Cryptocurrency has always been a polarizing issue – and recent debates about how it should be regulated certainly add to the questions over its legitimacy. But with the popularity and supposed potential of cryptocurrencies like Bitcoin or Litecoin, surely it’s important to know what you’re talking about before you knock it (or, for those brave souls, before you invest).
Litecoin is often seen as the “silver” to Bitcoin’s “gold” – a valuable but somewhat lesser alternative. But Litecoin, as the faster transaction version of Bitcoin that actually has a higher cap of how many coins can be mined, is definitely worth looking into.
But before getting into the brass tacks of Litecoin versus Bitcoin, what actually is Litecoin and Bitcoin? There are no stupid questions here.
What Is Litecoin?
Just like other cryptocurrencies, Litecoin is a global, digital payment method that uses blockchain technology to transfer and trade “coins.”
Litecoin was originally created in 2011 by former Google (GOOG) engineer Charlie Lee, under MIT/X11 lісеnѕеѕ, as a peer-to-peer cryptocurrency. Since the creator of Bitcoin, Satoshi Nakamoto, made the Bitcoin code public, Litecoin is in many ways an extension or variation on Bitcoin since the code was open for modification (read: the Bitcoin code is essentially the foundation of various cryptocurrencies, including Litecoin). For this reason, coins like Litecoin are often referred to as “altcoins.”
However, Litecoin uses a different blockchain, which allows it to have a faster transaction or transfer speed. Litecoin uses an open source software to create and transfer coins, and is decentralized.
Since Litecoin hit the market, its growth has been pretty astounding. According to Forbes, Litecoin hit its peak in December of 2017, sitting at $360.93. At just $4.40 a year before, Litecoin saw an 8200% increase.
Like most cryptocurrencies, the future of Litecoin is very much in question, but these digital “coins” are starting to become more widely accepted as payment.
As of the writing of this article, one Litecoin is worth about $51 U.S. dollars (or, 1 LTC is worth $51 USD).
What Is Bitcoin?
Bitcoin, to many, is the original cryptocurrency that has (thus far) maintained its status as the most popular.
Created in 2009 by an unknown individual going by the alias Satoshi Nakamoto, Bitcoin was designed as an alternative currency that used blockchain technology to supposedly increase safety in financial transactions throughout the network.
Bitcoin essentially pioneered the cryptocurrency industry by allowing Bitcoin miners to mine and add coins to the public blockchain network. Bitcoin can also now be bought through exchanges, much like a stock can be purchased through the Dow Jones Industrial Average (DOW) or the S&P 500 . So, while Bitcoin is essentially a currency, it also kind of operates as a stock (so it’s a mixture of a lot of things).
As of the writing of this article, one Bitcoin is worth about $6,400 U.S. dollars (or, 1 BTC is worth $6,400 USD).
Litecoin vs. Bitcoin: What’s the Difference?
So, both Litecoin and Bitcoin are cryptocurrencies that share a similar basic structure and rely on crypto networks, but what are the differences between the two? And how do you buy them?
Algorithm and Mining
One of the principle differences between Litecoin and Bitcoin are their different cryptographic proof-of-work algorithms.
Bitcoin uses a traditional SHA-256 algorithm, while Litecoin uses an algorithm known as Scrypt. The way these two algorithms affect the difference between Litecoin and Bitcoin is based off of is the speed by which they are able to mine respective coins.
Litecoin’s algorithm is designed to produce about four times as many coins as Bitcoin does – producing one coin every 2.5 minutes (whereas Bitcoin produces one every 10 minutes). So, the speed of acquisition is really the main difference.
However, both Litecoin and Bitcoin use algorithms that use computing power to process transactions, which is accomplished by “miners” confirming transactions in their networks with their computing power and receiving coins in exchange. But the speed at which these transactions occur is very different for the respective Litecoin and Bitcoin algorithms.
Bitcoin’s SHA-256 algorithm, famous for being very complex, has been altered over the years by miners, and commonly uses what are called Application-Specific Integrated Circuits (ASICs) – hardware systems that can be customized for mining Bitcoin. For this reason, Bitcoin’s algorithm stresses processing power. However, one critique of Bitcoin’s algorithm has been that it is increasingly becoming more difficult for regular users to mine Bitcoin due to its complexity.
On the other hand, Scrypt, which is used by Litecoin, is generally a more efficient algorithm for mining cryptocurrency due to how it is designed to prevent too much customization with hardware solutions like ASICs….