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Similarities Between Bitcoin and Litecoin

Similarities Between Bitcoin and Litecoin

October 16, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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Bitcoin and Litecoin are some of the top cryptocurrencies. They are both successful and attract similar users. They are correlated such that some feel Litecoin is an evolution of Bitcoin. 

To understand the correlation, you need the similarities between the two coins. 

Here are the similarities between Bitcoin and Litecoin;

Transaction Validation Similarities Between Bitcoin and Litecoin

The cryptocurrency world is an open environment. No single entity controls transactions. It only involves transferring data through different addresses. 

For that, there is a possibility of unscrupulous running around illegitimate codes. This calls for the need for transaction validation and confirmation. 

Both Bitcoin and Litecoin use the proof-of-work validation system. It is a system where miners approve of the nodes within a transaction before it goes through. It helps in avoiding cases of double payments and other scams.

The validation ensures the cryptographic security of the network. This brings us to the next Similarities Between Bitcoin and Litecoin; mining. 

Mining Similarities Between Bitcoin and Litecoin

Mining is the process through which new coins come into existence. The systems rely on unique mining rings to produce the coins.

Miners take time to solves various arithmetic problems. The first to solve the puzzle is the winner, and they gain rewards. The reward for mining one block of Bitcoin is 6.25BTC, while that of Litecoin is 12.5LTC.

Both of the coins require special mining machines. Earlier on, mining was relatively easy. One could gain the coins using the regular CPUs and GPUs. The process has become more competitive. Using low computing power is not profitable

The need for special tools has led to the creation of mining companies. These are spaces set aside for crypto mining. They assemble the mining tools and expertise. They also have the resources to cater to the electricity costs.

Some miners are already looking for ways around the electricity costs. They are finding ways to bypass government electric supply systems. This has led to arrests and jail terms

With such concerns, it might seem like mining is a reserve for the few affluent. Those with less computing power can still join a mining pool. The pool allows one to rent out the mining power instead of having to buy the expensive machines.

Halving Similarities Between Bitcoin and Litecoin

Halving is one of the most crypto events. It is where the earnings from mining rewards reduce by half. Both similarities between Bitcoin and Litecoin provide for halvings. 

They work such that the halving happens every four years. The events have become so mainstream that the countdown to the next halving is always on. There are specific websites keeping track of the halving dates.

The halving helps in controlling the coin supply. When the mining rewards reduce, it becomes less lucrative. For that, most miners would not be willing to keep on reducing supply. The reduction of supply with the same demand leads to more value.

Still, the volatility of the coins also comes into play. For example, halving Bitcoin trading at $10k is the same value as before halving when the currency trades at $5k. For this, miners are still willing to participate as they earn from the gains. Most of the miners also tend to hold on to their coins until a possible bearish run. 

There are concerns about possible miner migration when halving gets to zero. Still, there is the possibility of the use of transaction fees. The role of miners in the system is so important. They have to be present for the security of the networks.

Storage and Transactions Similarities Between Bitcoin and Litecoin

As digital currencies become integral to the economy, they still have concerns. Cryptocurrencies operate exclusively online. The online environment exposes them to possible hacks and other online fraudulent operations. 

For safety, there is a need for reliable wallets. The wallets allow for the keeping of private keys used in transactions. There are both online and offline crypto wallets. These wallets come with pros and cons to understand before use. 

Users have to look for security features in the wallets. For the online wallet, it should provide for two-factor authentication logging in. They should also be accessible through mobile. 

There has also been an increase in cryptocurrency exchanges for both similarities between Bitcoin and Litecoin. The exchanges allow for easy trading of the coins. They have attracted many users leading to better liquidity. 

Use Cases

The other similarity between Bitcoin and Litecoin is the use cases. One of the main reasons behind the success of both coins is usefulness. The coins work as a store of value. They operate like any other fiat currency. For that, they are useful for payments of goods and services.

The success of Bitcoin has seen merchants accepting it. Several tops of the range retailers already provide for it as a payment method. The access also keeps growing with Bitcoin ATMs coming up all over.

The same value applies to Litecoin. The coin is useful and gaining traction as a payment method. It is becoming accepted in stores. It is also partnering with more entities as they increasingly become mainstream.

With the digital currency economy growing, both coins use cases is likely to increase. They are acting as the best alternative to the struggling fiat currency.

Scarcity Similarities Between Bitcoin and Litecoin

Scarcity is another factor that both Bitcoin and Litecoin shares. They operate differently from the fiat currency that has no supply limit. It's the government that decides on the printing, depending on the inflation rates. The centralized nature of fiat allows governments full control.

Bitcoin and Litecoin have 21million and 84 million maximum supply, respectively. While these are different figures, they are final for each coin. Once the supply hits the figures, there is no addition whatsoever.

Both coins understand the importance of scarcity. They use it in controlling demand, thus sustained high value.

Similarities Between Bitcoin and Litecoin Bottom Line

Even though different coins, Bitcoin and Litecoin operate almost similarly. They both have proof of work validation and are gained through mining. They also provide for halving and require safe storage and transaction medium.

The same use cases might also make it hard to decide on the coin to choose from. You don't have to struggle; go for both currencies. Spread your investments such that you can gain from either coins' price movements. 

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