Bitcoin vs. Litecoin: What’s The Difference? Essay
Investments into various cryptocurrencies are in trend nowadays, and Bitcoin’s leadership position is well-deserved. It was designed by Satoshi Nakamoto in 2008 as the first digital money ever. To put it briefly, it is a digital payment method that allows people from different corners of the globe to transfer the funds, buy products and pay services by means if digital currency. It is not under the governmental supervision and is totally decentralized which ensures anonymity, privacy protection, and secure transactions. It is done in the peer-to-peer method meaning that people don’t use any mediators, for instance, banks as their financial transaction anymore. Also, the code is open source and can be altered by anyone. The investments into Bitcoin were considered to be more fruitful than into gold. It was a pioneer in this field – later the invention of a blockchain technology, the main engine of all cryptocurrencies, gave birth to numerous digital currencies that claim the king’s place.
Three years after Bitcoin was launched, Litecoin (LTC) was invented in 2011 by former Google engineer Charles Lee. So what is Litecoin? Having a very ambitious goal to become the second best after Bitcoin, the main aim of the founder of this advanced digital currency was to find a way to improve Bitcoin. It is an open source software that possesses pretty much the same characteristics as its predecessor. It can boast the secure process of money it manged totransaction, the fast transfer rate, a shared digital storage platform, and support of privacy. The position of Litecoin on the financial market is quite impressive – it managed to fulfill its task of becoming the second best. What about the enhancement which makes it a more efficient version of the previous currency? It is time to find out, who will be the winner in Bitcoin vs. Litecoin match. The divergences of these two cruptocurrencies are not very dramatic yet if to work with both systems; they become quite noticeable.
- One of the principal differences between these two currencies deals with the maximun number of coins that can be obtained through mining. Bitcoins limit is 21 million of coins – all of them will be issued, some experts claim that will happen in 2035, the price will get even bigger already existing coins. On the contrary, Litecoin can release 84 millions of coins, which are a significant advantage in favor of this currency. There is a great difference in price – Bitcoin remains one of the most expensive digital currencies with thousands of dollars per unit, Litecoinhas much more democratic price – up to 50 dollars per unit. The market capital differs – 10,467,596,650.78 dollars Bitcoin and 540,274,528.26 Litecoin.
- Litecoin transactions are processed four times quicker than Bitcoin. By default, the transactions of both networks are happening immediately. The response time when other participants need to confirm the operation can vary. In case of Bitcoin, the time of typical confirmation is somewhere over 9 minutes a transaction. Litecoin, it takes only 2.5 minutes. The delay in the transaction can force back the clients who can conduct the same transaction four times faster with Litecoin. This is possible due to Litecoin faster block generation, which allows handeling of a greater number of transactions. Most clients choose zero-confirmation transactions that need no confirmation at all. The same problem arises with block time. Bitcoin has 10 minutes block and his rival 2.5 minutes.
- Mining divergencies. Both these currencies are generated by mining. This is an important difference all those miners hunting coins as they influence the process of mining. The most frequently used method of mining Bitcoins is ASICs – Application-Specific Integrated Circuits. These are hardware systems that have been specifically created with the purpose to mine coins. It works with the SHA-256 hashing algorithm which means that the work can speed up during parallel processing. This increases the level of difficulty miners. Litecoin uses the scrypt algorithm or s-crypt which is considered to be much easier. It was created to oppose the custom hardware used in ASIC mining. It is generally considered to be more understandable an average user.
- Last but not least factor concerns the environment. Tremendous level of energy consumption by Bitcoin mining has already become the legend. The popular joke has it that its mining takes as much energy as the population of the whole Ireland. Litecoin is not so destructive to the environment, and its energy efficiency is a good example.
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The match Litecoin versus Bitcoin does not have an unambiguous winner, as both these digital currencies possess a set of characteristic features, which are a necessary part of proper money transfer. But the financial world has a volatile nature. The situation can change dramatically just within a week’s time. Only time can decide whose approach to digital transactions has been more appropriate. Nowadays, Bitcoin and Litecoin move together on parallel roads proving to be the king and the queen of digital currency world.