How does litecoin differ from bitcoin

But Bitcoin is just the first of many digital currencies — known as cryptocurrencies due to their use of sophisticated computer encryption which prevents them being spent more than once, hence giving them their intrinsic value. In fact, there are now well over 1, cryptocurrencies, with more emerging all the time. One of the most popular and enduring is Litecoin. But how is it different from Bitcoin and other cryptocurrencies?

Before we dive in, as always, remember that investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. What is Litecoin? The code used to create Bitcoin was released into the public domain — or made open source — by the mysterious creator, Satoshi Nakamoto. This means that anyone can take it, modify it and use it to launch their own cryptocurrencies.

Which many people have done — and Litecoin was one of the first to gain traction. Although it was originally based on the same code, Bitcoin and Litecoin transfers are recorded on entirely separate blockchains , effectively meaning they are different currencies. Litecoin was created in by former Google engineer Charlie Lee. The aim was to create a blockchain-based currency which would solve some of the problems inherent to Bitcoin — in particular the slow transfer speeds.

When it was launched in , Bitcoin transactions would take around 10 minutes to complete. Due to the growth in size of the network and the Bitcoin blockchain, today transactions can take anywhere between 30 minutes and, in extreme cases, over 24 hours. Mining — the process by which new Bitcoins and Litecoins are created — involves using computer processing power to run complex algorithms, creating new blocks on the blockchain.

This was designed to lead to the supply of Litecoins increasing at a steadier rate. Feb 18, AM EST Original: Oct 29, Cryptocurrency has always been a polarizing issue - and recent debates about how it should be regulated certainly add to the questions over its legitimacy. But with the popularity and supposed potential of cryptocurrencies like Bitcoin or Litecoin , surely it's important to know what you're talking about before you knock it or, for those brave souls, before you invest.

Litecoin is often seen as the "silver" to Bitcoin's "gold" - a valuable but somewhat lesser alternative. But Litecoin, as the faster transaction version of Bitcoin that actually has a higher cap of how many coins can be mined, is definitely worth looking into. But before getting into the brass tacks of Litecoin versus Bitcoin, what actually is Litecoin and Bitcoin?

There are no stupid questions here. What Is Litecoin? Just like other cryptocurrencies, Litecoin is a global, digital payment method that uses blockchain technology to transfer and trade "coins. Since the creator of Bitcoin, Satoshi Nakamoto, made the Bitcoin code public, Litecoin is in many ways an extension or variation on Bitcoin since the code was open for modification read: the Bitcoin code is essentially the foundation of various cryptocurrencies, including Litecoin.

For this reason, coins like Litecoin are often referred to as "altcoins. Litecoin uses an open source software to create and transfer coins, and is decentralized. Since Litecoin hit the market, its growth has been pretty astounding. Like most cryptocurrencies, the future of Litecoin is very much in question, but these digital "coins" are starting to become more widely accepted as payment.

What Is Bitcoin? Bitcoin , to many, is the original cryptocurrency that has thus far maintained its status as the most popular. Created in by an unknown individual going by the alias Satoshi Nakamoto, Bitcoin was designed as an alternative currency that used blockchain technology to supposedly increase safety in financial transactions throughout the network.

Bitcoin essentially pioneered the cryptocurrency industry by allowing Bitcoin miners to mine and add coins to the public blockchain network. So, while Bitcoin is essentially a currency, it also kind of operates as a stock so it's a mixture of a lot of things. Litecoin vs. Bitcoin: What's the Difference? So, both Litecoin and Bitcoin are cryptocurrencies that share a similar basic structure and rely on crypto networks, but what are the differences between the two?

And how do you buy them? Algorithm and Mining One of the principle differences between Litecoin and Bitcoin are their different cryptographic proof-of-work algorithms. The way these two algorithms affect the difference between Litecoin and Bitcoin is based off of is the speed by which they are able to mine respective coins. Litecoin's algorithm is designed to produce about four times as many coins as Bitcoin does - producing one coin every 2. So, the speed of acquisition is really the main difference.

However, both Litecoin and Bitcoin use algorithms that use computing power to process transactions, which is accomplished by "miners" confirming transactions in their networks with their computing power and receiving coins in exchange. But the speed at which these transactions occur is very different for the respective Litecoin and Bitcoin algorithms. Bitcoin's SHA algorithm, famous for being very complex, has been altered over the years by miners, and commonly uses what are called Application-Specific Integrated Circuits ASICs - hardware systems that can be customized for mining Bitcoin.

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Note Cryptocurrency miners process new Bitcoin and Litecoin transactions to earn cryptocurrency rewards, which crypto users pay in the form of transaction fees. The Litecoin designer consistently used a multiple of four to differentiate between the currencies. Litecoin, with more coins issued, may have more liquidity than Bitcoin—but the scarcity of Bitcoin may make it more valuable. Since transaction fee amounts are determined by the transaction volume of the blockchain network, fees for Bitcoin transactions are significantly higher than Litecoin transaction fees.

With Litecoin, users typically pay, on average, just a fraction of a penny per transaction. Which Is Right For You? You can buy Bitcoin using nearly any cryptocurrency exchange or through a brokerage that supports crypto purchases.

Litecoin, like Bitcoin, is available through many cryptocurrency exchanges. You can choose to buy both Bitcoin and Litecoin, since each has different advantages and drawbacks. Many cryptocurrency investors hold a mix of currencies, including Bitcoin, Litecoin, and other altcoins. Note Cryptocurrency transactions are irreversible. Watch out for scams and fraud when considering a Bitcoin or Litecoin transaction.

Always follow online security best practices and double-check the transaction details before completing a purchase, since reversing a cryptocurrency transaction is generally not possible. Bitcoin uses the SHA hashing algorithm, which involves calculations that can be greatly accelerated in parallel processing. It is this characteristic that has given rise to the intense race in ASIC technology, and has caused an exponential increase in bitcoin's difficulty level.

Litecoin, however, uses the scrypt algorithm — originally named as s-crypt, but pronounced as 'script'. This algorithm incorporates the SHA algorithm, but its calculations are much more serialised than those of SHA in bitcoin. Scrypt favours large amounts of high-speed RAM, rather than raw processing power alone. As a result, scrypt is known as a ' memory hard problem '.

The consequences of using scrypt mean that there has not been as much of an 'arms race' in litecoin and other scrypt currencies , because there is so far no ASIC technology available for this algorithm. However, this is soon to change, thanks to companies like Alpha Technologies , which is now taking preorders.

GPU mining To highlight the difference in hashing power, at the time of writing, the total hashing rate of the bitcoin network is over 20, Terra Hashes per second, while litecoin is just 95, Mega Hashes per second. For the time being, 'state of the art' litecoin mining rigs come in the form of custom PCs fitted with multiple graphics cards ie: GPUs. These devices can handle the calculations needed for scrypt and have access to blisteringly fast memory built into their own circuit boards.

Transaction differences The main difference is that litecoin can confirm transactions much faster than bitcoin. The implications of that are as follows: Litecoin can handle a higher volume of transactions thanks to its faster block generation.