The recent technological advancements have created a powerful and impressive impact on the global economy. This has mainly been possible due to the introduction of crypto currency. Crypto currencies have been starting to replace paper and other digital currencies over the past few years. The crypto currencies mainly incorporate cryptography in order to implement methods for creating a balanced economy where two or more parties can carry out digital transactions between one another in an environment of trust, accountability and integrity.
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The basic principle through which these crypto currencies operate starts with an initial transaction request from a buyer. These transactions are then verified and stored in an open source public database. The operators who facilitate the processing of such transactions involving crypto currency are termed as miners. The miners charge a transaction fee and even newly mined crypto currency for their payment processing services.
The two contenders
Lately, Bitcoin and Litecoin have been the two strong contenders in the digital currency era. Both of them have been able to make the handling of transactions much safer, faster and more convenient over time and have hence gained popularity among digital buyers and sellers. Bitcoin and the Litecoin have significantly influenced the overall global economics but one is a bit different from one another, these have been able to fulfill the need of creating a reliable and less complex online transacting environment.
Some of the major differences between Bitcoin and Litecoin have been pointed out in this article.
Uses the scrypt mining algorithm:
The Litecoin uses the scrypt hash function for mining. The mining algorithm of the Bitcoin is replaced by the scrypt which makes the Litecoin mining possible through GPUs. However, the advanced scrypt hardware is more expensive than the SHA256.
Rate of capitalization:
The Litecoin has a market capitalization rate of $734 million currently. Total number of coins: The total number of Litecoins is 84 million as of now, meaning much more than that of Bitcoin. Faster transaction time: The time taken for processing transactions through Litecoin is nearly 4 times faster as compared to the Bitcoin transactions.
Faster block rate:
Litecoin has a block rate of 2.5 minutes which ensures a faster confirmation of transactions.
The Litecoin experiences a difficulty re-target of 3.5 days which makes it more immune to network power lapses and the possibility of slow block generation by miners.
The Litecoin is much more affordable to be used as investment than Bitcoin. It is the primary reason that the Litecoin has been able to gain great market strength over time and displays fairly better future prospects as a digital currency.
Low entry costs:
The market entry cost required for Litecoin mining is much cheaper as it can be easily mined on simple computers. This obviously makes it a more preferred form of digital currency for both buyers and sellers. Greater decentralization: The expected time for earning a reward by a miner of Litecoin is 4 times less than that of a Bitcoin miner. Hence mining is more easily sustained through litecoins which lend them the potential to become more decentralized than the bitcoins. Ensure profitable mining: Operators can earn larger profits by mining Litecoins rather than bitcoins. This has allowed even small operators to make good profits.
Uses the SHA256 mining algorithm: Bitcoin uses the SHA256 hash function for mining which can be used to mine Bitcoins on CPUs.
Rate of capitalization:
The current market capitalization rate for Bitcoins stands at 12 billion dollars currently. Total no. of coins: The total number of Bitcoins globally has been estimated to be around 21 million.
The Bitcoin is based on a more sophisticated and more firm digital platform which allows it to be used not only as a crypto currency but even for investment transactions like stock markets, digital agreements and other similar transactions with almost zero transaction fees.
The transactions carried out using Bitcoin are far more secure than those of the Litecoin, with minimal chances of online intrusions and threats from unauthorized miners.
High user popularity:
This is one point which makes Bitcoin the best and the biggest digital currency. The immense popularity is mainly owing to the fact that Bitcoin has been successful in attaining decentralization. Hence it has already been widely recognized and accepted as a digital currency by users and merchants alike.
Bitcoin is much easier to buy than Litecoin and can be purchased through many different paper currencies worldwide.
Greater community support:
Bitcoin has been able to create a greater market momentum than Litecoin for which it has won immense support from the whole community hence transforming into the number one digital currency globally.
In a nutshell, Litecoin, even though it is a tad bit less used than the Bitcoin, has the prime advantage of enabling faster transactions, which shows why many users have embraced it as a form of digital currency recently. Those users who are for the short term gains can exchange the Bitcoins or the Litecoins for real currency while the long term investors prefer to wait till the market value increases. This is very much similar to investments involving normal currency. Even though both the digital currency types are in their nascent stages, they have been able to capture a fairly large share of market capital in a shorter time span.
The reasons for using either Bitcoin or Litecoin may be different based on certain parameters and each of them has their own pros and cons. But they are undoubtedly a very efficient and secure medium which gives buyers a greater purchase power and control. The creation of these virtual currencies has indeed been a boon to users who can now trade and transact safely in an open source environment.