What is Litecoin? What are the differences between Bitcoin and Litecoin?
Litecoin’s design is based on virtual currency Bitcoin. The difference from Bitcoin is that Litecoin has faster data block generation rate (2.5/minute) and the use of scrypt hash function for mining. The scrypt operation does not require particular reliance on GPU, so mining Litecoin does not require expensive hardware devices. In addition, the number of Litecoin is four times than the number of Bitcoin (i.e. 84 million Litecoin). That’s why Litecoin’s slogan is “if Bitcoin is gold, Litecoin is silver.”
Proof-of-work based on scrypt operation
Litecoin uses scrypt algorithm as proof of mining mechanism. Script computing eliminates reliance on GPU as used in early Bitcoin mining. This leads to the early stage of CPU mining for Litecoin. However, from about July 2012 or August, some of the more energy efficient GPU and CPU mining method replaced the usual Litecoin mining method.
Faster generation of data blocks
On average Litecoin generates a data block every 2.5 minutes. This is four times faster than Bitcoin. This means that transactions can be processed faster, especially for micro-transactions.
840,000 Litecoin Data Blocks
Initially the issuance of Litecoin was same as Bitcoin. Every data block mined contains 50 monetary units. However, in order to maintain a consistent inflation as Bitcoin, every 840,000 data block mined, the reward for mining Litecoin is halved. Therefore Litecoin will reach a total number of 84 million units.
Different address from Bitcoin
To differentiate from Bitcoin, Litecoin’s addresses starts with “L”.
Lack of Innovation
Besides faster trade confirmation, Litecoin has no more different characteristics from Bitcoin. Due to the lack of innovation and unique advantages, some people think Litecoin will not exceed Bitcoin. Advantages such as faster data block generation remains to be seen.
Not a relative “Silver”
Since Bitcoin can be broken down into eight digits after the decimal point in the trading unit, some people think Bitcoin itself can be gold and silver. However, due to Bitcoin’s deflation feature, this will lead to higher value of Bitcoin and smaller unit of currency for transaction. So you can say Litecoin plays the role of “Silver” complacent to Bitcoin.
51% Hash Power Attack
Similar to Bitcoin, Litecoin faces the concern of 51% of hash power attack. Bitcoin’s 51% attack means that if one party owns 51% of the entire computing network, he can gain control of the block chain, including all personal account information from the transactions. He can choose not to broadcast the block to the network and convert all bitcoin into US dollars.
This transaction will appear normal in the block chain. When the attacker is extracting bitcoins in US dollars, the regular block chain’s length will be nine instead of 10. Now when this block chain is broadcasted to the network, the network will confirm that this block chain is correct. However the cash is already extracted, and the trading market bears the loss. If this happens more than once, it would be fatal to Bitcoin’s future. At least it will seriously impact people’s confidence in the crypto currency.
There are many crypto currency suffered from the 51% attack, which is a common problem faced by all such currencies.