Synopsis: Bitcoin is the first, largest, and best-known cryptocurrency. Litecoin was copied and adapted from Bitcoin’s open-source software, introducing important changes. This article makes the differences between the two simple to understand. Read it to learn when to use Litecoin vs Bitcoin!
Litecoin vs Bitcoin
Many parts of Bitcoin and Litecoin are very similar, thanks to Litecoin being largely copied (and tweaked) from the Bitcoin software, and launched in October 2011. In both Litecoin and Bitcoin, the coins are managed through an open-source cryptographic protocol. Both Litecoin and Bitcoin use proof-of-work mining to distribute newly created coins. And both are primarily designed to be used for payments.
But this article focuses on the differences in Litecoin vs Bitcoin. So what are they?
1. Litecoin’s Founder Is Known
Though it seems unbelievable, almost nothing is known of Bitcoin’s anonymous founder, Satoshi Nakamoto. We don’t even know whether Satoshi Nakamoto is a real name, a pseudonym, or even whether Nakamoto is a single person or a group working collaboratively. Nakamoto has never appeared in public and we only have his (hers? their?) forum posts and emails, none of which carry any identifying information. Many of Nakamoto’s most important messages were collected in an excellent book published by Phil Champagne called The Book of Satoshi.
Vigorous attempts have been made to track Nakamoto down – all of which have failed. As you would expect from a skilled cryptography expert, Nakamoto proved to be highly adept at covering his tracks. The true identity of “Satoshi Nakamoto” has been an enduring fascination for the crypto community.
Meanwhile, the founder of Litecoin is out in the open. His name is Charlie Lee, a former Google employee. Lee frequently tweets and is a regular on the crypto speaking circuit. Members of the Litecoin community say that their identifiable leadership represents an advantage for Litecoin vs Bitcoin.
2. Litecoin Has Lower Fees
Some people call Bitcoin “digital gold”. If Bitcoin is gold, Litecoin’s development team have expressed the desire to be silver – a more common, everyday asset.
If you wanted to use Bitcoin to buy a cup of coffee, the fees may be in excess of the price of the coffee itself. Litecoin’s website advertises that it offers near-zero cost payments, and so when it comes to smaller transactions in Litecoin vs Bitcoin, Litecoin comes out on top.
3. Litecoin Adds Blocks 4x Faster
The Litecoin network aims to process a new block on its blockchain every 2.5 minutes, which is 4 times faster than Bitcoin’s target of 10 minutes. Again, this gives Litecoin an advantage for over-the-counter type transactions. Imagine having to wait 10 minutes for a Bitcoin transaction to confirm, before the barista can confidently hand you your foamy latte!
Actually, Litecoin transactions can be processed even more quickly than 2.5 minutes. In May 2017, a Lightning Network transaction was completed through Litecoin, transferring 0.00000001 LTC from Zurich to San Francisco in under 1 second.
The addition of blocks 4x faster for Litecoin vs Bitcoin also means that Litecoin’s eventual supply will be 4x that of Bitcoin. Once all Litecoin is mined, there will be 84 million Litecoin outstanding – as opposed to 21 million Bitcoin.
4. Litecoin Uses A Different Algorithm
Bitcoin uses an algorithm called SHA-256, while Litecoin uses Scrypt. Other well-known coins to use Scrypt include Auroracoin and Dogecoin. The detail of the differences between SHA-256 and Scrypt require a decent working knowledge of cryptography to really understand – but one major difference is that SHA-256 hashing is more about raw processing power, while Scrypt favors high-speed RAM. Scrypt is said to be “memory hard”. This fact is important when it comes to the Litecoin vs Bitcoin crypto mining arms race…
5. Litecoin Mining Is Within Reach Of Ordinary People
Litecoin’s implementation of Scrypt instead of SHA-256 means that it is more difficult and expensive to create specialized ASIC mining hardware. Without so much competition from industrial-scale ASIC cryptocurrency mining (which has come to dominate the Bitcoin network), it means that Litecoin is easier for hobby miners to profitably mine using graphics cards. From a philosophical point of view, many in the crypto community believe that mining should be within the reach of ordinary people.
The trade-off is that all that extra hashing power of the professional ASIC miners does wonders for securing the network. The more hashing power that is added, the better protected it is, especially from a 51% attack (where bad actors try to take over the network and gain a majority share).
The Bottom Line – Which Is Best?
Which is the best cryptocurrency out of Litecoin vs Bitcoin depends on what you want to use it for.
As a store of value, you still can’t beat Bitcoin. As the oldest cryptocurrency, Bitcoin has matured the most and has lower volatility. The greater hashing power also means the network is more secure.
As a means of payment, Litecoin wins. Faster transaction times and lower fees are what you need from a crypto if it’s going to credibly compete with credit card payments. Although you will probably still see more “Bitcoin Accepted Here” signs in shops than Litecoin ones, it’s better to insist on Litecoin vs Bitcoin for a better user experience.