Litecoin originated back in 2011, and the purpose of its inception was to improve upon the Bitcoin technology. Since then, it has been enjoying quite a bit of success. It has managed to maintain its position amongst the altcoins and has consistently remained in the top ten cryptocurrencies.
In terms of functionality, it is pretty similar to bitcoin as it is also decentralized. All of the transactions related to it are also placed on Blockchain. The mining for both coins also happen through Proof of Work. And they are even using the new Lightning technology. Due to these similarities, Litecoin is often referred to as the little brother of Bitcoin. Another term used for Litecoin is “digital silver” as opposed to Bitcoin, which is called the “digital gold” of cryptocurrencies.
Was Litecoin Really Needed?
Due to so many similarities between the two, a lot of people wonder – was it even necessary to release Litecoin, and the answer to that question is yes. Despite similarities with Bitcoin, Litecoin has its own unique traits that set it apart from Bitcoin and other altcoins circulating in the market.
The first and the biggest difference is the total number of coins in circulation. While Bitcoin is capped at 21 Million, Litecoin has the cap of 84 Million. What this means is that any user can sell off thousands of their Litecoins without crashing the cryptocurrency market or drastically plummeting the price.
Furthermore, every transaction that happens on the blockchain needs to receive multiple confirmations. A Bitcoin-based transaction can take up to 10 minutes to get one confirmation whereas Litecoin only takes 2.5 minutes.
Due to these reasons, cryptocurrency merchants consider Litecoin a considerably better way of dealing. Confirmation of transactions is extremely important, so having it happen in less time certainly helps.
Is Litecoin More Stable?
Another question that gets asked a lot is whether Litecoin is more stable than Bitcoin? The answer to that question is “No.” The fact of the matter is that none of the altcoins are stable. They are always facing changes – going up and down as there are multiple factors impacting them. At the time of writing, Litecoin sat at around $96.29, which is lower than its price a few weeks back.
Like most cryptocurrencies, Litecoin is also dependent on Bitcoin. If the price of Bitcoin increases, the Litecoin also sees an increase in its price, and when Bitcoin comes crashing down, so does other digital currencies.
Neither Bitcoin nor Litecoin is stable. If you just look at the stats, you can see that the price is changing consistently particularly in the last couple of months. The trajectory is never in a single direction either. Sometimes, the price just keeps on rising, and then there are days where the price just keeps on crashing. If the trajectory changes sometime in the future, then we might be able to add something to stability side of altcoins, but at this point, their prices aren’t stable at all.
Litecoin and Bitcoin Farming
Both coins are farmed using proof of work method. Bitcoin uses SHA-256 algorithm, whereas Litecoin utilizes Scrypt algorithm. Bitcoin’s algorithm requires raw processing power, which is why you see so many people using a network of supercomputers to mine it. More powerful the processor, the faster the mining process would be. The mining of bitcoin consists of solving mathematical puzzles, and whoever completes them first, gets the reward. In this race to be the first, the computer with high processing power always beat out the rest.
Litecoin, on the other hand, makes use of Scrypt algorithm. This process also requires computers to solve mathematical puzzles, but instead of relying on raw processing power, high-speed RAM is needed to get the job done. Due to this major difference, there is no race to be first. People who mine Litecoins usually mine other low valued coins as a side project because this particular mining process isn’t as taxing on the computer as Bitcoin mining.
In conclusion, we can say that although both Bitcoin and Litecoin look same on the surface, there are some fundamental differences in technology, which make them distinctive in their own way. Both have certain advantages and disadvantages, so putting them in the same category doesn’t do either of them any justice.