WHAT IS THE DIFFERENCE BETWEEN LITECOIN AND BITCOIN?

 Alok Yadav, a cryptoanalyst and researcher at Indian Institutes of Science Education and Research, answers the question on Quora: What is the Difference Between Litecoin and Bitcoin?

The two cryptos may seem similar, but they are actually quite distinct in their market acceptance and technical mechanics.In the following four points, we will discuss what makes each crypto distinct. You will come to understand how Litecoin’s arguably superior algorithm will likely forever be subordinate due to Bitcoin’s pervasive network.

1) Bitcoin is Much More PopularWith a market cap roughly 22.5x the size of Litecoin’s,

 Bitcoin’s overwhelming popularity makes it the obvious choice for the crypto investment community.

According to Google Trends, Litecoin hardly holds a candle to Bitcoin’s search popularity. For scale, 100 indicates the peak popularity a term. A value of 50 means the term is half as popular, and a value of 0 means the term was less than 1% as popular as the peak.

Since cryptos are viewed as inherently risky, Bitcoin seems relatively stable with its extremely high market cap. Sure, Bitcoin’s price can still be incredibly volatile. Yet while a mere $1 billion loss would decimate Litecoin’s market cap in half, Bitcoin would need a crash of $40 billion in market cap for effects to be just as catastrophic.

Despite all this, Litecoin is still fairly relevant in the crypto community.

2) Litecoin Accommodates More Total Coins

Many crypto traders account for the total number of coins each cryptocurrency is programmed to make. Bitcoin is capped at 21 million coins, but Litecoin can make up to 84 million coins.Both coins technically still have a long ways to go until they hit their cap limits but it remains a concern because of the price volatility expected as the coins reach their maximums. Bitcoin currently has roughly 17,1 million coins in circulation, and Litecoin has about 57 million. This means Bitcoin is currently at 81% of its maximum, and Litecoin is about 68% of its maximum. If Bitcoin nears its maximum coin amount first, then Litecoin may pick up more traction with traders buying into Litecoin to avoid the Bitcoin volatility.

The above point in favor of Litecoin, however, is largely a misunderstanding: Since both Bitcoin and Litecoin can be divided into fractional amounts, the maximum coin shouldn’t impact the value storage of either coin. For example, Bitcoin users can transfer as little as 0.00000001 bitcoins. The ability to accommodate more coins is then kaput.

3) Litecoin Has a Faster Transaction Processing Speed

Bitcoin’s average transaction confirmation time is a little over 9 minutes per transaction, whereas Litecoin’s is roughly 2.5 minutes per transaction. This makes Litecoin’s transactions roughly four times faster than Bitcoin’s, offering an attractive advantage for users who frequently conduct transactions, such as merchants.

Keep in mind that transactions technically occur instantaneously on both Bitcoin and Litecoin networks, but the transaction confirmation by other network participants does take some time. Waiting the full 9 minutes for a Bitcoin transaction or 2.5 minutes for a Litecoin transaction ensures the transaction was valid. Merchants can accept the transactions instantaneously without waiting for a confirmation, but they run the risk of becoming victim to a “double spend” attack.

This seemingly large advantage Litecoin has over Bitcoin, however, is minimized by third-party solutions that make instantaneous transactions more secure.

4) Litecoin’s Cryptographic Algorithm Welcomes Newbies

Long-term cryptocurrency users consider the technical components of Bitcoin’s and Litecoins’ different cryptographic algorithms when comparing the two.Bitcoin uses the SHA-256 algorithm and Litecoin uses an algorithm called Scrypt. These algorithms determine the “mining” process for new coins. “Miners” confirm the transactions of other users, and are rewarded units of that currency in exchange.Many consider Bitcoin’s SHA-256 algorithm more complex than Litecoin’s Scrypt, which therefore allows for a higher degree of parallel processing. Bitcoin miners have built sophisticated methods to mine bitcoins at a highly efficient rate. The most dominant method uses ASICs–Application-Specific Integrated Circuits. ASICs are essentially hardware systems (similar to CPUs) created purely to mine bitcoins.

The Bitcoin competition for mining is fierce due to the sheer amount of miners, as well as technical innovations such as the ASICs. New miners struggle to establish themselves without adequate computing power, capital to handle expenses, and the know-how to outcompete experienced competition.

Litecoin was largely created to appeal to miners who could no longer mine Bitcoin because their CPUs couldn’t compete with ASICs. Scrypt is more accessible for new miners. It was designed to be less conducive to custom hardware solutions such as in ASIC-based mining. Scrypt, however, is not immune to the innovation and there is increasing development that hinders the easy-access mining Scrypt was partially designed for.

Bitcoin Crowned King Thanks to Its Network

While Litecoin’s efforts to make mining more accessible to everyone is a notable gesture that speaks volumes about the Litecoin community, it also pigeonholes itself into a niche. Instead of appealing to a massive community of people to achieve a network to contend with Bitcoin’s, Litecoin focused on minor differentiating factors. Litecoin essentially functions the same as Bitcoin and doesn’t offer enough for users to convert from Bitcoin.

It’s safe to assume that most crypto-traders, those responsible for the large crypto market caps, aren’t valuing tech over substantial profit. Litecoin’s value proposition simply sounds like another altcoin pitch to them. Less tech-savvy adopters hardly know what the mining process is like, let alone the difference between SHA-256 and Scrypt. So while Litecoin’s price has increased significantly over the past few months, it simply isn’t as attractive as Bitcoin’s.