Which is a Good Investment for The Long Run: Bitcoin or Litecoin?
While Bitcoin’s uses for financial transactions are well documented, a few Litecoin enthusiasts had been pointing to its use as an alternative to PayPal, but as of February 2013, it has dropped its association with the original open-source Bitcoin blockchain and has started to search for ways to monetize its users. As a consequence, Litecoin experienced a total hash rate increase of more than 24-fold in the past 2 months.
In short, Litecoin is the next big thing in altcoin land, with its “instant transactions” and the recent “magnitude increase” in the rewards for mining the crypto-currency. A look at the recent history of Litecoin might make you think it’s getting ready to become a threat to Bitcoin’s throne. If you want to know more about bitcoin, then you can visit Bitcoin Code App .
Litecoin is based on the Bitcoin reference software, but it does not use the Bitcoin mining methodology, but a better alternative is called Scrypt. In this monthly series, I aim to shine a spotlight on coins in the top 10% and explore their general similarities and differences, as well as their latest news. For my second entry, I’d like to talk about the most popular altcoin, Litecoin.
Design and Aims: The Litecoin Bitcoin Blockchains are made from transactions, and all it does is to verify and record each transaction by forging the transaction’s signature in this blockchain. However, unlike Bitcoin, Litecoin’s ledger is spread across multiple nodes on the internet.
Since the original idea behind Bitcoin was to fight financial crimes such as bank laundering and black markets, Litecoin’s creator decided to give it a limited scope of usefulness. Specifically, Bitcoin focuses on things like payments and remittances, while Litecoin is
Algorithms: There are two Litecoin Algorithms. The Scrypt Algorithm, and the Scrypt-N Algorithm. The Scrypt Algorithm, which is used in mining, is what is at the heart of Litecoin’s mining.
The Scrypt Algorithm is quite interesting: because of its randomness, a user has to train his/her “puzzle” by building “puzzles”. The trick is that he/she has to guess which puzzle is a link in this chain, as well as the exact order of the puzzles and the answers. Every time a user guesses correctly, he/she gets the reward of one single Scrypt Coin.
Block Sizes: The main difference between the Bitcoin and Litecoin block sizes is the size of the blocks: Bitcoin blocks are 1MB, Litecoin is 512. Bitcoin blocks are also “hard forked” – that is, the block reward for miners who keep the Bitcoin Blockchain up to date has been adjusted, and Litecoin has not yet implemented such an adjustment.
What to Expect: There are so many people thinking about and researching what “the next bitcoin” will be, and one thing is for sure: a bitcoin without mining will never be there because it would make the process of mining worthless. This is one of the main benefits of the Litecoin Blockchain: it is “self-financing”. The Litecoin distribution means that when Litecoin matures, and when most of the “scrapers” (the miners) have already been recruited, its price will inevitably increase and become more valuable, and mining will become less of a burden.
Proof-of-Work and Scrypt: Scrypt: The Litecoin Scrypt algorithm is the algorithm used in Scrypt mining. In Scrypt, instead of one very large block, a user has to “mine” a bunch of very small “puzzles”, a bit like making millions of Rubik’s cubes. If you want to learn more about Litecoin, read the white paper. If you want to learn more about Bitcoin, please read the whitepaper.