Litecoin is a derivative of Bitcoin because of its long transaction process. Though both the coins work on the same mechanism, proof-of-work, they are significantly different.
In this article, we have explained Litecoin and the aspects that make it different from Bitcoin. And if you are the one thinking of investing in any of the two assets, this article is for you.
Litecoin is an open-source, peer-to-peer network and the world’s second oldest cryptocurrency after Bitcoin. In 2011, Google engineer Charlie Lie developed a Litecoin for the perceived Bitcoin setbacks. Litecoin is the first alternative coin set to fill the gaps Bitcoin left. However, it is a currency for payment methods, unlike Bitcoin, due to its longer transaction process. Litecoin features its Blockchain to accelerate the transaction and the mining. In addition to its increased transaction rate, Lightcoin’s market supply is capped at 84 Million, which is more than Bitcoin.
Litecoin features its Blockchain that works on the proof-of-work consensus mechanism. Blockchain is a shared public ledger, so any node or a computer having its copy allows the transactions to proceed and store that we can trace back in time. To add transactions on Litecoin’s Blockchain, Miners solve the mathematical puzzles. However, the fewer added layers to its Blockchain, Litecoin limits its transaction time to 2.5 minutes, making it more of a payment method. The working of Litecoin is the same as that of Bitcoin. Litecoin enforces transactions on the Blockchain by miners solving cryptographic puzzles or adding a new block to the Blockchain.
Cryptocurrency exchanges are the marketplace for crypto coins. They allow users to trade and invest in cryptocurrencies. You can buy or sell crypto assets on cryptocurrency exchanges like all digital assets. Since crypto assets are highly volatile, they tend to drop and rise depending on the market’s call. Before buying crypto assets on any exchanges, experts recommend traders do comprehensive research about the exchanges.
The first step to buying Litecoin on any platform is to open an account with your name and email address. With this, you can enter its currency marketplace, where you can click on the buy button to complete your transactions. Then, after creating an account, you need to bypass your money or digital coins to your account.
Litecoin provides many advantages in the crypto industry; here are some to keep in mind before investing.
- Litecoin is listed on almost all cryptocurrencies due to the high liquidity it provides to the market.
- Due to its shorter transaction process, Litecoin is a more straightforward payment method. Click here to read more.
- An accelerated transaction rate increases liquidity in the market.
Despite being a top cryptocurrency, Litecoin has some non-negotiable disadvantages.
- The higher production cap (84 Million) makes it less scarce, which makes it less valuable.
- The fact that the founder has shown less interest in Litecoin decreased its market value.
Litecoin, being a part of Bitcoin, shows various similarities. Moreover, Litecoin is the first alternative to bitcoin.
The foundation difference between Litecoin and Bitcoin is the underlying Blockchain. Bitcoin relies on its Blockchain, whereas Litecoin has developed its Blockchain with no extra added layers. With no additional added layers to its Blockchain, Litecoin has a significantly high transaction rate compared to Bitcoin. Where Bitcoin takes 10 minutes for one transaction to complete, Litecoin makes 4 multiples of it.
And the production rate of Litecoin is capped at 84 million in quantity, whereas Bitcoin increases scarcity by having it at 21 Million.
With the increasing price and volatility of Bitcoin and traders are now facing alternative methods to satisfy their risk appetite. However, it does not decrease the value of Bitcoin for its reputation and high returns.
Litecoin has several similarities and an improved version of Bitcoin possesses a relatively lower value than Bitcoin. The future of Litecoin may be bright for its increasing demand and maintaining itself in top digital currencies. However, Bitcoin, being scarce, keeps increasing its market value.
Before investing in any of the two assets, you must focus on its technical analysis and past behavior.
Cryptocurrencies keep changing their market values for their volatile nature, making them subject to high risks. We have derived the above information from our extensive research and critical analysis to present before you. We also recommend that you perform comprehensive research about the exchanges and coins you decide for a profitable and protected investment.
In the case of Litecoin, the risks might be lesser than the other prominent cryptocurrencies due to its stable behavior.