Litecoin & Bitcoin: What's the Difference?!
Bitcoin has open source code, meaning it’s open to the public to analyze and learn from.
This has inspired a whole lot of people to take this code and tweak it in a way that they think will be most beneficial, resulting in a new cryptocurrency and blockchain.
One of the first of these people is Charlie Lee.
So right off the bat, Litecoin has a publicly identified creator compared to the anonymous Satoshi Nakamoto.
Charlie created Litecoin about two years after Bitcoin, and one of the ways that he chose to make Litecoin different is how Litecoin is mined.
Litecoin uses Scrypt mining.
This type of mining can be thought of as ASIC resistant, meaning that it requires memory in addition to computing power, which is what GPUs are much better suited for.
Litecoin was designed this way to purposely avoid the centralization we’re now seeing with Bitcoin and it’s mining pools.
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Scrypt mining is still profitable for those who want to use their computers, unlike Bitcoin at this point.
(But you know how those ASIC manufacturers like to innovate, there are ASICs for Scrypt mining now as well.)
Regardless, this helps explain one aspect of how Litecoin can implement changes much faster and easier than Bitcoin.
Litecoin doesn’t have these huge, centralized mining farms like Bitcoin which have enough control over the network, like Antpool that allows them to strongly influence decisions like hard forks.
Bitcoins trouble with reaching consensus in regards to updates to the network can also be attributed to the sheer size of the network.
Bottom line, Bitcoin has a lot of miners and nodes that need to come together and choose to signal one way or another.
Decentralization is great, and although we are increasingly becoming accustomed to instant gratification, this slow process of updates can actually help make sure that major mistakes aren’t made, and that the network has had ample time to consider the pros and cons.
This is when Litecoin comes into play and can demonstrate how things like Segregated Witness and Lightning Network can work once implemented.
Litecoin often comes to decisions much faster because the network is generally smaller, with less developers and not as many powerful stakeholders (like blockstream) than Bitcoin, it’s easier for Litecoin to make decisions faster.
In addition to all of this, there are also some economic differences between Bitcoin and Litecoin.
For example, the total possible supply of Litecoin is 84 million compared to the 21 million of Bitcoin. This sets the stage for overall more coins for Litecoin’s block rewards, and a less expensive price tag per coin.
Generally, the Litecoin network sees a bit more than 10% of the amount of transactions compared to Bitcoin.
The block times are a fraction of Bitcoin as well, which translates to faster transactions.
Getting back to the mining aspect of Litecoin, the difficulty and hash rates are lower so mining is actually more directly profitable for Litecoin.
Great vid! I was just trying to describe this to a friend the other day!
I really like LTC but it is hard for me to find real purpose for it. For everyday payments 2.5 min per block is too slow, there are faster coins now and it can't compete with BTC as store of value. With LN development it will be even harder to find LTC purpose dough it will be able also to use LN. Still it is better than BCH.
Faster block times only mean it needs inversely proportional more confirmations for security. As conventional wisdom states though, the smaller the purchase the more comfortable we can be once the broadcast is made, very little practicality in anyone trying to be malicious there. :-)
As long as there is no RBF for example, which Bitcoin now has and Bitcoin Cash doesn't. I bet Litecoiners were smarter and didn't implement it, even when Blockstream obviously preferred it since it helps push users to side chains instead.
True, but RBF is opt-in anyway. Also, I'm not sure the smaller purchases would need to be prioritised, but anyway, depends on the vendor and the state of the mempool I suppose. But then there is Segwit.
Opt in but enabled by default. It makes a big difference, because it changes the culture and leads to a much less safe environment for 0-conf.
SegWit isn't a feature imo, but that's that.
Never said Segwit was a feature, but if we all start using Segwit, which is highly encouraged, we won't need to be weary of RBF being default etc. You could argue that RBF is implemented to push people towards Segwit.
Yes, RBF and low blocksize was intended to create a "fee market". In other words manipulate the pricing mechanism to drive up deflation arbitrarily. (Causing losses to peoples wallets in the process.)
This pushes users to whatever SegWit enabled networks can be created on the side, but those networks still can't compete with the original on chain transactions because the topology and resulting security will be completely different.
Even with the best possible implementation of Lightning, Liquid etc, the network simply won't look the same and have the same liquidity as the actual Bitcoin network (ie the "timestamp server run by hashing nodes). This is because Satoshi entirely avoided routing in the design, on purpose.
That said, if it can just be liquid enough to not cause issues most of the time, users will still probably migrate there over time. Especially if the mempool starts to fill up again etc.
Out of interest, at what blocksize do you think, at mainstream adoption, and you can imagine the number of transactions that occur, but lets put it to a low value of 150000 tps, is appropriate? And the golden question of, how does the larger blocksize, positive or negative affect the average full node wallet holder (or should full nodes be avoided)?
I understand portions of the first two lines of your last reply, but, would it be such a bad thing for a fee market?, to sustain the immense immutable security that the bitcoin POW provides? To add more functionality to this idea, it seems as though, RBF and low blocksizes encourage the higher much more valuable transactions to remain on-chain for obvious reasons, but the extremely high volume low value transactions to go off chain? I do want to examine the pro's an con's and don't want to appear biased to any particular design philosophy.
Would you please explain "In other words manipulate the pricing mechanism to drive up deflation arbitrarily. (Causing losses to peoples wallets in the process.)" as I do not understand this.
Somthing else I'd like to point out, and is a matter of opinion, "This is because Satoshi entirely avoided routing in the design, on purpose." I have briefly glanced at some of the original comms between the cypherpunks including Hal Finney and Martti Malmi with Satoshi, but I cannot see any discussion about avoiding routing in the design (I've probably just not noticed or misinterpreted this). I've also either not noticed or failed to interpret any avoidance of routing.
Yeah I probably will never see Litecoin as much more than a meme coin, but it still has speculation potential. That much is for sure. I also wouldn't trust as much in 1 LTC confirmation as I would in a few seconds without RBF on Bitcoin Cash. The network is just so much smaller.
Great article, i think there needs to be more articles like this to educate the differences and to see the true value of each cryptocurrency.
Personally I struggle to see a true value to Litecoin as the same with Ripple, but let's see what happens!
Bitcoin is more like invest wait and reap w
I buy some idea about the both coins in this post. great content
As i was reading your post , i began to find out some of the benefit of litecoin over bitcoin , especially the lower difficulty in hash rate and more profitable in mining litecoin now than bitcoin . Each time i read your post , i learnt new thing . just like what happened when i come across your post on genesis and hashflare mining i learnt a lot . happy to have come across your post leaving it with new knowledge in the crypto world
Litecoin is really good as a medium of exchange but for long term storage bitcoin is king!
I would still prefer bitcoin
I wouldn't use that guy's pic, but mkay :D
Another difference that I would like to mention is that Litecoin has Segwit activated and Bitcoin does not. Great comparison!
Where did you get this information from?
https://www.buybitcoinworldwide.com/litecoin/
Horribly outdated information. Look up BIP 141