altcoin, an alternative currency to Bitcoin. It was created in 2011 and is known for its high speed in processing transactions, meaning they are confirmed quickly. Today, many retailers accept Litecoin as a form of payment precisely because of this nimble return.
Bitcoin (BTC) is the world’s most famous cryptocurrency, the first to be created. It emerged in 2008, bringing the proposal of decentralization of the economy, ie, the need for banks and larger agencies controlling the transactions. It is the pioneer in this world and is based on one of the main technologies of today’s world: Blockchain.
What are the differences between Litecoin and Bitcoin?
Limit of existing cryptocurrencies
The first difference between both cryptocurrencies is their unit limit. First of all you have to understand that Litecoin and Bitcoin do not have an infinite number of units. That is, it is not the same as cash, in which Central Banks can issue more notes, there is an actual limit with these crypto assets. Today Bitcoin has a limit of 21 million units. It is not for nothing that it is compared to gold, which is a resource that is also finite – let’s talk about this later. On the other hand, Litecoin has a limit of 84 million units.
Another basic difference between Litecoin and Bitcoin is the algorithm that lies behind each of the mining processes of these virtual currencies. While Bitcoin uses the so-called SHA-256, Litecoin uses Scrypt.
In the case of SHA-256, calculations are performed in a manner that can be accelerated in several processes, but for this to be possible, they must run in parallel. When Bitcoin was released, the algorithm was a huge breakthrough, especially in the world of ASIC technology.
Scrypt, which is part of the Litecoin world, is an algorithm that is also built into the SHA-256. But their calculations happen in a serialized way, favoring machines that contain a large amount of RAM. That’s one of the main reasons why Litecoin has such an impressive processing time.
Average time to generate a transaction block
As we mentioned before, both Bitcoin and Litecoin are generated through mining, which exists precisely to record your transactions. Thus, the average time to generate a block also differs in both cryptocurrencies.
To make things clearer, Bitcoin takes, on average, about 10 minutes to generate a transaction block while Litecoin performs the same process in just over 2 minutes that is, which makes it about 4 to 5 times faster.
Incidentally, one of the great reasons behind Litecoin’s creationswas precisely this: to improve the block generation time that, according to Litecoin’s writers, left something to be desired in Bitcoin’s universe. In fact, a lot of altcoins are created for this sole purpose; to improve and address Bitcoin’s shortcomings.
Transaction Processing Capability
It is worth mentioning that Litecoin has a greater capacity to handle a large volume of transactions. This is mainly due to its operating algorithm, which allows a faster generation of blocks, as we mentioned have previously discussed.
It is also important to mention that it is practically impossible for Bitcoin to enter this type of competition with Litecoin, since it will require a lot of updates in its code. The reality is that there are many users running it currently, so this idea is practically unfeasible
For those who do not get it yet, when a transaction is posted to the network of one of these cryptocurrencies, the process of registering the transaction in one block begins. And this is nothing more than the mining of the cryptocurrency. It may seem simple, but behind it all there are users mining and putting their machines to the test to solve the algorithms we described earlier and, finally, to register that new block in the network.
Then, the user or group of users that obtain this first will be rewarded by means of payment of the own cryptocurrency. Given this scenario, there are also differences related to how these rewards work.
In the case of Bitcoin, it is made available every 210,000 blocks processed. Litecoin’s version, with every 840,000 blocks that are processed. In addition, both cryptocurrecies began to offer rewards of 50 units. Today, Litecoin maintains this number, Bitcoin already decreased that to 25 units.
Obviously Bitcoin and Litecoin were not created the same day. The latter, which is the first cryptocurrency that was presented to the public was created on January 3, 2009. Litecoin was created on October 7, 2011.
Therefore, it is normal for them to have different market potential from each other. For those who do not know, market potential is nothing less than the possibility that these cryptocurrencies will appreciate and grow based on potential consumers.
Bitcoin and Litecoin also do not share the same creator. Bitcoin was created by the famous Satoshi Nakamoto, who is considered to be one of the biggest references in the world of cryptocurrencies. Despite all the glamor that Nakamoto has received in recent years, his identity is still a mystery. Since no one knows for sure who he is. There are even suspicions that he is just a fictional character and that there is a group of people or someone who does not want to reveal it.
Litecoin was created by Charles Lee who is a computer scientist who entered the world of Bitcoin, became interested in the world of cryptocurrencies and Blockchain until he decided to create his own cryptocurrency. Today, he is one of the most active people in the world of cryptocurrencies.
Analogy with gold and silver
Finally, we must emphasize that there is a certain difference in the analogy of these crypto-coins with natural resources. Bitcoin has always been compared to gold, much to the esteem that its value has, as well as being a finite resource. That is, just like metal, one day there will be no more Bitcoins to be mined.
You could note that even though they are in the same world, Litecoin and Bitcoin have significant differences in how they function right? Continue to deepen your study in these two cryptocurrencies to know more.