Must Read: The Most Successful Bitcoin Clone
Around seven years ago, a near-clone of Bitcoin was created by former Google developer Charles Lee: a new cryptocurrency that shared almost all of its code with the better known market leader. EOLBREAK Despite being like Bitcoin in virtually every way, Litecoin has managed to carve out its own culture, value proposition — and by market capitalization nearly 2 percent of the entire crypto sector.
When did Litecoin separate itself from Bitcoin despite being nearly similar to it structurally, and how are the two measuring up to each other in 2018? EOLBREAK As with most crypto-related questions, it is best to look in the data for answers. EOLBREAK Here's how the numbers on July 13, 2012, nine months after its public release, compared Litecoin to Bitcoin:
And this is how those numbers have changed as of September 12, 2018:
To understand how these numbers have shaped Litecoin vs Bitcoin — and how they’ll continue to influence the relationship between these cryptocurrencies in the future — we need to interrogate three dimensions of their history:
The origin story
The infrastructure
The community. What kind of future for these cryptocurrencies can we expect, given the difference in the level of activity and support in their respective communities?
Digging into these dimensions tells us that when it first debuted, Litecoin had a strong, persuasive advantage — but it's unclear if that advantage will last long-term
Litecoin gave people another shot at capturing the value of Bitcoin
Travel back with us to the crypto state in 2011, when Charles Lee first considered Litecoin's concept. Here's a context about what happened at the time:
A gentleman named Laszlo had proven Bitcoin’s commercial potential by spending 10,000 BTC to purchase two large pizzas in May 2010.
Bitcoin’s price had shot from just under $0.05 USD in July 2010 to a peak of almost $30 USD in June 2011 — a ~60,000% price increase in less than a year.
Bitcoin mining was getting beyond the reach of ordinary hobbyists, with application-specific integrated circuits (ASICs) being built for the express purpose of mining increasingly computationally intensive blocks.
It was obvious to anyone paying attention that Bitcoin had the potential as a new value transfer tool— but it also looked to many as if they had missed the opportunity to become an early Bitcoin adopter and capture its value. (They didn't know how much higher Bitcoin's value will go up!)
It was in this landscape that Charles Lee launched Litecoin. The new cryptocurrency had a simple and compelling value proposition: it’s almost exactly like Bitcoin, but better for daily commerce — and you can buy it from almost the very moment it’s first created.
Instead of following in the footsteps of Satoshi and launching Bitcoin privately after mining on his own at least one million, Lee was up front about his identity and launched Litecoin publicly after mining just 150 coins.
In this respect, it wasn't a bad thing that Litecoin was almost the same as Bitcoin. Bitcoin had already proven its usefulness: if someone were able to create a blockchain that took Bitcoin's same fundamentals but optimized it even a little bit further for that particular utility, people would have a second chance of a successful cryptocurrency "getting in on the ground floor."
That's exactly what Lee intended to do with Litecoin, and it was a success in the short run: trading for about $0.03 USD in July 2012, Litecoin reached a price point of $40 USD in November 2013— a rise of over 130,000 percent.
Litecoin was built to be better for ordinary transactions
There are really just three main structural “tweaks” that makes Litecoin different from Bitcoin, each of which was meant to make Litecoin more accessible for everyday commercial use:
A different hashing algorithm.
More overall coins.
More frequently mined blocks.
Let’s consider the initial and ongoing impact of each one, in turn.
1. Democratizing mining
In the early days of Bitcoin, anyone could use their computer to mine new blocks — but the rise of ASICs and organizations that pooled their computational power together to mine BTC put this process outside of ordinary people’s reach.
Lee wanted Litecoin to be minable by anyone, so he implemented a different hashing algorithm of his own design to make LTC mining ASIC-resistant. Rather than Bitcoin’s CPU-intensive SHA-256 algorithm, Litecoin uses the memory-intensive Scrypt algorithm. This difference made it much harder to design specialized computers for mining Litecoin — at least, that’s how it was when Litecoin first launched.
Nowadays, seven years later, it’s a different story: Litecoin-mining ASICs do exist, and they dominate the mining scene. To get a sense of exactly how much they dominate, take a look at the current hashrate distribution for the Bitcoin network as a point of reference:
Accelerating confirmation times
What’s probably making the biggest difference in Litecoin vs. Bitcoin today is the fact that Litecoin adds new blocks roughly four times as frequently as Bitcoin does: roughly every 2.5 minutes, rather than every 10 minutes.
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