Throughout the years, public interest in cryptocurrencies has fluctuated significantly. Every now and then, investor interest in crypto coins re-surge and the main focus of this interest is usually Bitcoin, which has long been the dominant name in the industry.
However, since the founding of Bitcoin, numerous other cryptocurrencies have appeared on the market. Even though it has proven to be rather difficult for digital coins to stand out considering the congestion level in the segment, Litecoin (LTC) is an altcoin that has managed to make an outstanding impression.
Similarities Between Bitcoin and Litecoin
At first glance, Bitcoin and Litecoin have a lot in common. At the most fundamental level, they are both decentralized crypto coins. Litecoin was established as a ‘lite version of Bitcoin’ according to what the founder Charlie Lee said and is seen as being created in reaction to Bitcoin. For this reason, Litecoin has many of the features Bitcoin has and changes some elements the development team felt could be enhanced.
PoW Protocol
One fundamental similarity between these two coins is that they are both Proof-of-Work (PoW) ecosystems, which means that the primary process by which both cryptocurrencies are mined is similar.
Storage and Transactions
For an investor, numerous basic elements of transacting with Bitcoin and Litecoin are similar as well. Both of these crypto coins can be purchased via exchange platforms or mined using a mining rig.
Both need a digital wallet to be safely kept between transactions. In addition, both cryptocurrencies have proven to be liable to striking volatility depending on aspects related to investor interest, government regulation, and so on.
Differences Between Bitcoin and Litecoin
There are many differences between Bitcoin and Litecoin, which is somewhat understandable since not every aspect of these coins is identical. We’re not going to mention all of them but detail some more prominent differences, such as distribution, algorithms, and transaction speeds.
Distribution
One of the main differences between the two cryptocurrencies concerns the total number of coins that each can generate. While the Bitcoin network can never pass over 21 million coins, Litecoin can produce up to 84 million coins. Theoretically, this sounds like a significant advantage in favor of Litecoin, but its real-word impacts may eventually prove to be insignificant.
Transaction Speed
Even though technically, transactions take place instantaneously on both networks, time is required for those transactions to be verified and confirmed by other participants in the ecosystem.
Litecoin was established to prioritize transaction speed, and that has ended up being an advantage as it has gained popularity. As per information posted by Blockchain.info, the Bitcoin network’s average transaction confirmation time is around 9 minutes per transaction, but this can depend widely on the traffic level. In the meantime, the equivalent figure for Litecoin is approximately 2.5 minutes.
Algorithms
By far, the most basic technical difference between Bitcoin and Litecoin is the different cryptographic algorithms that they use. Bitcoin employs the longstanding SHA-256 algorithm, whereas Litecoin uses a relatively new algorithm known as Scrypt.
The critical functional relevance of these different algorithms is their effect on the process of mining new coins. In both cryptocurrencies, the process of confirming transactions needs significant computing power. Some participants of the currency network, known as miners, assign their computing resources toward confirming other participants’ transactions. In exchange for doing so, the miners are rewarded with units of the currency which they have mined.
The Bottom Line
Although Bitcoin and Litecoin may be referred to as the gold and silver of the cryptocurrency industry, history has shown that the situation in this dynamic and ever-developing sector can change in even a few months. It remains to be seen if the currencies with which we become familiar will maintain their stature in the years to come.