Litecoin

Litecoin is an alternative peer-to-peer currency developed by former Google engineer Charlie Lee in 2011. In terms of market capitalization, Litecoin was the third largest cryptocurrency at its peak. Since its structure is similar to that of bitcoin, it has been used as a test network or testing platform for improvements that would later be applied to bitcoin.

Litecoin is a branch of bitcoin (BTC). Like Bitcoin, Litecoin is based on an open-source global payment network that is not controlled by any central government. Litecoin differs from Bitcoin in terms of faster block generation and the use of Scrypt as a state verification solution.

About Charlie Lee

Charlie Lee graduated from the Massachusetts Institute of Technology and was a former Google engineer who became interested in bitcoin in 2011. Lee said, “In October 2011, I was working on bitcoin code. I think I just wanted to create it at the time. . . A bitcoin branch. It’s basically an interesting back-end project.”

Scrypt proof-of-work algorithm for Litecoin.

Scrypt is a password-based key output function. According to Tarsnip, “the scrypt key output function was originally developed for use in the Tarsnap online backup system and is designed to provide more reliable protection against hardware brute force attacks than other functions (such as PBKDF2 or bcrypt).”

Scrypt was specifically designed by Lee to make large-scale single hardware attacks against the currency more difficult. The Bitcoin SHA-256 algorithm does not require a large amount of RAM as a hindrance to parallel processing, unlike Scrypt.

In the early 2010s, when the mining industry was developing special hardware such as dedicated circuits (ASICs) to solve SHA-256 hashes, it appeared that Bitcoin was vulnerable to such attacks. By increasing the memory density of Litecoin’s consensus algorithm, Lee tried to avoid an arms race with the hardware, although in reality this did not happen, as the increased GPU power met the increased demand for RAM.

Similarities between Bitcoin and Litecoin
At first glance, Bitcoin and Litecoin have a lot in common. At the most basic level, they are all decentralized cryptocurrencies.

1. Proof of work

An important similarity between Bitcoin and Litecoin is that both are proof of a working ecosystem. This means that the main process of mining two cryptocurrencies (i.e., the process of generation, authentication and subsequent addition to a public ledger or blockchain) is basically similar (but not exactly the same).

2. Buy and trade

For investors, many of the basic elements of Bitcoin and litecoin trading are also very similar. Both cryptocurrencies can be purchased through exchanges or mined with mining equipment. Both require a “wallet” with digital or cold storage for secure storage between transactions.

In addition, over time, the prices of both cryptocurrencies have been subject to sharp fluctuations depending on various factors, from investor interest to government regulations.

Differences between Bitcoin and Litecoin

1. Market Value

As of March 2021, the total value of all bitcoins in circulation is approximately US$11 trillion, and its market capitalization is more than 70 times that of Litecoin (total value is US$113.7 billion). Whether bitcoin’s market value is high or low depends largely on the historical point of view. Considering that bitcoin’s market capitalization in July 2010 was only $42,000, its current figure seems staggering.

2. Total issues

Another important difference between Bitcoin and Litecoin is the total amount of coins each cryptocurrency can generate. This is what distinguishes Litecoin. The Bitcoin network can never exceed 21 million coins, while Litecoin can contain up to 84 million coins.

3. Transaction speed

Depending on the blockchain. According to com, currently the average transaction confirmation time on the bitcoin network for each transaction (the time it takes to validate a block and add it to the blockchain) is less than 9 minutes. However, in the case of a lot of traffic, the transaction time can vary greatly. The equivalent amount of Litecoin is about 2.5 minutes. Facts have shown that the speed of Litecoin transactions has its advantages.

4. The algorithm

So far, the most fundamental technical difference between Bitcoin and litecoin is the different encryption algorithms they use. Bitcoin uses the long-established SHA-256 algorithm, while Litecoin uses the relatively new Scrypt algorithm. In general, SHA-256 is believed to be a more complex algorithm than Scrypt and, at the same time, provides a higher degree of parallel processing. Therefore, in recent years, bitcoin miners have used increasingly sophisticated methods to mine bitcoins as efficiently as possible. The most common method of bitcoin mining is the use of applied integrated circuits (ASICs).

Litecoin (LTC)} package

Since its launch, Litecoin has implemented many features designed to increase transaction speeds without compromising the security and integrity of the network.

1. SegWit

SegWit was first offered for Bitcoin in 2015. Its operating principle is to “isolate” the digital token data (“indicators”) from the basic block of the blockchain. SegWit was designed to solve bitcoin’s extensibility problem, but this proposal has caused a great deal of controversy in the bitcoin community.

In 2017, Litecoin adopted SegWit. Due to the similarities between Litecoin and bitcoin, it served as a testing ground or testnet for the feasibility of SegWit on the larger bitcoin network. The test was successful, and Bitcoin has since adopted SegWit. Some opponents of SegWit, who advocate the use of large bitcoin blocks, have created hard forks of bitcoin that have produced bitcoin cash.

2. Lightning Network

Lightning Network is a second-tier bitcoin technology that uses micropayment channels to expand the transactional capabilities of its blockchain.

Similar to the SegWit example, the introduction of the Lightning network in Litecoin has always been a test network that demonstrates that innovations can be made in bitcoin. Charlie Lee also argued that “when the Bitcoin blockchain is crowded and expensive, it is easy to use Litecoin to easily access the Lightning network.”

3. Mimblebelle

MimbleWimble is a confidential transaction-based privacy protocol that encrypts or hides information such as transaction amounts. Some people believe that MimbleWimble can reduce block size and increase scalability. Charlie Lee announced in early 2019 that Litecoin will continue to develop MimbleWimble, and from early 2021, development continues.

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