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Learn More about Litecoin

Satoshi Nakamoto is credited with developing bitcoin, the world’s first cryptocurrency and utiliser of blockchain. The blockchain code is open source (versus proprietary), which means it can be modified by anyone to create new projects and application. As a result, it has inspired the formation of many new types of cryptocurrency using modified versions of this code, to varying degrees of success.

Litecoin’s launch was announced in 2011 with the goal of being the digital equivalent of silver just as bitcoin is considered digital gold. In 2014, Litecoin had the second highest market cap of any mined cryptocurrency, after bitcoin.

Here’s our guide to show you the crucial difference between bitcoin and litecoin.

At-a-glance differences in Bitcoin and Litecoin

BitcoinLitecoin
Coin limit21 Million84 Million
AlgorithmSHA-256Scrypt
Mean block time10 minutes2.5 minutes
Difficulty retarget2016 block2016 blocks
Block reward detailsHalved every 210,000 blocks.Halved every 840,000 blocks
Initial reward50 BTC50 LTC
Current block reward25 BTC50 LTC
Block explorerblockchain.infoblock-explorer.com
Created bySatoshi NakamotoCharles Lee
Creation dateJanuary 3rd, 2009October 7th, 2011
Market cap$10,467,596,650.78$540,274,528.26
Bitcoin StatisticsLitecoin Statistics

 

Mining differences in Bitcoin and Litecoin

Just like bitcoin, litecoin is is generated by mining. Litecoin was created in October 2011 by Charles Lee, a former Google engineer, with the intention of improving upon bitcoin. The key difference for end-users, however, is the 2.5 minutes it takes to generate a block, as opposed to 10 minutes for bitcoin. Charles Lee now is now employed by Coinbase,


one of the most popular online bitcoin wallets.

For miners and cryptocurrency enthusiasts the really notably difference between litecoin and bitcoin is its proof of work algorithm. Bitcoin employs the SHA-256 hashing algorithm, based partly on calculations that can be greatly accelerated in parallel processing. This characteristic has given rise to an intense race in ASIC technology, and has exponentially increased bitcoin’s difficulty level.

Litecoin’s Algorithm explained

Litecoin, however, uses the scrypt algorithm, formerly known as s-crypt but pronounced as ‘script’. This algorithm incorporates the SHA-256 algorithm, but with calculations which are much more serialised than those of SHA-256 used by bitcoin. Scrypt is enhanced by large amounts of high-speed RAM rather than raw processing power alone and is subseqeuntly known as a ‘memory hard problem’.

Using scrypt mean that there has not been as much of an ‘arms race’ in litecoin nor other scrypt currencies because there is no ASIC technology available for this algorithm. However, this will soon change due to companies like Alpha Technologies.

To highlight the difference in hashing power, in 2014 the total hashing rate of the bitcoin network is over 20,000 Terra Hashes per second, while that of litecoin is just 95,642 Mega Hashes per second.

For the time being the most sophisticated litecoin mining rigs are custom PCs fitted with multiple graphics cards (ie: GPUs). These devices can handle the calculations required of scrypt with access to blisteringly fast memory built into their own circuit boards.

Originally when first launched, people could use GPU mining for bitcoin, but ASICs have made this method completely obscure to the point of futile.

Transaction differences with Litecoin

The main difference between the two cryptocurrencies is that litecoin can confirm transactions must faster than bitcoin. As a result, litecoin can handle a higher volume of transactions because of its faster block generation. For bitcoin to match this, it would require significant updates to the code that everyone on the bitcoin network is currently running.The disadvantage of the higher volume of blocks is that litecoin’s blockchain will be proportionately larger than bitcoin’s and have more orphaned blocks.

Litecoin’s faster blocktime also greatly reduces the risk of double spending attacks in the theoretical instance of both networks having the same hashing power. A merchant waiting for at least two confirmations would only spend five minutes with litecoin, whereas they would have to wait 10 minutes for just one confirmation with bitcoin.

Transaction speed (or faster block time) and confirmation speed are often dismissed as moot points by many bitcoin enthusiasts, since a great many merchants would allow zero-confirmation transactions in order to make the sale. However, bear in mind that the actual transaction itself is instantaneous; its confirmation by the network as it propagates is what leads to the wait.


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