Being that Bitcoin and Litecoin come from the same code, they have their similarities and differences. The creator Charlie Lee considers it the silver to bitcoins gold. His goal when creating it was to improve the accessibility and the speed of transactions, making it a more suitable option for everyday purposes.
Speed of transactions
One of the main differences is the speed of transactions. Litecoin takes 2.5 minutes to generate a block, whereas bitcoin takes 10 minutes to create a block of transactions. Therefore, Litecoin can complete transactions four times faster. This makes it a more attractive option for merchants. While bitcoin is viewed as a store of value, Litecoin is an everyday currency. Litecoin mining is also possible on home computers, whereas bitcoin mining requires a customized computer.
Poof of work algorithm
The two differ in their mining algorithm. They both work on a proof of work network; Bitcoin uses the traditional SHA-256 hashing algorithm, while Litecoin uses a new algorithm called Scrypt. The difference between the two is that Scrypt uses less computing power, making it a more easy-going platform for users.
Coin limit – block rewards
As part of the mining process, miners receive coins for verifying and processing transactions. Both of these cryptocurrencies also have a limited supply. Bitcoin has a limit of 21 million coins, while Litecoin has a limit of 84 million. These limits prevent new coins from being produced, and the rewards are halved to limit the creation of new coins. The rewards for Bitcoin blocks are halved every 210,000 blocks and Litecoin blocks every 840,000 blocks.
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