Litecoin is a popular peer to peer digital currency that was forked (branched) from the original bitcoin design. This makes it similar from a technology standpoint to the first ever cryptocurrency. Litecoin’s creator is Charlie Lee; a former google employee and Director of Engineering at Coinbase. His vision was to create an improved, faster version of bitcoin that could be adopted by the masses. Litecoin has a strong positive history and was one of the first ‘alternative’ cryptocurrencies in the market.
So what makes litecoin faster?
To understand why litecoin is faster we need to understand how the blockchain records transactions. Although technically transactions occur instantly on both litecoin and bitcoin networks; confirmation and consensus that the transactions are legitimate takes a bit longer.
Each ‘block’ in the blockchain stores multiple transactions within it. So if you send 1 BTC to your friend it will be one of many bundled transactions that are being processed within a single ‘block’. In bitcoin the timing of each block is mathematically set and enforced at 10 minutes. This means for a full confirmation of a bitcoin transaction we have to wait 10 minutes for the miners to process and agree that the block is legitimate.
Litecoin was developed with 2.5 minute block times. This theoretically makes confirming transactions 4x faster than bitcoin. Charlie Lee believed this made it better as a ‘real world’ transaction system. Furthermore with faster block confirmation times double spending became less likely to occur.
Apart from speed what is else unique about litecoin?
Litecoin has a larger supply, with the maximum total being 84 million compared to bitcoin’s 21 million coins. This has helped spread early adoption due to the affordable price. Furthermore litecoin uses a different mining algorithm than bitcoin. Bitcoin uses the SHA-256 algorithm whereas litecoin uses the Scrypt algorithm. Modern mining of bitcoin has evolved so much that there are specific machines built just for mining it. These are called ASIC machines and they only mine the SHA-256 algorithm.
Charlie Lee wanted litecoin to be adopted by the wider community so had to avoid using the SHA-256 algorithm to keep the large miners away. This is why the Scrypt algorithm was initially adopted and it paved the way for everyday people to mine the currency (although at time of writing there are now dedicated Scrypt machines available). Litecoin also adopted the speed improvement proposal ‘Segwit’ before bitcoin.
Bitcoin or Litecoin which is better?
Well so far we can see that litecoin has its technical and speed advantages. Adoption is strong and it is currently a top 5 cryptocurrency in market cap. Bitcoin continues to have adoption advantage over litecoin due to being first into the market. Litecoin is sometimes referred to as ‘silver to bitcoin’s gold’ and both definitely have a place in the market going forward. Litecoin also has a lot of growth potential in the market due to it being a newer currency, having a more affordable price and a higher supply. Most cryptocurrency enthusiasts are holders of both bitcoin and litecoin.
The quick facts:
Bitcoin: 21 million coins
Litecoin: 84 million coins
Bitcoin: 10 minute block times
Litecoin: 2.5 minute blocktimes
Bitcoin: SHA-256 Algorithm (ASIC compatible)
Sounds great! Where can I get some?
Easy Crypto makes it simple for you to pick up litecoin at the great rates. We’ll deliver your Litecoin into a secure portfolio file; and if you want set up your own wallet, you can check out our how to guide.
This article is not financial advice. It is purely for information only and is based on the author’s understanding and research, but we cannot guarantee the accuracy of any statements made. We strongly recommend that you do your own due diligence before purchasing any cryptocurrencies, and make sure that you are fully aware of the risks involved.