Litecoin and Bitcoin are among the most popular cryptocurrencies. Investors trust them as standards within the crypto community. Bitcoin is the household name whose market capitalization far exceeds any other coin. It was the first cryptocurrency. As its price goes, so has the market. Litecoin intended to solve some fundamental nuances underlying Bitcoin. It is for this reason that Litecoin developers describe their coin as the silver option to Bitcoin’s gold. This has caught on among crypto enthusiasts.
All cryptocurrencies strive to transcend the limitations of fiat currencies. Conventional currencies are bound by legal and political mechanisms. Cryptocurrencies instead rely upon the cryptographic integrity of the network they run on. Litecoin and Bitcoin run on separate cryptographic networks. There is no limit as to how small either coins can be divided. This means that both can be used for low-priced purchases.
Litecoin can accommodate four times as many (84 million) coins as Bitcoin (21 million) can. This is a design difference. It does not have much real-world difference beyond public perception since both can be divided without limit. Another perceptual difference is the price of each coin. Litecoin is priced much cheaper than Bitcoin. Together these perceptual differences may offer Litecoin a psychological advantage. IBM’s Richard Brown stated that some users prefer making transactions in whole units.
Speed is another advantage that Litecoin currently has over Bitcoin. Its approximate 2.5 minutes for a transaction is four times faster than Bitcoin’s 10-minute average. This current transaction confirmation time is a very important advantage for consumers. Technically, however, transactions occur instantaneously on either blockchain.
The two coins do have fundamental differences. Bitcoin uses the SHA-256 algorithm while Litecoin uses Scrypt. SHA-256 is considered more complex and predates the Scrypt algorithm. Bitcoin mining has become too elaborate for the average investor to mine for profit. In contrast, Scrypt mining is more practical. However recent developments have seen companies bring adaptable Application-Specific Integrated Circuits (ASICs) to market. This levels the mining playing field between the two coins.
Litecoin and Bitcoin differ slightly when viewed within the crypto world today. Their fundamental differences should be noted because of the speed of innovation within the space. Currently, they resemble silver and gold. In an uncertain future though, their difference may become more profound.