The difference between Bitcoin and Litecoin

Bitcoin was first established in 2009. Ever since it was introduced, it has gone on to become one of the most popular alternative currencies used for a variety of transactions. There are various ways in which you can attain and start using this currency. Bitcoin however, is not the only idea of its kind to hit the market. There is a currency that bears a lot of resemblance with bitcoin. This currency is referred to as Litecoin. There are several similarities between the two currencies, however, the two are not the same thing. Here are a few of the main differences between these two digital currencies.

Instructions

  • 1

    The creation and transfer of the bitcoin currency is managed by an open source cryptographic protocol. This protocol is not looked after by any central authority. One bitcoin is further divided into a hundred million smaller units that are known as Satoshis. It is possible to buy and sell bitcoins from a computer or a phone without involving any financial institution. On the other hand, Litecoin is an alternative peer to peer digital currency that is based on bitcoin. The currency targets a block rate that is faster than that of bitcoin and makes use of scrypt in the primary hashing done in the mining process.

  • 2

    The block chain for Litecoin also differs a lot from that of bitcoin. For instance, the chain generates a new block every 2 ½ minutes. This is like four times the rate at which bitcoin block chains develop a new block. This means that if you are a merchant that accepts transactions that are only 1 block deep, you will only get confirmation much faster with Litecoin than you would with Bitcoin. However, there is a downside to this faster confirmation rate. You will need more blocks to get the same amount of confirmation strength as that of bitcoins. This means that for instance, eight blocks of Litecoin are not equal to eight blocks of Bitcoin.

  • 3

    The other comparison between these two digital currencies is based on their addresses. Litecoin addresses normally start with L. this is because of their version number. This is what sets them apart from bitcoin addresses. Otherwise, the generation process is completely identical to that of bitcoin addresses.

  • 4

    The other main difference between Litecoin and Bitcoin is it will cost you less to start mining for Litecoin than it would cost to start mining for bitcoin. As a matter of fact, the only thing you will need in order to start mining for Litecoin is a computer and an internet connection. In addition to that, you can even use CPUs to mine for Litecoin. However, this has its own demerits. The minimized market entry cost means that the mining power is decentralized. This poses the danger of some investors making a huge one time investment on the Litecoin. In order to do the same for bitcoin, an investor would need to have a lot of money. It is this limitation that makes mining for bitcoin safer than going for Litecoin.

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