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The crypto industry has been around for more than 10 years, continuously developing and evolving. During this time, blockchain technologies have changed significantly, and new segments and new generations of digital assets have appeared on the market. However, the first cryptocurrencies still attract the attention and capital of investors.
History of the Creation of the Two Cryptocurrencies
The analysis of Bitcoin and Litecoin should begin with the history of their appearance, which demonstrates the relationship between the first cryptocurrencies, as well as the differences in the approaches and goals of developers.
A Brief History of Bitcoin
The founding of bitcoin is commonly attributed to the paper Bitcoin: A Peer-to-Peer Electronic Cash System. This paper was published by an anonymous developer under the pseudonym Satoshi Nakamoto on bitcoin.org on October 31, 2008.
The first transaction in the network took place on January 12, 2009, when Nakamoto sent 10 bitcoins to developer Hal Finney to test the network's operation.
It is generally believed that bitcoin appeared as a response to the banking crisis of 2008-2009 and the main goal of the project was to create a digital payment system, independent of the state and resistant to outside interference. The first cryptocurrency was later dubbed "digital gold" because of its ability to serve as a long-term store of value.
A Brief History of Litecoin
Litecoin (LTC) was created in 2011 by a former IT engineer at Google named Charlie Lee. The developer himself positioned the cryptocurrency not as a competitor, but as an extension of bitcoin, focused on small payments - the Litecoin network, although built on the bitcoin source code, has received some changes that make transactions cheaper, faster and convenient for everyday use. For this reason, LTC has been dubbed "digital silver" in the community.
Litecoin was the first bitcoin hardfork, as well as the first altcoin, that is, an "alternative" cryptocurrency.
Technical Comparison
Launching a blockchain through a hardfork involves developers using the source code of an existing cryptocurrency for the project, then making changes to it and offering nodes to join the updated version of the network.This mechanism leads to the fact that the architecture and basic principles of bitcoin and Litecoin are very similar, but they still have some technical differences that determine the features of the network.
A comparison of the main characteristics of bitcoin and Litecoin
In addition to such obvious differences as maximum supply and speed of transaction finalization, the alternative coin received an updated algorithm of data hashing (encryption) - Scrypt instead of SHA-256.
This change is due to the fact that SHA-256 requires significant computing resources to create a hash, so bitcoin mining takes place on special devices - ASIC.
Scrypt allowed to reduce the technical requirements for miners and in theory should have countered the spread of ASICs, which were considered a threat to decentralization. However, soon optimized computing devices appeared for this algorithm as well;
Learn more about the technical features of the Litecoin network and the cryptocurrency itself in our review article.
Capitalization and Scope
Bitcoin's capitalization at the time of writing exceeds $1.67 trillion, which is more than 65% of the total crypto market capitalization, giving the first cryptocurrency a dominant position in the industry. Litecoin's capitalization is approximately $6.86 billion, which at the time of writing allows the asset to take 20th place in the overall cryptocurrency ranking.
The main purpose of bitcoin is to preserve value and investor purchasing power in the face of fiat currency inflation. For this reason, and because of its relatively slow and expensive transactions, bitcoin is referred to as "digital gold." This informal name also outlines the scope of application of the first cryptocurrency - long-term investments and storage of large capital, the owners of which do not need fast and frequent transfers;
The scope of application of LTC is predetermined by its technical features. "Digital silver" is better adapted for everyday use and provides faster and cheaper transactions needed, for example, when paying for purchases or services.
It is important to note that in 2023-2024, bitcoin's scope of use has expanded with the Ordinals and Runes protocols, as well as the emergence of DeFi projects and second-tier solutions related to this ecosystem. However, an analog of Ordinals has also been launched on the Litecoin network.
Price Highs and Asset Potential
At the time of writing, bitcoin's price high is set in December 2024 at $106,147. Litecoin's price record is set in May 2021 at $410.
However, throughout its history, the correlation of the first and second cryptocurrencies has changed repeatedly, and their value is influenced by many factors, so it is impossible to say for sure which of the assets is a more profitable investment.
Thus, the driver of growth of both coins may be the improvement of the general economic situation and, as a result, the inflow of investments into the crypto market. But it is almost impossible to determine for sure how exactly the capital will be distributed between the various assets and whether Litecoin will be able to keep the attention of users in this cycle.
Conclusions
Despite using a common source code, Litecoin and bitcoin are still different currencies, each with its own place in the industry.
Bitcoin, for example, has earned the status of "digital gold" due to its dominant market position and trust from users, including institutional investors and even government agencies. In addition, the decentralization and security of the network makes it a reliable foundation for a new generation of DeFi platforms and second-tier solutions;
LTC, on the other hand, is referred to as "digital silver" because of its faster and more accessible transactions, as well as its greater supply and relatively low market value. However, unlike the first cryptocurrency, Litecoin operates in a more competitive niche - in 2024, cheap and accessible payments can provide many networks, due to which the project is gradually losing users' attention and capitalization.
Frequently Asked Questions (FAQ)
What is better Bitcoin or Litecoin?
A direct comparison of cryptocurrencies is incorrect, as each has its own sphere of application. For example, bitcoin is used as a means of investment while Litecoin provides relatively cheap and fast transactions necessary for everyday payments.
Is Litecoin a copy of bitcoin?
Litecoin is a fork of bitcoin, which provides for the use of a common source code. However, some changes were made to the mechanism of the new cryptocurrency to optimize the network for fast transactions.
What is Litecoin for?
LTC is often considered as "digital silver", i.e. a cryptocurrency for everyday use and fast settlements. Transactions on this network are faster and cheaper.
