Bitcoin, Litecoin and other coins

Bitcoin, Litecoin and other coins

What is Bitcoin?

Bitcoin is the first cryptocurrency ever created and also the first one that appeared on the market in 2009. Introduced by a pseudonymous developer or group of developers, Satoshi Nakamoto, Bitcoin came into existence as a digital form of money that is not controlled by any government or bank and that is decentralized between the global network of participants which gradually grows in number. Because of that, Bitcoin is resistant to censorship, is not confined by borders and operates by blockchain technology, which ensures its security with public encryption. The idea of Bitcoin is that it is operated by a collection of high-powered computers that run the code of Bitcoin and save it to a public network of Blockchain. As for Blockchain, it is a collection of blocks. Each block is storage of Bitcoin transactions. Such technology ensures that nobody is able to forge transactions because all blocks in the chain run the same history of transactions and those transactions can be seen publicly by anyone in real-time. Unlike fiat money (Regular currency issued by banks), cryptocurrency, in general, is not controlled by a centralized authority. Therefore, it is not possible for a single authority to control and direct its market price and Bitcoin’s value can fluctuate significantly. During its short existence, there have been drastic changes in Bitcoin’s market value. Because of its scarcity, difficulty to maintain, and the finite number of available supply (21 million) together with its high liquidity, security, and reliability, Bitcoin is believed to stay a valuable asset over time. Some investors prefer to use Bitcoins as a form of currency and spend them in regular transactions while others adopt a holding strategy and invest in Bitcoins with the hope of its growing value in the future.

Altcoins

Nowadays, Bitcoin is the most famous cryptocurrency in the world, however, hundreds of other cryptocurrencies have been created since Bitcoin’s success. Each of them has its own distinguishing feature or mechanism which makes particular currency valuable on the market. All cryptocurrencies other than Bitcoin are known with a collective name, altcoins. Some altcoins’ blockchains are created completely from scratch while others are based on already existing blockchains. Generally, altcoins are created with the purpose of improving some features of Bitcoin or offering alternative features or mechanisms available.

Litecoin

As numerous altcoins have appeared over the years, it is extremely challenging for them to stand out and gain popularity. One of the few altcoins that have established their place on the market is Litecoin which was created in 2011 as a ‘silver alternative’ for Bitcoin’s ‘gold’. Like Bitcoin, Litecoin is also a fully decentralized open-source network. Both, Bitcoin and Litecoin can be bought on an exchange (You can buy both of them on Swapax as well) or mined through blockchain blocks. The most important difference between Litecoin and its predecessor, Bitcoin is in their market capitalization, distribution of coins, transaction speed, and the cryptographic algorithm each of them employs. According to the latest data of 2020, the value of the total amount of Bitcoins in circulation is about 128$ billion while the market cap of Litecoin is under 3$ billion. One of the ways in which Litecoin stands out is the total amount of coins that will ever be produced. It can reach 84 million coins while the maximum number of Bitcoins that will ever be mined is just 21 million. The most significant difference between Litecoin and Bitcoin and possibly the main advantage of it is the average speed of the transaction. In the blockchain system, transactions require some time to be approved by the network. On average it takes about 10 minutes to perform a transaction with Bitcoin and about 4 times less on Litecoin (about 2.5 minutes). This difference can be considered as a competitive advantage of Litecoin. To conclude, being the first-ever cryptocurrency in the world, Bitcoin dominates the industry and represents the most expensive and popular cryptocurrency in the world. Bitcoin’s popularity and its many practical advantages induced the creation of hundreds of other cryptocurrencies. Though not many altcoins managed to establish their place on a crypto market, Litecoin managed to find its place among the top crypto coins.