For several years now, there has been a lot of interest in digital currencies. Many enthusiasts have been focusing on Bitcoin while other ‘smaller’ currencies missed in the limelight. Litecoin, the digital Silver, is one of these once perceived small currencies and since become one of major cryptocurrency in the market.
The major difference between cryptocurrencies is what they offer to the consumer. Launched in 2009, Bitcoin has already positioned itself in the digital market; however, Litecoin has been giving the competition a run for their money since 2011. Litecoin growth has reached a market cap of $75 million making it the market ‘silver’ competing with Bitcoins ‘gold’. To understand these cryptocurrencies clearly, it is important to look at their similarities and differences.
Characterestic Similarities in Between Litecoin and Bitcoin
There are more similarities than differences between Litecoin and Bitcoin despite them being cryptocurrencies. They both relay on the integrity of the individual networks and they are both decentralized with no central authority.
One of the differentiating factor is their popularity and market capitalization. Bitcoin commands a higher market cap when compared to Litecoin. Bitcoin remains highly valued in the cryptocurrency niche. This could be as a result of entering the market earlier that Litecoin and as build on a huge user base. However, Litecoin has made significance steps eating into Bitcoins market share in the recent years.
Looking at Litecoin trends and consumer response, the providers is becomes the Crypto Silver, next to gold; Bitcoin. This is only based on the market cop and consumer interest. When you talk of the digital silver, Litecoin has all the characteristics of one.
Production of coins is another factor to consider. The Bitcoin network is limited and cannot exceed 21 million coins. Litecoin on its part can produce a maximum of 84 million LTC. These statics on the surface tend to favor Litecoin but the impact might be minimal.
Complete Units in Litecoin a Huge Advantage over Bitcoin Satoshis!
Bitcoin and Litecoin currency units can be broken down to small units. You can transfer as little as 0.00000001 Bitcoins or a single satoshi. If you are planning to buy low price currencies, do not think twice, you can start from the fraction and grow from there. If the price of undivided Litecoin or Bitcoin is high for you, buy in small amounts.
From a psychological point of view, the number of coins Litecoin has is a great advantage over Bitcoin. In real sense, you can buy goods worth $ 20 which translates to 00.2 Bitcoins which is the same as 1 Litecoin. The digital currency market is dynamic and spenders would prefer using complete units as opposed to a fraction of a currency unit.
Software changes can however turn around this decimal psychological way of thinking. Having a digital wallet that converts cryptocurrencies into traditional currencies can help. Bitcoins has tried to change this through their Multibit and Electrum wallets; they display your balance with Fiat or traditional currencies like USD and Pounds.
Faster Confirmation of an Transaction Means Higher Applicability
The time it takes a network to process transactions is a factor to consider when comparing Litecoin with Bitcoin. A split second delay in a transaction can mean a lot to the consumer. Confirmation of transactions by network users is important; if this is the case, Bitcoin transactions take an average of 9 minutes per transaction against Litecoins 2.5 minutes. Less confirmation time appears more appealing to the merchant to avoid user queues.
If you are selling products using Bitcoin, it means your customers will wait four times longer than those using the Litecoin platform; again the issue of convenience come into play. Not all merchants are willing to wait for confirmation though and the only way Bitcoin can close the gap is to wait for the implementation of the proposed Inter-Channel Payment system; Impulse. This will speed up transaction time and for them to be at par with Litecoin.
Algorithm Stuff up Ahead…
Bitcoin and Litecoin use different algorithms and this is an area raising concern among industry stakeholders. Bitcoin uses a slightly outdated SHA-256 against Litecoin’s Scrypt. This is a technical difference that keeps the two providers worlds apart. This process makes mining Bitcoins tedious and yet miners are getting less incentives as more coins are mined. Replacing the old CPU and GPU systems with tailor made solutions has made mining a preserve of big investor. Litecoin Scrypt employs ASIC- supported mining and allows more users to access the network as miners.
With these Litecoin advantages over Bitcoin, it is very hard to maintain silver or gold status quo in the cryptocurrency eco-system. Each currency has strategies that are designed to move it forward; to get the silver or gold status is not a big problem but maintaining it is tricky.