Difference Between Bitcoin and Litecoin

Difference Between Bitcoin and Litecoin

The story about the difference between Bitcoin and Litecoin started when they were created and launched. Bitcoin was created in 2009 as the first-ever cryptocurrency, which was a work of a person or group of people called Satoshi Nakamoto. It's an open source code, so anyone who wishes to make a change can make the modification. There were also several attempts of launching similar cryptocurrencies or copies of Bitcoin with a modified version of the code, but few of them succeeded to be competitive. Two years later, a Google engineer, Charles Lee, created a Litecoin in 2011. His goal was to create a digital currency that would take the second place on the digital market, after Bitcoin. For some time, according to its market cap, Litecoin was second most mined cryptocurrency. These two cryptocurrencies have some similarities and some differences which we'll explain it the next several paragraphs.

Bitcoin vs. Litecoin

Both currencies were created with mining, and both prone to deflation, which means that the cost of services can only continue dropping compared to these currencies' prices. The transaction of Bitcoin is maintained by the cryptographic protocol which is not influenced or controlled by any central authority. One Bitcoin can be divided into 100 million smaller units which are called Satoshi. Litecoin is a peer-to-peer alternative digital currency which is primarily based on BTC. Litecoin's goal is to gain a faster block rate than Bitcoin.

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Mining differences

When it comes to mining coins, Litecoin depends on script hashing, while Bitcoin depends on SHA-256 in the hash function. Speaking of writing, BTC and LTC have differences in hashing power. Bitcoin's total hash rate is around 20,000 TH/s, while Litecoin's hash rate is just 95,642 MH/s. Litecoin addresses usually start with an L, which signifies the version number, which makes them quite different to the Bitcoin address naming system. The generation process of these two currencies is the same.

Chain differences

Regarding their functioning in the Blockchain, these two cryptocurrencies are very different. It's easier to explain this by giving an example of a chain that makes a new block every two and half minutes. This is 4 times the rate at which BTC chains create a block. This leads us to the conclusion that the confirmation is faster with Litecoin. But, in order to get the same confirmation strength as BTC, we need more blocks. It all means that 16 blocks of LTC are not equal to 16 BTC blocks.

Total supply differences

Speaking about the maximum supply of these two cryptocurrencies, the total supply number of LTC is 4 times bigger than the BTC total supply. There's 84 million LTC planned to appear in the circulation, while there's 21 million BTC. Completing the Litecoin block brings a reward of 50 LTC. The generation rate of LTC is cut to half every 840 thousand block, which means four times more blocks. This leads us to the conclusion that Litecoin' inflation has a similar trajectory as Bitcoin's inflation.

Mining cost differences

The important difference between Litecoin and Bitcoin is that LTC costs less to start mining than BTC. If wishing to mine Litecoin, users just have to possess a computer and internet connection, which is just enough to begin. People can choose to use CPUs for mining Litecoin, but it has its own disadvantages. As the mining power is decentralized, it means that it's risky for many investors to make one big move on LTC. To do the same with BTC, the investor has to put a lot of money in the game. According to this situation, it is much safer to mine BTC than LTC.

Conclusion

When we make a comparison between Litecoin and Bitcoin, the first conclusion would be that both cryptocurrencies have many differences and not so many similarities. So, before choosing in which way you would go with mining, it is essential to analyze all the differences and similarities before making a final mining decision.

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