Bitcoin vs. Litecoin or Satoshi Nakamoto vs. Charlie Lee. Major differences between mining algorithms, caps and block times as well as data table providing the comparison between two digital assets
Bitcoin was released on January 3, 2009. Its mysterious creator, Satoshi Nakamoto made it open-source, meaning he published Bitcoin’s entire code online. Anyone can view it, copy it, make changes, and use it for their own product. Litecoin was one of those projects.
Charlie Lee, a former Google engineer, created Litecoin in 2011. He noticed some problems with Bitcoin and wanted to solve them with Litecoin. Though Bitcoin and Litecoin are pretty similar, they are useful in their own ways.
Charlie Lee saw that a lot of Bitcoin miners used ASICs (Application-Specific Integrated Circuits), special hardware designed to mine bitcoins. It was a problem because the popularity of ASICs meant that mining was not nearly as profitable for people with regular computers.
Lee used a different mining algorithm for Litecoin, Scrypt, as opposed to Bitcoin’s SHA-256. Scrypt ensured that there would be no special hardware to give some miners a big advantage over others. While this was true for a while, eventually Litecoin lost its ASIC-resistance.
Bitcoin’s cap is 21 million coins. Litecoins are capped at 84 million. This means that a Litecoin should, according to the demand-supply principle, always be cheaper than a Bitcoin. This supports a common analogy that Litecoin is silver to Bitcoin’s gold. Litecoin was intended to be a smaller currency for smaller everyday transactions, while Bitcoin is now increasingly used as a commodity.
Block time differences
Bitcoin is now becoming an asset that can be sold at any time to retrieve a predictable amount of value. This, in part, is because Bitcoin transactions take much more time compared to other altcoins. For security purposes, the classic bitcoin client marks a transaction as confirmed only after it is six blocks deep into the blockchain. With Bitcoin’s block time of 10 minutes, it takes about an hour for a transaction to get six confirmations. This makes smaller Bitcoin transactions inconvenient.
Litecoin, on the other side, has a block time of about 2.5 minutes. This makes everyday payments much easier and faster. Faster block time also ensures increased security of the blockchain as blocks build on top of each other much faster making it harder for attackers to replace blocks.
Developers, however, are now proposing various solutions to make Bitcoin scalable and faster. With Segregated Witness, for examples, blocks will be able to store more transactions, and Lightning Network will record smaller transactions off-chain, on a second layer on top of the blockchain, which will make payments instant and offload the blockchain.
Bitcoin vs Litecoin
- Creator: Satoshi Nakamoto
- Date of creation: October 31, 2008
- Max. coin supply: 21 million
- Mining algorithm: 21 million
- Block time: about 10 minutes
- Creator: Charlie Lee
- Date of creation: October 7, 2011
- Max. coin supply: 84 million
- Mining algorithm: Scrypt
- Block time: about 2.5 minutes