Difference between Bitcoin and Litecoin

Litecoin and Bitcoin are both digital currencies based on the same technology, the blockchain technology. Litecoin and Bitcoin are both cryptocurrencies and are decentralised. Both of them are not subject to inflation as well.

Litecoin and bitcoin can both be traded on different markets as tradable assets, and both have a particular value in fiat currency.

If two things have so much in common, why are they even different? Why cant they be both merged into one and then called something else?

This is where the technicalities begin. As two different denominations of a single type of currency (digital currency), Bitcoin and Litecoin make a massive sound in the market, accompanied by etherium.

Together these three, are what people know of digital currencies. It is hard to imagine, but there are at least 200 different cryptocurrencies, already in circulation.

So what is the crucial difference between bitcoin and litecoin? They work on the same technology, after all?

They do work on the same technology, but the way they are used in both the products makes the difference.

This brings us to our first and foremost key difference in bitcoin and litecoin.

The way blockchain works: To understand how blockchain works, we will first see what encryption is, how it is connected to Bitcoin and Litecoin and the types of encryption techniques we need to know to relate them to digital currencies.

Encryption:.

As kids, we've all come up with a code language. Not as in a computer code, but something very much comfortable. Like, reading PM as AM and vice versa. This changes the whole meaning of the delivered message and more importantly, an unauthorised recipient will not understand what the message wanted to say.

This is a type of encryption. In this case, you and your friend have agreed that PM will be read as AM. This is what makes the message specifically available to just the two of you.

Now imagine a third person. The message you want to convey to your friend is "we will meet at 6 PM today".

There is a slight chance that before the message reaches your friend, the third person will somehow see it and read what's in it.

Since only two people know how to perceive this message, the third person will read it differently.

This is the concept of Keys explained in a straightforward manner. In the given example, the key was "read PM as AM and vice versa". When computers generate keys by themselves, they are a bunch of non-readable words for the average user.

Keys are the backbone of encryption because a lock is useless if everyone else has the keys. Only the intended people should know how to open it.

How is encryption used in digital currencies?

Digital currencies are often called cryptocurrencies. The crypto in cryptocurrencies means nothing but "secret". Cryptography is the technology behind cryptocurrencies. It is used when a secure transaction has to be done between two parties.

Hashing:

In straightforward terms, hashing is a process in which a variable-length input will be converted to the output of fixed length.

For example, in SHA-256, the output is always fixed no matter how significant the input is.

That is 256 bits. This output is always encrypted. This process happens with the help of a mathematical algorithm.

Now, we know what encryption is, we know what hashing is, and now, we will understand what blockchain is.

Blockchain is a type of ledger or a book that is owned by everyone.

Understand it this way:

A transaction has to be noted in a ledger when there is only one copy of a ledger, trust issues surface. What if the person owning the ledger manipulates the data? What if I spend my money and is not recorded on the ledger or deleted later?

These problems can still happen. What happens when you transfer funds to someone else who has a different bank account? Where are the books of all the transactions? Who's in charge?

Most of the time, all the transactions that happen are recorded on servers in centralised bank systems. Ideally, you are putting your trust in a third party different from you and the banks involved in the transaction.

This was a problem that bitcoin wanted to address. The anonymous creator had to think of a transparent way to record all transactions that happen, and it was supposed to have the capacity to record all of those transactions.

That is what blockchain is. It is still a ledger, but anyone can own a copy of that ledger.

When a transaction happens, the ledger is updated, and there is no single person who is in charge.

(who is in charge? No one when it comes to the blockchain).

To sum up, no one can single-handedly manipulate the data in a blockchain, the data is always transferred with the help of end to end encryption and hashing, further secured by keys.

This is all we know till now.

Now let us address the real question; what is the difference between bitcoin and Litecoin.

Bitcoin and lite coin majorly differ when it comes to the transaction speed. Bitcoin takes up to 10 minutes to complete a transaction, and Litecoin takes only 2.5 minutes. This makes it four times faster than Bitcoin.

That's one of the critical differences.

Speed:

Speed of a transaction or the speed of how fast the data processed depends upon two things.

How big the file is, and what is the encryption algorithm used by the platform.

Bitcoin uses the SHA-256 algorithm, and Litecoin uses Scrypt as its preferred encryption algo.

Litecoin is faster than bitcoin because the blocks in bitcoin are generated faster than that of bitcoin.

Another difference in bitcoin and bitcoin is, of course, the encryption technology that both the platforms use. Scrypt and SHA 256.

Scrypt and SHA both are different in terms of collision and speed.

Collision as in, the hash function generated for a particular file, can be the same for a different file. Most of the technologies like SHA takes much more time in p[rocessing because the possibility of the collision has to be kept as low as possible.

Since we can not have any more technicalities related to cryptography, we have to make peace with this information only.

Another significant difference in both the coins is the number of circulated currency. While bitcoin is set to produce no more than 21 million coins, Litecoin has set a target of 84 million coins.

As to why different encryption technologies are used, here is the answer.

Scrypt & SHA-256

Both of the algorithms are computationally intensive because both require the computational power that is raw so that a large number of possible solutions can be created.

Scrypt is different from SHA also because it is memory intensive. Apart from the rapid generation of numbers, they also have to store in the RAM of the computer to be accessed before submitting any result.

Why is Scrypt used?

The research team of Litecoin used this to stop the use of ASICs for mining purposes.

ASICs make GPUs and CPUs look like a AAA battery when it comes to mining.

To ensure that the miners using GPUs and CPUs for mining do not have any disadvantage, scrypt was used so that GPUs and CPUs could remain in the market.

However, with the advancement of computer science, specific ASICs have been made that allow the mining of cryptocurrencies using Scrypt.

Frequently asked questions:

Is bitcoin cheaper than Litecoin?

Yes. It is.

Are there brokers that are a scam?

Yes, some brokers are not authentic.

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Bottom line: the market of crypto is volatile. Ensure you have done proper research in terms of what holds the market, what drives the market and most importantly, what can go wrong.

Always keep in mind that the math will put food on the table, not the gut feeling.