Litecoin vs. Bitcoin: What’s the Difference?
Posted by Frank Gogol in Crypto | Updated on August 23, 2022
Cryptocurrencies have boosted in popularity over the last few years, and so did people’s interest in them. Bitcoin is one of the main currencies that people are working with, and it was founded back in 2009. Ever since, though, a lot of other currencies have emerged, and one of these is Litecoin, which has managed to stay in the race for a long time now. If you don’t know how Litecoin and Bitcoin are different from each other, don’t worry – we’ll help you out in this Litecoin vs Bitcoin article.
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Bitcoin vs. Litecoin: Overview
The interest in cryptocurrencies has increased over the past few years, especially with more people discovering how convenient they can be, as well as their investing potential. Bitcoin is one of the cryptocurrencies that dominated the market, and it makes sense considering it was the first currency of this type to arise.
At the moment, Bitcoin isn’t the only cryptocurrency out there, as many others joined the market and managed to stand out in their own way. Still, not every cryptocurrency can stand out, and it’s especially difficult for new ones to gain traction considering the field is already very crowded. Nevertheless, Litecoin is one of the currencies that are still in the competition, and it’s actually one of the most popular cryptocurrencies.
In March 2021, Bitcoin had a market cap of $1 trillion, whereas Litecoin had a market cap of $13.7 billion. The two have different algorithms too. Litecoin has a newer algorithm known as Scrypt, and Bitcoin has the SHA-256 algorithm. Also, Litecoin has a better transaction speed and it produces a larger number of coins. It is important to note, though, that this is merely a way to spark the interest of investors, and they don’t affect the usability or value of the cryptocurrency.
How Bitcoin and Litecoin Are Similar
Even though they are different currencies, Bitcoin and Litecoin have a lot of things in common. For instance, they are decentralized cryptocurrencies. Fiat currencies like the U.S. dollar use the central banks backing for value, legitimacy, and circulation control. Meanwhile, this is not the case for cryptocurrencies. They aren’t subject to centralized authorities, but rather rely on the network’s cryptographic integrity.
When Litecoin was created, it was considered to be related to Bitcoin. Litecoin was launched back in 2011, and when it was established, Charlie Lee, former Google engineer, and creator of Litecoin, said it is a “lite version of Bitcoin. This message was posted on a Bitcoin forum that was very popular at the time. After all, it’s been stated many times by the Litecoin developers that they intended to create a silver version to the gold of Bitcoin.
Therefore, Litecoin has a lot of similarities to Bitcoin, such as:
Transactions and Storage
Transactions made with Litecoin and Bitcoin are often considered very similar by investors. It’s easy to get them through mining using a mining ring or buying them through the exchange. To be stored safely between transactions, they need to be kept in a “wallet”. They also have very volatile prices as time goes by.
Proof of Work
Another similarity between the two cryptocurrencies is the fact that both of them are proof of work ecosystems. So, the process that allows the two currencies to be mined is similar, as stated above.
Differences between Bitcoin and Litecoin
Bitcoin and Litecoin certainly share some similarities, but at the end of the day, they are different cryptocurrencies and they inevitably have some unique features. Here is what makes them different.
When making transactions with Bitcoin and Litecoin, they happen instantly most of the time. Still, they need some time until the other network participants confirm the transactions.
Bitcoin has an average transaction confirmation time of less than 9 minutes, although it may last a bit longer in moments of high traffic. At the same time, Litecoin was created with the goal of making transactions faster, so transaction speed would be attractive enough for people to use it. Litecoin’s transactions take under 2.5 minutes, and this is one of the reasons why it became more popular over time.
The two cryptocurrencies have different market capitalizations. In March 2021, Litecoin had a total value of $13.7 billion, whereas Bitcoin’s value was around $1 trillion.
Bitcoin as a network is simply larger than other currencies. A long time ago, in July 2010, Bitcoin only had a market capitalization of $42,000. So, its growth is truly impressive.
The one that comes closest to Bitcoin in terms of market capitalization is Ethereum, with a market cap of around $212 billion. So, it’s not a surprise that Bitcoin is larger than Litecoin.
Litecoin and Bitcoin also have different algorithms. Litecoin uses Scrypt, whereas Bitcoin uses SHA-256.
The two algorithms have different effects on how mining new coins unfolds. A lot of computing power is necessary in order to confirm transactions on both Litecoin and Bitcoin. Usually, SHA-256 is a more complex algorithm compared to Scrypt.
The miners also tried using some of the most sophisticated methods to be able to efficiently mine bitcoins. To do so, miners decided to use ASICs, which are hardware systems made to mine Bitcoins.
Meanwhile, Scrypt was made in such a way that it is not as susceptible to the ASIC-based mining custom hardware solutions, which is what made more people look towards Litecoin. Thus, Litecoin seems more accessible for people who want to become miners.
Litecoin and Bitcoin produce different amounts of coins. Bitcoin never goes over 21 million coins. Litecoin, on the other hand, can go up to 84 million coins.
While this is an advantage at first, the effects in the real world may actually be negligible since both currencies are divisible into almost infinitesimal amounts.
Bitcoin vs. Litecoin FAQs
Here are some commonly asked questions about Bitcoin vs. Litecoin:
What Is Litecoin Used for?
Litecoin is mainly purchased and sold back and forth by people. Litecoin is a digital money type, meaning that people and institutions can simply use it to transfer money between accounts or buy different products/services.
Can You Convert Litecoin to Bitcoin?
It is possible to convert Litecoin to Bitcoin, but also Bitcoin to Litecoin. You only need to make sure you have a trading app or an exchange platform to do this.
Can I Send Litecoin to a Bitcoin Address?
Sending Litecoin to a Bitcoin address is not possible, because if you try to do it, you will lose the money. You may be able to recover it, but it would be very hard.
Can Litecoin Overtake Bitcoin?
It’s hard to say whether Litecoin will take over Bitcoin. After all, Bitcoin is the original cryptocurrency, and people just associate it with the crypto market overall. It’s all a matter of speculation whether Bitcoin can get overtaken by another cryptocurrency.
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Litecoin and Bitcoin both have their own benefits, but they do share some similarities. They can be great investment opportunities, and if you want to switch between them, you can convert from one to another. Before choosing between them, make sure that you look into what they have to offer and settle for the one that suits your needs the most.
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