Bitcoin today is known to dominate the crypto space, having a market cap of over $723.65Bn and ranking number one on coinmarketcap.
The world of cryptocurrencies has also seen several kinds of coins claiming to solve one problem or another. An example of such a currency is Litecoin, which is considered silver to Bitcoin’s gold.
This article would discuss what Bitcoin is what Litecoin is, Bitcoin and Litecoin price, their similarities and differences, and if one should pick either Bitcoin or Litecoin.
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This is one of the most popular questions asked on google. Simply put, Bitcoin is a digital currency created in the year 2009 by Satoshi Nakamoto, who remains anonymous till this very day. Creating Bitcoin formed a means through which money is sent and circulated without a governing body.
In other words, decentralize money (taking out the need for banks and governments having control over money).
Bitcoin doesn’t have physical currency but works by using a ledger that everyone can access, creating transparency. Although having records of all transactions, this ledger does not reveal who performs a transaction, creating anonymity. Bitcoin is mostly referred to as the digital gold, and has created a means by which large sums of funds can be moved quickly, at low cost, and without the restriction of international transfers.
Having no central authority brings to mind the question of how Bitcoin works. Bitcoin, being decentralized, is managed by many different computers worldwide, which act as nodes to validate transactions on the bitcoin blockchain. A blockchain simply refers to different blocks of data which hold transaction records.
Miners also contribute to the integrity of the Bitcoin network. Miners are people who, like the name implies, mine Bitcoin. The process of mining is by the use of powerful computers to solve complex mathematical equations. The first computer or miner to solve an equation receives a fixed number of Bitcoins and fills the Bitcoin ledger. [Learn more about Bitcoin mining here].(https://remitano.com/forum/post/291-bitcoin-mining-software-5-best-bitcoin-application)
Having an idea of what Bitcoin is, let’s talk a little about Litecoin.
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Litecoin is a peer-to-peer cryptocurrency also called an altcoin. It is also open-source like Bitcoin and was created in 2011 by ex google engineer Charlie lee as an alternative to Bitcoin, meaning it is also decentralized.
He created this cryptocurrency by copying Bitcoin’s code and making changes that would make transactions faster. Such changes created differences in the mining processes and speed, the speed at which funds are transferred, the algorithm they use, etc.
Due to it being a copy of Bitcoin, Litecoin has several similarities, which we would look at later. However, unlike Bitcoin, Litecoin is known to handle small figure transactions.
Being decentralized means Litecoin has no singular authority, and decisions are reached on the network when miners combine their computing power to solve.
Litecoin achieved one of its aims of providing much less time (2.5minutes) per transaction, which is four times less than the 10 minutes it takes to confirm a transaction using Bitcoin. Litecoin also has a feature that allows its users to exchange different currencies without going to an exchange.
The primary use of litecoin is to carry out small payments, as mentioned earlier, which require quicker validating times, which are all made possible based on the SCRYPT algorithm on which Litecoin runs. Just like Bitcoin, Litecoin is acquired through mining.
The crypto market since November 2020 has been in a constant upward movement in trend ( or bull market). This bullish market has seen growth in many cryptocurrencies, with Bitcoin and Litecoin also benefiting tremendously from this market movement. Let’s take a look at their performances this bull run.
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Bitcoin over the past few weeks has consistently broken into new all-time highs, with the price of a single coin equaling $34,000 in the previous day.
As of the time of writing this article, the Bitcoin price just hit a new all-time high of $38,411 on Binance, which corresponds to a 12.45% increase in the last 24hours, and this upward trend is still ongoing with signs of hitting $40,000 per coin. Bitcoin has also experienced a 39.29% increase over the previous seven days.
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Just as Bitcoin, many altcoins also increased tremendously in value, with Litecoin being one of them. Since November 2020, the Litecoin price has seen an increase to $178.
Litecoin currently sits at $178 per coin after experiencing an uptrend leading to an 8.15% increase in value in the last 24 hours and a seven day gain of 44%. With the bull run still on, there is always room for more growth.
Although very similar, these two coins have several differences, as seen in the table below.
