Beyond the past several years, public interest in cryptocurrencies has increased dramatically. The channel focus of this interest has been Bitcoin, which, following the manumission of its first public client in 2009, has become the dominant name in cryptocurrency. In brand-new years, however, many other cryptocurrencies have entered the brouhaha. Among these, one name which has garnered increasing interest is Litecoin. To say the least, Litecoin’s own developers have long stated that their design is to create the “silver” to Bitcoin’s “gold”. In this article, we will tour the similarities and differences between these two leading cryptocurrencies.
On the surface, Bitcoin and Litecoin partition a lot in common. At the most basic level, they are of course both cryptocurrencies. Whereas circumstances currencies such as the U.S. dollar or the yen rely on political and legal mechanisms for value and legitimacy, cryptocurrencies rely alone on the cryptographic integrity of the network itself. Yet Bitcoin and Litecoin also fall out in important respects. In what follows, we will address four of their sundry important differences, progressing from the most straightforward differences to the various complex. (Read more What Is Litecoin And How Does It Work?)
Market-place Capitalization and Popularity
At the time of writing, Bitcoin’s market capitalization hold backs at roughly $217 billion. Whether this figure strikes you as either high-priced or low will depend largely on your historical perspective. When we examine that Bitcoin’s market capitalization was barely $42,000 in July 2010, its in the air figure seems staggering. While Bitcoin remains by far the most very valued player in the cryptocurrency space, others such as Ethereum, Purl and Litecoin are catching up.
We can now ask the question, what other characteristics set Bitcoin and Litecoin to?
Total Amount of Coins
One of the main differences between Bitcoin and Litecoin responsibilities the total number of coins which each cryptocurrency can produce. The Bitcoin network can not under any condition exceed 21 million coins, whereas Litecoin can accommodate up to 84 million silvers. Although in theory this sounds like a significant advantage in favor of Litecoin, its real-world objectives may be negligible. This is due to the fact that both Bitcoin and Litecoin are divisible into hardly infinitesimal amounts. In fact, the minimum quantity of transferable bitcoin is one hundred millionth of a bitcoin (0.00000001 bitcoins) recollected colloquially as one “satoshi.” Users of either currency should therefore acquire no difficulty purchasing low-priced goods or services, regardless of how high the broad price of an undivided single bitcoin or litecoin may become.
Despite this, Litecoin’s major number of maximum coins might offer a psychological advantage beyond Bitcoin, due to its (so far) smaller price for a single unit. In a video interview staked by IBM’s banking division in November 2013, IBM executive Richard Brown increased the prospect that some users may prefer transacting in whole items rather than in fractions of a unit—a potential advantage for Litecoin.Yet cool assuming that this is true, this problem may be solved finished with simple software changes introduced at the level of the digital wallets from one end to the other which Bitcoin transactions are made. As Tristan Winters points out in a November 2013 Bitcoin Journal article, “The Psychology of Decimals,” popular Bitcoin wallets such as Multibit and Electrum already tender users the option of displaying the value of their bitcoins in terms of pompous (or fiat) currencies such as the U.S. dollar. This can help circumvent the intellectual aversion to dealing in fractions when using bitcoin.
Transaction Processing Zoom
Although technically transactions occur instantaneously on both the Bitcoin and Litecoin networks, leisure is required in order for those transactions to be confirmed by other network become associated withs. According to data from Blockchain.info, the Bitcoin network’s long-term for the most part transaction confirmation time is just over 9 minutes per transaction. The equivalent compute for Litecoin is roughly 2.5 minutes, according to data from BitInfoCharts.com. In morals, this difference in confirmation time could make Litecoin sundry attractive for merchants. For example, a merchant selling a product in exchange for Bitcoin liking need to wait nearly four times as long to confirm payment as if that anyhow product were sold in exchange for Litecoin. On the other hand, shopkeepers can always opt to accept transactions without waiting for any confirmation at all. The security of such zero-confirmation matters is the subject of some debate. However, recent innovations such as Bitpay’s proposed Inter-Channel Payments set-up (nicknamed “Impulse”) may make these kinds of instantaneous transactions significantly uncountable secure, mitigating Litecoin’s faster confirmation time advantage.
Original Algorithms: Bitcoin’s SHA-256 vs. Litecoin’s Scrypt
By far the most fundamental complicated difference between Bitcoin and Litecoin are the different cryptographic algorithms which they take up. Bitcoin makes use of the longstanding SHA-256 algorithm, whereas Litecoin gathers use of a comparatively new algorithm known as Scrypt.
The main practical significance of these unlike algorithms is their impact on the process of “mining” new coins. In both Bitcoin and Litecoin, the organize of confirming transactions requires substantial computing power. Some fellows of the currency network, known as miners, allocate their own computing resources toward the criticize of confirming the transactions of other users. In exchange for doing so, these miners are rewarded by reaping units of the currency which they have mined. (Read more What Is Bitcoin Mining?)
SHA-256 is conventionally considered to be a more complex algorithm than Scrypt, while at the nonetheless time allowing a greater degree of parallel processing. Consequently, Bitcoin miners in current years have utilized increasingly sophisticated methods for mining bitcoins as efficiently as practicable. Today, the most dominant method for Bitcoin mining consists of the use of Application-Specific Blend Circuits (ASICs). These are hardware systems which, unlike the direct CPUs and GPUs which came before them, can be tailor-made for the personal purpose of mining bitcoins. The practical consequence of this innovation has been that Bitcoin mining has transform into increasingly out-of-reach for the everyday user.
Scrypt, by contrast, was deliberately charted to be less susceptible to the kinds of custom hardware solutions employed in ASIC-based mining. This has led various commentators to view Scrypt-based cryptocurrencies, such as Litecoinm as being numerous accessible for users who also wish to participate in the network as miners. In new years, however, companies such as Zeus and Flower Technology eat brought Scrypt AISCs to the market, suggesting that Litecoin’s far-sightedness of easily accessible mining may become a thing of the past.
The Bottom Track
While Bitcoin and Litecoin may be the gold and silver of the cryptocurrency space today, CV has shown that the status quo in this dynamic and emerging sector can vacillate turn into profoundly in even a few months. It remains to be seen whether the cryptocurrencies with which we be struck by become familiar will retain their stature in the months and years to communicate. (Read more The 5 Most Important Virtual Currencies Other Than Bitcoin)