Litecoin vs Bitcoin
Litecoin vs Bitcoin... It’s been over 10 years now since some unknown group or individual (no one quite knows) going by the name of “Satoshi Nakamoto” created the digital currency Bitcoin (BTC). Something that started as a curiosity ballooned within just a couple of years into a global phenomenon. Bitcoin didn’t just dominate headlines and capture the imaginations of investors all over the world, it also inspired a whole raft of imitators too.
Charlie Lee used to be an engineer at Google, but he saw the potential of creating a fork of Bitcoin which he named Litecoin (LTC). Although it was based on Bitcoin it possessed some key differences. It inspired its own community of devoted followers as well, and Litecoin remains among the top 10 Cryptocurrencies in the world today.
It’s easy to forget that Bitcoin was once virtually valueless, but in June 2011 when Litecoin came on the market Bitcoin rose to almost $30 in value. For an investment to gain this much value so quickly was almost unheard of and tremendously exciting. Investors were interested in getting a piece of the action, but it was difficult to get hold of.
It was known that you could mine Bitcoin (which is another way of saying that you could validate transactions on the blockchain using your computer and get paid in Bitcoin for your troubles) but even this was becoming more exclusive. Specialized and very pricey machines called ASICs were doing the job better and pushing hobbyists out of the market.
At this point, ordinary people were coming to recognize the revolutionary technology that Bitcoin represented but felt that they had little chance to ride this wave.
People who thought that they were too late and had missed the boat were wrong though. Bitcoin still had a long way to go before it peaked. As of this writing, the total value of circulating Bitcoins exceeds that of multinationals like PepsiCo, Toyota, HSBC, Citigroup, and Netflix.
When Charlie Lee created Litecoin it was with Bitcoin’s shortcomings in mind. He wanted transactions to be processed faster and he didn’t want ASIC miners to move in and destroy the competition as they had before, and to that end, he used a mining algorithm called Scrypt.
His unique vision gained traction with a group of new and enthusiastic supporters who may have felt left out by the ASIC bouncers who were working the door at the Bitcoin party. They enjoyed a boom period when 1 LTC rose from $0.03 in July 2012 to $40 in November 2013. That’s an eye-opening 130,000% rise.
Bitcoin and Litecoin are now considered to be veterans of the cryptocurrency world. Now that time has passed, let’s look at Litecoin vs Bitcoin in terms of their similarities and differences and see if we can pick a winner.
Litecoin vs Bitcoin Transaction Speed
As we said already, Charlie Lee was looking to speed up transaction times above the dismally slow speeds that Bitcoin could manage.
The average Bitcoin block time is about 10 minutes, but Charlie managed to get Litecoin to perform the same function in around 2 ½ minutes.
Litecoin handles transaction confirmation 4 times quicker than Bitcoin can manage it, so Litecoin is the clear winner for validation.
Litecoin vs Bitcoin Fees
Being fast is one thing, but what’s it going to cost you? The Bitcoin vs Litecoin question also needs to consider transaction fees. Right now, The average Litecoin transaction costs $.0327 against an average Bitcoin transaction of $0.631. This is a poor result for Bitcoin–it’s four times slower and it costs you 20 times more to get your Bitcoin transactions entered into a new block!
Litecoin wins here because although it’s still slow compared to using your credit card, it’s a lot faster than its competition. This seems a bit odd when you think about the fact that that once upon a time their fees used to be virtually at parity.
Bitcoin vs Litecoin: Scalability
The answer as to why Bitcoin has struggled to keep its prices down is because of one of its limitations. As Bitcoin has become more popular it’s had to cope with a huge increase in the number of transactions that need to be processed at once, which means that prices have had to rise.
From this point of view, it might look as if Litecoin does a better job of handling transactions, but it’s actually not being as heavily tested as Bitcoin. At the time of writing, Bitcoin is having to deal with 10 times as many transactions as Litecoin every day, so it seems unfair to do a Bitcoin vs Litecoin comparison based on scalability at the moment. It would be better to come back to them when they're both dealing with the same level of traffic, and then we would get a better idea of whether their respective SegWit and Lightning Network improvements were effective.
Litecoin vs Bitcoin: Mining
As we mentioned already, Charlie Lee wanted to remove the natural advantage that ASIC rigs have over typical CPU and GPU miners. Litecoin’s mining algorithm Scrypt did manage to hold its own against these specialist machines for a good length of time, but the ASIC Manufacturers eventually managed to work out some clever ways around Scrypt’s cryptographic roadblocks.
It’s an unfortunate irony that this innovation led to even greater centralization in Litecoin mining than there was in Bitcoin mining. 5 mining pools (where miners band together to create more blocks and split the rewards) made up 71% of Litecoin’s hashrate (or total mining power on the Litecoin network).
The top 5 Bitcoin mining pools now account for 60.4% of Bitcoin’s total hashrate, and the top 3 pools make up 48% of the total hashrate, though Bitcoin still has a more decentralized network than Litecoin. Both of them do now have fairly centralized mining processes, but Bitcoin Is slightly less centralized compared to Litecoin’s.