Over the past few years, public pursuit in cryptocurrencies has skyrocketed tremendously. The major focus of this has been Bitcoin, which has also become an imperative name in cryptocurrency. Bitcoin is also considered the grandfather of other digital currencies. However, in the recent years, Litecoin has entered the scene, and also picked up an increasing public interest. On the surface, both Litecoin and Bitcoin share several things in common. However, at the basic level, they both differ immensely. It is believed by many, that if Bitcoin is gold, Litecoin is certainly silver.
Similarities between Bitcoin and Litecoin
Both the currencies are generated by mining, and are cryptocurrencies. Furthermore, both are deflationary – the cost of services and commodities will only keep on falling in comparison to the price of the coins. Both the digital currencies are also adopted by the online merchants to incur lower transaction costs on payments. However, despite some of these similarities, the two are not exactly the same. There are several differences between Bitcoin and Litecoin.
Differences between Bitcoin and Litecoin
Although Bitcoin is the classic and original cryptocurrency and has the lion’s share of the market, Litecoin was brought into existence by those people who could not mine Bitcoin. Here are some of the major differences between the two for a better understanding:
1. Different Algorithms
This is the most fundamental technical difference between the two. While Bitcoin makes use of algorithm SHA-256, Litecoin makes use of a new algorithm, which is known as Scrypt. These different algorithms basically depict their impact on the mining process. SHA-256 is considered to be a more complicated algorithm than Scrypt. This also has a significant implication on the security linked per unit. Scrypt was consciously designed to be comparatively less susceptible to the custom hardware solutions. Also, many companies have recently brought Scrypt to the market, suggesting that it ensures easy accessible mining.
2. Number of Coins
Another major difference is the total number of coins each one can produce. The Litecoin network cannot exceed 84 million coins, whereas Bitcoin can accommodate up to 21 million coins. Again in theory, it sounds like an advantage in favor of Litecoin; however, the real world impacts may be negligible. And this is due to the fact that both are divisible into minuscule amounts. This implies that users of either currency can have no difficulty buying low-priced services or goods, regardless of how high the price of the undivided currency may become.
3. Difference in Addresses and Costs
Another comparison between the two currencies is based on their specific addresses. The Litecoin addresses normally begin with L, which is due to their version number. And this is what sets it apart from Bitcoin addresses. The generation process otherwise is completely similar to that of Bitcoin addresses. Furthermore, it costs less to begin mining with Litecoin as compared to the cost to begin mining for Bitcoin. Also as a matter of fact, the only thing required for a Litecoin is an Internet connection and a computer.
4. Popularity and Market Capitalization
The market capitalization of Bitcoin is approximately $4 billion in 2015. However, in the year 2010, its market capitalization was merely $42,000, and the current figure seems to be mind-boggling. It is quite evident that it remains the most highly rated player by far in the cryptocurrency market. On the other hand, Litecoin has made good progress in recent years. Based on its public interest and market capitalization, Litecoin seems warranted.
5. Transaction Processing Speed
Bitcoin that was launched in the year 2009, garnered international attention instantly, and also established its position in the transaction market. Ever since then it has become one of the most popular currencies used for a wide array of transactions. Its transaction speed is 9 minutes per transaction. Litecoin, which was launched in the year 2011, was especially designed to be much faster than Bitcoin, and also to impede the centralization of mining. Its transaction speed is 2.5 minutes per transaction. Although Bitcoin bears a lot of resemblance with Litecoin, but it is not the only currency of its kind to hit the market.