Bitcoin vs Litecoin: A guide to understanding cryptocurrencies
Cryptocurrencies currently occupy an odd place in society. They are no longer the super niche bizarre currency beloved by tech heads but they haven’t gone fully mainstream yet. Most people have at least a vague understanding of what cryptocurrencies are, even if they don’t really understand how they work.
Bitcoin was the first cryptocurrency, and it is seen as the standard. For people who are only vaguely aware of cryptocurrencies, ‘Bitcoin’ is the catch-all term and all crypto is ‘Bitcoin’. In reality, there are a huge number of cryptocurrencies. There are other major coins, including Ethereum and Litecoin as well as a number of meme coins. There are also scam coins that are essentially used like Ponzi schemes.
Litecoin is one of the original altcoins, which was created as an alternative to Bitcoin using the same codebase. This article will compare Bitcoin and Litecoin. It will act as a beginner’s guide to understanding these two major cryptocurrencies.
Before we get into the nitty-gritty of how these coins work and the programming behind them, it makes sense to talk about the ways that cryptocurrencies can be used. It’s easier to visualize and understand them if you can see what their point of them is.
As Bitcoin is the best-known cryptocurrency and the best-established, as well as being the most widely accepted. When you find a business that accepts payments in cryptocurrencies, the coins that they are most likely to accept are Bitcoin, and occasionally Ethereum. Litecoin is a well-respected coin, so it is accepted by the more forward-thinking brands embracing crypto. It isn’t accepted by as many businesses yet, but it is trending toward greater acceptance.
One area where a wide range of coins is accepted is online crypto casinos. Crypto casinos accept deposits and withdrawals only in cryptocurrencies. Unsurprisingly, Bitcoin casinos are the most common. More and more people have started playing at Litecoin casinos as well. As Litecoin is such a trusted coin this makes sense.
Cryptocurrencies work on the blockchain. They are created through a process known as mining. Cryptocurrency mining works by adding new blocks of data to the chain. In order to do so, a computer solves a complicated mathematical problem that verifies and validates the block. Once a block is verified and added to the chain, the miner is rewarded with cryptocurrency.
The verification protocol for Bitcoin is known as proof of work. While proof of work is the original protocol, it is time-consuming and uses a significant amount of energy. This contributes to Bitcoin’s serious environmental impact. Litecoin uses an alternate form of proof of work protocol known as Scrypt, which is, even more, energy intensive. However, Litecoin is merged and mined with Dogecoin, which means miners are rewarded with both coins.
Bitcoin is the largest of the cryptocurrencies. It has a market cap of $352bn as of June 2022. Litecoin is considerably smaller, with a market cap of $3.4bn. This is a massive difference, but it still places Litecoin within the upper ranks of cryptocurrencies.
Privacy and security:
Both Bitcoin and Litecoin have high security and high privacy standards. They are similar in this aspect because Litecoin has the same base code as Bitcoin, so both operate on a proof-of-work model. Security and privacy are becoming major concerns for an increasing number of people as they realize how most of the big tech companies are taking advantage of how much personal information and private data we make available online. Cryptocurrencies are a way of keeping your finances away from the prying eyes of big businesses.
Safely storing cryptocurrencies is hugely important. Bitcoin and Litecoin are both stored in the same way — in digital wallets. There are two types of storage wallets, hot and cold. Hot wallets are connected to the internet and should be used to transfer cryptocurrencies between users or accounts. They should not be used for long-term storage because they are more vulnerable to being hacked. The internet connection is what makes them vulnerable.
Cold wallets are where cryptocurrencies should be stored long-term. These wallets are only connected to the internet when the coins are transferred in or out of them. The rest of the time they are kept offline. This makes them incredibly secure.
The other important aspect of cryptocurrency storage is protecting your password. A hacked password means all your coins can be stolen. The safest way to save a password is to go old school by writing it down on a piece of paper and keeping it locked away in a safe place.