Software & Apps Cryptocurrency Litecoin vs. Bitcoin How these cryptocurrencies compare by Ryan Dube Writer Ryan Dube is a freelance contributor to Lifewire and former Managing Editor of MakeUseOf, senior IT Analyst, and an automation engineer. our editorial process Facebook Twitter LinkedIn Ryan Dube Updated on January 22, 2020 Cryptocurrency What Are Bitcoins? Tweet Share Email Bitcoin was the first cryptocurrency. Litecoin, on the other hand, came two years later, but has some advantages over Bitcoin. But is it worth investing in? Here's what you need to know about Litecoin vs. Bitcoin, starting with a better definition of each: Bitcoin, the first cryptocurrency which launched in 2009, has grown in value significantly over the last few years. The value of Bitcoin comes from the work involved in processing transactions by miners. Bitcoin miners are people who run computer hardware that processes every Bitcoin transaction, and earn Bitcoin for doing so, in addition to transaction fees.Litecoin, on the other hand, was founded two years after Bitcoin, in 2011. Former Google engineer Charlie Lee established Litecoin as a Bitcoin alternative with a faster transaction time. Bitcoin transactions can take up to 10 minutes, while Litecoin transactions only take 2.5 minutes. The reason for this is that Charlie Lee modified the Bitcoin code and instituted something called a scrypt for processing transactions. This different code base allows miners to process Litecoin transactions much more quickly. Coin images by Piqsels Bitcoin vs Litecoin: Overall Findings Bitcoin Based on SHA-256 hashing algorithm. Transactions take up to 10 minutes. Larger mining pools control the mining distribution. Coins are far more expensive. Litecoin Based on Script hashing algorithm. Transactions take up to 2.5 minutes. Mining is more accessible to regular users. Can own more Litecoin at a much lower price. Bitcoin was introduced in 2009 by Satoshi Nakamoto in a detailed white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System." The core purpose of Bitcoin was to provide decentralized currency that would free people from the control of the world banking system. Blockchain transactions are based on the SHA-256 hashing algorithm and require CPU-intensive calculations to encrypt and decrypt. Litecoin was founded in 2011 by Charlie Lee. Its hashing algorithm was built on the open source Bitcoin code base. It was modified to be memory-intensive, more accessible to regular miners rather than massive mining pools, and developed so that each transaction could be encrypted or decrypted in a fraction of the time as a Bitcoin transaction. For this reason, Litecoin was adopted quickly by cryptocurrency fans, and it remains one of the top six cryptocurrencies in the world. Base Currencies: Bitcoin and Litecoin Bitcoin Launched as an alternative to mainstream currency. Most expensive cryptocurrency. Decentralized currency. Transactions take 10 minutes. Litecoin Launched as an improvement over Bitcoin. Almost 200 times less expensive than Bitcoin. Decentralized currency. Transactions take 2.5 minutes. Coins that were developed upon the open source Bitcoin code base like Litecoin are known as "alt-coins." Because Litecoin was developed only two years after Bitcoin was created, and was viewed as a more affordable cryptocurrency alternative to Bitcoin, it has become known as the "silver" cryptocurrency. No more than 21 million Bitcoins will ever be produced. Once they are, the mining 'reward' will disappear (but miners will still receive transaction fees). On the other hand, Litecoin has a maximum cap of 84 million Litecoins. Because the Litecoin codebase was an improvement on the Bitcoin codebase, buying or selling Litecoin occurs much faster. And since Litecoin has been around for almost as long as Bitcoin, many more businesses and merchants accept Litecoin as a legitimate currency. For many years, Litecoin was one of the top three preferred cryptocurrencies to own. Today, it's listed as one of the top six out of 1,600 cryptocurrencies that are available. Blockchain Algorithm: Litecoin Is Easier to Mine Bitcoin Uses SHA-256 blockchain algorithm. Transactions take up to 10 minutes. CPU intensive mining. Litecoin Uses Scrypt blockchain algorithm. Transactions take up to 2.5 minutes. Memory intensive mining. The Bitcoin blockchain is based on a cryptocurrency algorithm known as SHA-256. This algorithm creates a 256-bit key that encrypts each transaction. However, this 256-bit encryption requires intensive CPU processing power, which is why most Bitcoin miners need to invest in expensive graphics card processors (GPU) with significant processing capabilities. This is also why processing Bitcoin transactions on the blockchain can require up to 10 minutes for each transaction. Litecoin, on the other hand, uses a far more efficient encryption algorithm known as Script. Script was based on the Bitcoin code base but modified to utilize computer RAM (memory) more than CPU processing power. By limiting the transaction calculations by memory, it allows minors to use less expensive mining units, since memory cards are far less expensive than processors. Because of this efficiency and far less complexity, Litecoin algorithms allow miners to process four times as many coins in the same amount of time as one Bitcoin transaction. While regular miners with standard computers have great difficulty mining much Bitcoin, those same miners can more easily mine Litecoins. Flexibility: Litecoin Is More Flexible and Accessible Bitcoin Takes more work to earn Bitcoin. Mining controlled by large miner pools. Coin production limit makes Bitcoin scarce and liquid. Bitcoin development is slower than other projects. Litecoin Faster and easier to earn Litecoin. Mining is more accessible to regular miners. Coin production limit makes Litecoin scarce and liquid. Litecoin developers typically add algorithm advancements first. One of the benefits of Litecoin's Script algorithm approach is that it reduces the proliferation of high-powered mining pools which keep coin mining out of the hands of regular people. Litecoin started out with a more "democratic" blockchain, with much smaller mining pools, and even individual miners. However, over the years larger pools still formed, with six of the largest mining pools controlling 90% of Litecoin's hashing power. However, Litecoin's technology still levels the mining playing field much more than Bitcoin. Final Verdict: Litecoin is as Viable as Bitcoin at a Lower Price Litecoin is also far more versatile than Bitcoin in the following ways: Fast Transaction Processing: Litecoin transactions are processed faster, which is better for cryptocurrency users and miners.Scrypt Algorithm: Litecoin's scrypt algorithm is a considered to be a much more fair mining distribution model.Liquidity: With a higher coin cap than Bitcoin, in the future Litecoin will also be scarce like Bitcoin, but far more liquid.Flexibility: Litecoin developers work on algorithm advancements more than most other alt-coins, making it a far more progressive and flexible cryptocurrency to own and mine. It's debatable which cryptocurrency will be worth more over the long term, but given its market strength, Litecoin is just aa viable a cryptocurrency investment as Bitcoin is. You can also own much more for a far lower price.