Bitcoin
Litecoin
Market Capitalization
$723.65Bn
$11.42Bn
Coin Supply
21,000,000 BTC
84,000,000 LTC
Mining Algorithm
SHA-256
Scrypt
Blocks Per Minutes
10
2.5
Mining Rewards Per Block
6.25 BTC
12.5 LTC
Block Halving Event
Every 210,000 mined blocks
Every 840,000 mined blocks
Transactions Per Second (scalability)
3 - 7
56
Smallest unit
Satoshi
Litoshi
Founder
Satoshi Nakamoto
Charlie Lee
Release Date
3 - Jan - 2009
7 - Oct - 2011
Market capitalization refers to the total amount of coins in circulation multiplied by one coin’s current cost. Therefore, Bitcoin has a market cap of $723.65B, while Litecoin has a market cap of $11.42bn.
Coin supply is the total number of coins that exist and can ever be in circulation, meaning no new coins would be created if all of these coins are in circulation. Therefore, Bitcoin has a max coin supply of 21,000,000 BTC, while Litecoin has a max supply of 84,000,000 LTC.
Bitcoin uses the SHA-256mining algorithm known for its high security and complexity, making it slow and requires high-end equipment to run. Litecoin makes use of the Scrypt algorithm, which has lesser security and complexity but is known for being faster and compatible with consumer-grade GPUs.
Litecoin takes about 2.5 minutes per block, which is four times faster than Bitcoin's 10 minutes per block, making Litecoin transactions instantaneous when compared to that of Bitcoin.
Rewards on either cryptocurrency are given to miners who can provide the solution to the mathematical equation. Currently, the Bitcoin mining rewards stand at 6.25 BTC and Litecoin mining rewards at 12.5 LTC.
Block halving event refers to a rule in which miners’ rewards are cut in half to maintain steady control of circulating coins and control their value. This event is because if all coins are mined at once, the value reduces, simulating inflation. Therefore, Bitcoin experiences a halving with every 210,000 blocks mined, while Litecoin experiences its halving with every 840,000 blocks mined.
Bitcoin can handle about 3 - 7 transactions per second, while Litecoin can handle 56 transactions per second, known as scalability.
The smallest unit of a Bitcoin is SATOSHI, with 1 Bitcoin equating to 100 million satoshis and 1 satoshi equating to 0.00000001 BTC. The smallest unit of Litecoin is called Litoshi. 1 Litoshi equates to 0.00000001 LTC, and 1 LTC equates to 100 million Litoshis.
Like earlier mentioned, Litecoin was created by copying Bitcoin’s code and making alterations to it. This means that there will be several similarities between the two cryptocurrencies, which we shall take a look at now.
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Both Bitcoin and Litecoin use the same kind of validation system, the proof of work mining system. This system means that the mined coins gotten as rewards serve as proof of the miner’s work (mining). In this system, different groups of miners work together to validate transactions on the network.
Mining these coins requires miners to solve that complex mathematical equation created. The use of a powerful computer achieves this (the more substantial the processing power of your computer, the faster the calculating power), which runs dozens of calculations per second to arrive at a solution. The first miner to come up with the correct answer gets rewarded in either Bitcoin or Litecoin.
What is source code?
A source code is a collection of characters written using a programming language such as c++. This code aids the running of programs by specifying actions to be taken by the program. Now that we understand what a source code is, we would talk a little about these two cryptocurrencies’ core.
Crypto source code
A Cryptocurrency core refers to the open-source software, which enables the use of this currency.
Bitcoin and Litecoin share a similar core, and this is because Bitcoin’s code was copied to create Litecoin (while making alterations are made to make it run differently from Bitcoin). The source codes for both Bitcoin andLitecoin are available on Github.
Scalability refers to the number of transactions processed per second, which poses a significant constraint to many cryptocurrencies, especially in the long term. Bitcoin currently can handle 3-7 transactions with a block creation time of 10 minutes per block with a block size of 1 megabyte.
