Cryptocurrencies have been in the news for quite a while. There was the story about the guy who splashed out on $27 worth of bitcoin back in 2009, and by the time he’d remembered to check on his hoard they were worth $980,000. That’s one of many rags-to-riches tales that have driven public interest in cryptos, but when most people think of these e-currencies, they think of Bitcoin because it was the first one to appear in 2009.
Although that’s more than a decade ago now, the actual idea dates back to 1999. The Nobel Prize winning economist Professor Milton Friedman once said “I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed is a reliable e-cash.” Somebody (no one knows who because the creator remains anonymous!) must have been listening because they it into reality; Bitcoin was the result.
Litecoin came along a couple of years later. It’s based on the same block chain technology, but it differs in a couple of major ways. If we take a look at what they are then that may help you to come to a better decision about which one you should invest in.
Both crypto currencies have a set maximum number built-in. Once that number is reached, no more coins can be created. The maximum number for bitcoin is 21 million, and Litecoin is limited to 84 million coins. Both currencies also feature an amount which is granted when you discover blocks by mining.
Your reward for mining is also “halved” at fixed intervals. Bitcoins halve every 210,000 blocks, and for litecoins it’s every 840,000 blocks. So, with bitcoin, blocks are mined about every 600 seconds, which translates to something like 144 blocks a day. Going at that speed, it would take about four years before the reward halves again. At the moment, you get 25 BTC for verifying a block, that would fall to 12.5 coins after the next halving.
“Proof of work” is the name of the concept which is used to keep crypto’s currency networks safe. There’s an algorithm used as part of the mining process which just people rewards when their mining machines unravel complicated mathematical problems which verify transactions, releasing new coins.
With Bitcoin mining this is the SHA-256 algorithm and it requires a lot of raw processing might for its cryptocurrency mining. Litecoin relies on a different one called the “scrypt algorithm,” which prefers fast RAM over sheer processor muscle. This is significant because it means that less powerful, and therefore less expensive computers can be used with scrypt, so people can mine Litecoin on their home PCs without having to invest in lots of expensive new dedicated hardware for Bitcoin mining.
Litecoin transactions process much more quickly than Bitcoin’s, but there is a price to be paid for that— drawbacks like “orphaned blocks”, which happen when two Litecoin miners produce blocks in parallel.
Despite this risk, these quicker transactions do have advantages. It only takes a merchant 2 minutes to get validation for a Lite coin transaction, but that rises to 10 minutes with bitcoin. I know which one I’d rather go shopping with!
Despite the sometimes-erratic behaviour of certain crypto currencies, with their values sometimes swinging wildly, interest in them has remained strong. Part of the reason for that is the fact that each transaction is deregulated, anonymous, and transparent, and the whole mechanism is decentralised. Fiat currencies cannot match these attributes. There is no centralized bank for these currencies, which means that values cannot be manipulated artificially, and fraud becomes impossible.
If you’re intrigued about investing in crypto currency then might be wondering which to choose—Litecoin vs Bitcoin, Ethereum, or maybe Dash? Litecoin mining is attractive to beginner miners because the algorithm is easy to set up and doesn’t cost so much to get started in. It’s also good for people who expect to make more transactions, because transaction fees are simple and, as we’ve seen, you don’t have to wait long for confirmation. That said, we advise you to take the time to assess how well your setup is working for you and adjust accordingly as you learn more.
Of course, there is a way to avoid having to go out and buy any new tech to get you started with crypto currency mining. We offer a cloud hosting solution that offers the twin benefits of scalability and convenience. IQMining is now offering a world first—flexible large-scale cloud-mining with multiple algorithms.