What is Litecoin? – Comparison with Bitcoin cryptocurrency
In 2009, Satoshi Nakamoto launched Bitcoin as the first cryptocurrency in the world. This currency has open source, which means that anyone can modify it and use it freely for other projects. Shortly after Bitcoin, two very important cryptocurrencies appeared, namely Ethereum and Litecoin, and this article is primarily devoted to the question of what Litecoin is, and its comparison with Bitcoin.
Many cryptocurrencies have been launched with modified versions of this code, with varying levels of success. Over the past few years, public interest in cryptocurrencies has increased dramatically. The main focus of this interest was Bitcoin, which after its first public client in 2009 became a dominant name in the field of cryptocurrencies. In recent years, however, many other cryptocurrencies have entered the scene. Among them, one name that has earned increasing interest is Litecoin.
In addition to Bitcoin, Ethereum and Litecoin, which we will write about in this text, are the two most famous cryptocurrencies. Find out what Litecoin is, and what its advantages are compared to Bitcoin and other currencies.
What is Litecoin?
Litecoin was announced in 2011 with the goal of being “silver”, Bitcoin’s “gold”. On the surface, Bitcoin and Litecoin share a lot in common, at the most basic level, they are, both cryptocurrencies. While sovereign currencies such as the U.S. dollar or kuna rely on political and legal mechanisms for value and legitimacy, cryptocurrencies rely only on the cryptographic integrity of the network itself. But Bitcoin and Litecoin also differ in important aspects.
After a cursory look at what Litecoin is, read a little more about the differences in Litecoin and Bitcoin mining, transaction speed, investment potential and Litecoin, and how to buy Litecoin below.
Here is our guide that shows you the crucial differences between Bitcoin and Litecoin.
Differences between Litecoin and Bitcoin in mining
Just like Bitcoin, Litecoin is a cryptocurrency generated by mining. Litecoin was created in October 2011 by former Google engineer Charles Lee. The motivation behind its creation was the improvement of Bitcoin. The key difference for end users is the length of 2.5 minutes to create a block, unlike Bitcoin which has a length of 10 minutes. Charles Lee now works for Coinbase, one of the most popular online exchange offices.
However, for miners and enthusiasts, Litecoin has another very important difference from Bitcoin, and that is its different algorithm of proof of work. Bitcoin uses the SHA-256 hashing algorithm, which includes calculations that can be greatly accelerated in parallel processing. This is a feature that has led to an intense race in ASIC technology and has caused an exponential increase in the level of difficulty of Bitcoin mining.
Litecoin, however, uses a scripting algorithm – originally called s-crypt. This algorithm includes the SHA-256 algorithm, but its calculations are much more serial than those of the SHA-256 algorithm. S-crypt favors large amounts of high-speed RAM, not just raw processing power.
The consequences of using scripts mean that there hasn’t been as much racing and competition in Litecoin (and other scripting currencies) because (so far) there are no ASIC technologies available for this algorithm.
Currently, the “most modern” Litecoin mining platforms come in the form of custom computers equipped with multiple graphics cards (i.e. GPUs). These devices can process the calculations needed for scripts and have access to incredibly fast memory built into their own boards.
Differences between Litecoin and Bitcoin in transactions
The main difference is that Litecoin can confirm transactions much faster than Bitcoin, and it also has a significantly cheaper transaction cost. The implications of this are as follows:
- Litecoin can handle a larger volume of transactions thanks to faster block creation. If bitcoin were to try to compete with this, it would require significant code updates that everyone on the Bitcoin network is currently using.
- The disadvantage of this larger volume of blocks is that the Litecoin blockchain will be proportionally larger than that of Bitcoin, with more orphaned blocks. Separate or orphan blocks are valid blocks that are not part of the main chain. They can occur naturally when two miners produce blocks at similar times or they can be caused by an attacker trying to reverse transactions.
- Faster block creation time of Litecoin reduces the risk of a double spending attack – this is theoretically the case if both networks have the same hashing power. A so-called double-spending attack consists of sending the same payment to two recipients at the same time.
- A trader who has waited at least two confirmations should only wait five minutes with Litecoin while he should wait 10 minutes for only one confirmation with Bitcoin.
Transaction speed (or faster block generation time) and confirmation speed are often considered irrelevant by many involved in Bitcoin, as most traders will allow transactions that do not require confirmation for most purchases. It is necessary to keep in mind that the transaction is current, it is only confirmed by the network as it expands.
Market capitalization and popularity
At the time of writing (March 1, 18), Bitcoin’s market capitalization lies at about $ 180 billion. Considering that Bitcoin’s market capitalization in July 2010 was only around $ 42,000, its current figure looks staggering. While Bitcoin remains by far the most valuable player in the cryptocurrency space, others such as Litecoin (but also Ethereum and Ripple) are slowly catching up. What will be in the future we can only guess, but certainly cryptocurrencies are becoming more and more present on the market.
Investing in Litecoin
Litecoin is already one of the better known names in the cryptocurrency market, and is one of the first cryptocurrencies on the market. This is what gives Litecoin great opportunities for future growth, and for implementation in everyday life and the normal way of paying people. Unlike some new cryptocurrencies that have just been created, Litecoin with the name stands side by side with Bitcoin and Ethereum and is therefore one of the cryptocurrencies that carry the most potential for success.
Through the text we believe you have learned what Litecoin is, and you have decided for yourself whether investing in Litecoin is a smart move or not, and if you have decided to include it in the next paragraph we bring you more on how to buy Litecoin.
How to buy Litecoin?
Now that we have introduced you to Litecoin and how it works, it is important to mention how to buy Litecoin. Since it was created back in 2011, Litecoin can be purchased directly with a real currency (EUR, USD…), through the Coinbase exchange office. The tutorial on how to buy Bitcoin is the same as when buying Litecoin, only when buying choose Litecoin instead of Bitcoin.