This means that the network performs at its maximum capacity, leading to strains on the blockchain and delays. One of Litecoin’s aims included solving this problem, and therefore achieved it to an extent, with 56 transactions processed per second with a block creation time of 2.5 minutes per block, and a block size of 1 megabyte.
Currently, Litecoin handles about 60,000 transactions per day and experiences lesser issues with speed compared to Bitcoin. However, as the use of Litecoin increases, it too can run into the same problems as Bitcoin.
They both have the same purpose of decentralizing money and providing easy, fast means by which funds are sent between people.
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Before one chooses whether to invest in Bitcoin or in Litecoin or begin cryptocurrency mining, one must thoroughly research each coin. There are several factors to consider before picking particular crypto, such as;
_ The coin capitalization.
_ The current price trend.
_ Fundamental analysis.
_ Developments and innovations.
_ Technological use.
_ The goal of the currency.
_ Use of the coin.
_ Competition
Therefore, we can not give a definite answer to choosing either Bitcoin or Litecoin, but let us go through the advantages and disadvantages of both coins to aid our decision.
_ Bitcoin has higher liquidity, resulting in the ability for Bitcoin to maintain value when trying to swap Bitcoin for a fiat currency.
_ Bitcoin is widely accepted in many more places as a payment method.
_ Bitcoin is much easier to access than most other cryptocurrencies. This is due to its popularity, while individual exchanges might not support some other cryptocurrencies.
_ Large return on investment: Bitcoin is known to bring a higher return on investment than its peers, as seen in this current market trend. Someone who bought Bitcoin in 2010 or 2019 would have made a high return on investment by now. For example, the earliest record of the Bitcoin price was $0.003, and the current price of Bitcoin as of the writing of this article ( January 2021) is about $38,411.
_ Security: with the growing participation of individuals in Bitcoin, there is an increase in its Hash rate, which is the overall computing power used in validating transactions on the blockchain at any point in time. This increase in hashrate and participation makes the Bitcoin blockchain more secure against 51% hacks capable of bringing it down.
_ It creates anonymity for users. In this way, users can control their personal information by having their private keys.
_ Transaction speed: Bitcoin transaction processing power, although fast, can be seen as slow compared to most new cryptocurrencies such as Ethereum and Litecoin.
_ Scalability: As said earlier, scalability refers to the amount of transaction per second. Bitcoin currently confirms about 400,000 transactions, with only being able to process 3 - 7 per second. This can cause delays in transactions, leading to losses, especially when dealing with a highly volatile market. Also, compared to Litecoin, with 56 transactions processed per second, Bitcoin is behind on it.
_ Price Volatility: while this is not entirely seen as a disadvantage as it creates room for short term trading, the Bitcoin prices are highly volatile, losing and gaining as much as $3,000 in a minute. This proves as a hindrance to the use of Bitcoin as a payment means minimal payments. The receiver might end up being underpaid or overpaid.
_ Connection with fraud: fraudsters are known to take advantage of the anonymity of Bitcoin. Although fraud cases are seen in fiat currencies, Bitcoin credibility and participation can reduce if, sometime in the future, fraudsters’ use outweighs its other benefits. For a digital currency that relies on its public view, this can critically affect its growth.
_ Compared to Bitcoin, litecoin transaction speeds are four times faster (litecoin takes about 2.5 minutes, compared to Bitcoin’s 10 minutes per block).
_ Litecoin uses a stronger Scrypt algorithm.
_ Litecoin has cheaper transaction fees compared to cryptocurrencies, such as Bitcoin.
_ Litecoin creates full anonymity for users and also gives users control over their personal information.
Fraudsters can also use Litecoin due to its anonymity, which can affect the coin negatively.
Although secured, Litecoin is not as secure as Bitcoin. As earlier said, miners, afford a level of security to a network. Hence, due to its popularity, early start, and dominance, Bitcoin has more miners, making it more secure than Litecoin.
There is a lack of developmental plans and innovations by the Litecoin team.
Bitcoin's dominance on the crypto space increases each day. As advances are made cryptocurrencies stand to benefit tremendously. This article talked about Bitcoin and Litecoin extensively. however, to learn more about other cryptocurrencies, read this Remitano article.
