Litecoin was designed to be used for cheaper transactions and to be more efficient in everyday use. By comparison, bitcoin was being used more as a store of value for long-term purposes.
The market capitalization of the currency limit is much higher in litecoin than in bitcoin, and the mining process is much faster. This means that transactions are faster and cheaper, although generally smaller in size.
Like bitcoin, litecoin is a form of digital money. Using blockchain technology, litecoin can be used to transfer funds directly between individuals or companies.
This ensures that a public ledger of all transactions is recorded and allows the currency to operate a decentralized payment system, free from government control or censorship.
How does litecoin work?
Litecoin involves the creation and transfer of digital currencies through an open source cryptographic protocol. It uses blockchain technology to record a decentralized public ledger of all transactions.
What is the blockchain?
The blockchain is a shared digital ledger that keeps a record of all litecoin transactions. Recent cryptocurrency transactions are grouped into 'blocks' by the miners. Blocks are then cryptographically protected before being linked to the existing blockchain. Similar blockchain technology is used for several different cryptocurrencies, including litecoin and bitcoin.
What is mining?
Mining is the process of securing each block to the existing blockchain using mining software. Once the lock is secured, new cryptocurrency units are released. Miners can inject these units directly into the market.
What are the differences between litecoin and bitcoin?
While there are many similarities between bitcoin and litecoin, some of the subtle differences include:
Although litecoin requires more sophisticated technology to mine than bitcoin, blocks are actually generated up to four times faster. Litecoin also processes financial transactions much faster and can also process more of them in the same period.
number of coins
Both bitcoin and litecoin have a finite number of coins in circulation. Bitcoin has 21 million available coins, while litecoin has 84 million — four times more than bitcoin.
Litecoin has a much smaller market capitalization than bitcoin, but it is still one of the most traded cryptocurrencies.
Miners must successfully resolve hash functions to add new blocks of a cryptocurrency to the blockchain. Litecoin and bitcoin use different mining algorithms, with Scrypt being the hash function used for litecoin and SHA-256 the hash function used for bitcoin. Scrypt was initially chosen by the litecoin development team to prevent mining from being dominated by ASIC-based miners. This would allow CPU and GPU-based miners to compete.
The Scrypt mining algorithm consumes more memory and was initially less suitable for ASIC miners, giving other miners more opportunities. However, ASIC-based miners with Scrypt capability have developed over time.
This means that CPU and GPU-based miners no longer have valid mining tools due to lower computational powers, and ASICs are capable of generating much more hashes per second.