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Bitcoin is arguably the most famous cryptocurrency in the world. For starters, it has a market capitalization that’s bigger than the likes of Facebook (Meta) and Nvidia.
BTC has also become a store of value, a tradable asset, and a way to pay for goods and services. There’s a historical context to this popularity. Bitcoin was the first-ever cryptocurrency that the world encountered.
It emphatically showed that an asset can be decentralized, transparent, and fast without the need for a traditional gatekeeper. Bitcoin also established the groundwork for other decentralized cryptocurrencies.
Litecoin was one of them. It was an early Bitcoin-inspired offshoot that was created by Charlie Lee. Litecoin was heavily influenced by Bitcoin’s underlying principles and is, in many ways, similar to it.
That said, Litecoin came after Bitcoin because of which it had time to evolve and improve. This is where the differences between the two get interesting. Join us, as we explore all that makes BTC and LTC function.
First things first, Bitcoin and Litecoin are both cryptocurrencies that share certain similarities. They don’t rely on a centralized authority like the US Federal Government or the Reserve Bank of India.
Instead, Bitcoin and Litecoin are a melting pot of cryptography, mathematics, mining, and community-driven ethos. If you delve deeper, you’d find that Bitcoin and Litecoin share “proof of work” validation.
This allows miners to validate transactions, which is a crucial step to avoid double payments. Proof of work as a concept also helps maintain the cryptographic integrity of the Bitcoin and Litecoin ecosystem.
Furthermore, Bitcoin and Litecoin are “deflationary” cryptocurrencies. In simple terms, this means that the number of BTC and LTC will reduce every time a transaction happens.
Being deflationary is known to have its benefits. It primarily introduces a sense of scarcity that can effectively drive up the perceived value of cryptocurrencies like BTC and LTC.
Other similarities include the fact that you’d need a reliable wallet for storing Bitcoin and Litecoin. Finally, both BTC and LTC are a store of value and can be used as a payment for goods and services. You can consult a Cube Wealth coach or download a Cube Wealth App.
Bitcoin and Litecoin feature in the top 20 cryptocurrencies in the world and use similar mechanisms to operate. But, there are 5 key differences between them that you should know before investing in either.
There are no two ways about this one - Bitcoin is the biggest cryptocurrency in the world. BTC’s market capitalization was above $1 trillion not so long ago and is currently at $949.39 Billion.
In fact, the closest competitor to Bitcoin is Ethereum that has a market capitalization of $508.34 Billion while Litecoin is currently trading with a market cap of $11.13 Billion.
We’ve discussed before that BTC and LTC are limited in nature. During their lifetime, only 21 million Bitcoin and 84 million Litecoin can exist. As you can tell, the number of LTC is 63 million more than that of BTC.
Currently, there are over 18 million BTC and 69 million LTC in circulation. This leaves scope for close to 3 million BTC and 15 million LTC to be mined by enthusiasts.
Mining is essentially the process by which new Bitcoin and Litecoin are introduced into circulation. Back in the day, mining a new block of Bitcoin could fetch miners up to 50 BTC.
However, Bitcoin mining rewards are halved every 4 years. That’s why a block of Bitcoin mined in 2021 carries a reward of 6.25 BTC. Mining a block of Litecoin, on the other hand, can fetch miners up to 12.5 LTC.
Bitcoin is known to be one of the fastest cryptocurrencies. That said, Litecoin is touted to be faster because of two reasons:
This implies that Litecoin is 4x faster than Bitcoin. All of this is possible due to the frequent block generation, a feature that’s thoroughly dependent on robust math algorithms for Bitcoin and Litecoin. You can consult a Cube Wealth coach or download a Cube Wealth App.
In order to maintain the integrity of the cryptographic network, Bitcoin uses the Secure Hash Algorithm 256-bit (SHA-256) hashing algorithm, which is a classic encryption algorithm designed by the NSA in 2001.
Litecoin uses Scrypt, a key derivation function known to be better than SHA-256. Scrypt was developed by Colin Percival and makes it far more costly to attack a system that makes use of it.
Ans. One of the primary differences is the hashing algorithm they use. Bitcoin employs SHA-256, while Litecoin uses Scrypt. Additionally, Litecoin has a shorter block generation time, which results in faster transaction confirmation and lower fees.
Ans. Both Bitcoin and Litecoin use robust blockchain technology and are considered secure. However, Bitcoin's larger network and higher market capitalization can make it a more attractive target for attacks, potentially affecting its security.
Ans. Bitcoin has significantly greater adoption, recognition, and market capitalization compared to Litecoin. It is often referred to as the digital gold standard and is widely accepted as a store of value.
Ans. Litecoin's faster transaction times and lower fees make it a more suitable choice for certain types of transactions, particularly those requiring quick confirmations. It is often used for small, everyday purchases and transfers.
The choice between Bitcoin and Litecoin ultimately depends on your specific needs and preferences. Bitcoin is more widely recognized and often used for long-term investment or as a hedge against inflation. Litecoin, on the other hand, is favored for faster, low-cost transactions and everyday use. Both cryptocurrencies play significant roles in the cryptocurrency ecosystem, and their coexistence allows users to choose the one that best suits their particular requirements and goals. You can consult a Cube Wealth coach or download a Cube Wealth App.
Note: Facts & figures are true as of 08-12-2021. None of the information shared here is to be construed as investment advice. Exercise caution when investing in unregulated assets like cryptocurrency.
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