Bitcoin was introduced in 2009 as a virtual currency designed to act as a form of payment system outside the control of people, groups, communities, or any other such entities. It thus removed the need for third-party involvement in monetary transactions. It was the first form of cryptocurrency the world witnessed and inspired the fabrication of hordes of other altcoins. One such altcoin is Litecoin. Let’s learn more about it.
What is Litecoin?
Litecoin was introduced in 2011 as a ‘lite version of Bitcoin’. It was created from a fork in the Bitcoin blockchain and was initially designed to address the concern that Bitcoin had become too centrally controlled. Litecoin’s creation also aimed to make mining difficult for large-scale mining firms by employing a different encryption method.
Though initially, it was unsuccessful in preventing enterprise miners from gaining the upper hand in Litecoin mining, the currency has reformed itself into a mineable coin and a peer-to-peer payment network. It employs a Proof-of-work consensus and Scrypt hashing function, unlike BItcoin’s SHA-256, which decreases its dependability on GPU arithmetic logic units.
The cryptocurrency was released with 150 pre-mined coins. It has a supply of 84 million coins. The supply of Litecoin, to preserve the coin’s value, is designed to reduce over time. As of April 2022, 14 million litecoins are left to mine.
Litecoin has shifted its mining ecosphere from individual miners to corporatized setups. Large pools for mining run by tech firms have taken the major share of Litecoin mining. Though it possesses a much lower capacity than the more popular coins, it is still one of the most traded cryptocurrencies, being one of the top 30 coins out of 18000+ tokens.
Future of Litecoin
Litecoin is one of the first crypto assets to successfully improve Bitcoin’s transaction speed. It is marked as an asset with long-term growth potential.
According to a range of analyst and forecasting sources, Litecoin is expected to cross $152.39 by the end of 2022. The forecasted price for 2024 is $180. For 2025, the prediction is around $233.79, which is +119.851% of its price in 2022. Thus, the future of Litecoin appears promising for investment.
Litecoin vs. Bitcoin: Which is better?
The similarities between Litecoin and Bitcoin
Both Litecoin and Bitcoin share a lot in common. This is no surprise that Litecoin took its inspiration from Bitcoin. Let us look at their similarities.
Both Litecoin and Bitcoin are decentralized cryptocurrencies and are independent of control by any central authority.
Proof of Work consensus
Both share the same proof of work ecosystem, i.e., the mining procedure for both these cryptocurrencies is similar on the fundamental level.
Storage and Transactions
The basic elements of transactions with Bitcoin and Litecoin are similar. Both can be bought via an exchange or mined by employing a mining rig. Both require a digital or cold storage wallet to store them safely between transactions.
The Differences between Litecoin and Bitcoin
We need to look at the differences to determine the better of the two and pick our investment option.
The total circulation of Bitcoin will never exceed 21 million coins, whereas Litecoin can hold up to 84 million coins. However, this is not as significant as it might appear. This is because both these coins are divisible into approximately infinitesimal amounts. The reward size for the received block while mining changes every four years for Bitcoin, whereas the premium is changed every 840,000 blocks, every four years here as well.
To get a block on the network, the time taken by Bitcoin is roughly 9-10 minutes, whereas Litecoin only takes 2.5 minutes. Thus, transaction confirmations using LTC are faster.
This is the most fundamental technical difference between these cryptocurrencies, as they influence the process of mining new coins. Bitcoin employs the SHA-256 algorithm, while Litecoin uses an entirely new algorithm called Scrypt. SHA-256 is considered more complex than Scrypt but enables a greater degree of parallel processing. Bitcoin miners have started to employ more sophisticated mining methods. One of the most common methods is the Application-Specific Integrated Circuits (ASICs), which can be tailor-made for Bitcoin mining. However, Scrypt is less susceptible to custom hardware solutions used in ASIC-based mining.
Bitcoin or Litecoin: Which one to choose?
The answer to this question is entirely dependent on consumer goals. Litecoins are generated faster compared to Bitcoin, but Bitcoin is worth more. Thus, Bitcoin is a better option if one requires more value per coin, but Litecoin is a better choice if one requires more coins at a lesser value.
With faster block generation and higher transactions, litecoin was developed to be a more realistic and scalable medium of exchange, while Bitcoin has become more of a store of value. Litecoin is one of the most recognized, trusted, and widely used blockchain-based payment networks globally. Thus, Litecoin can be said to complement Bitcoin and not be seen as its competitor.
Litecoin has a low LTC/USD exchange rate and less purchase power as it has a large supply and low demand compared to other cryptocurrencies. This is due to the perspective of consumers and investors. If one can purchase more goods through an exchange, it is worth more. Bitcoin is perceived as a more valuable commodity. Hence, it is worth more.
The future of Litecoin, like any other cryptocurrency, is dependent on economic conditions, technological advancements, and government regulations. Thus, as the crypto market is volatile, any investment should be made only when one is up for risks.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.