At one point only those “in the know” were aware of digital currencies but that is no longer possible nowadays. Cryptocurrencies are becoming more and more aware together with the increasing crisis community, as more investors engage in the process of digital asset trading with greater insight into their outlook. Along with the increase of interested investors, there are plenty of available crypto coins as well in the market.
But of course Bitcoin currency, Ethereum currency, and Litecoin currency are three of the most well-known cryptocurrencies that most people have heard of. Not only have they outlasted many others, but they have all maintained significant positions in the ranks of the most valuable cryptocurrencies. Each has its own set of characteristics that they hope will help them succeed in an exceedingly turbulent market. Today in this article we will go a bit deeper into the influence of their cryptographic algorithms. So let’s start with
Bitcoin vs Ethereum vs Litecoin: The Key Differences
Bitcoin began in 2008, when an anonymous programmer using the alias Satoshi Nakamoto published a paper on a cryptography email group. The workings of a new digital currency based on blockchain technology were revealed in this study. The virtual currency was created to mimic fundamental characteristics of traditional money while also allowing privacy, transparency, and removing the need for a third party.
Vitalik Buterin, a Canadian-born cryptocurrency developer, proposed Ethereum in 2013. Later that year, it was funded through a crowd sale event using 11.9 million pre-mined ETH. It was fully published in 2015 and has rapidly increased in popularity since then. Ethereum tokens, sometimes known as "Ether," have become a common means of trade on a variety of blockchain-based apps and continue to appreciate in value.
Litecoin is a peer-to-peer cryptocurrency designed to overcome some of the difficulties with the Bitcoin blockchain. Charlie Lee, a Google developer at the time, built it. Lee was displeased by the 10-minute or more wait period that Bitcoin users must suffer. He began working on his cryptocurrency by cloning and modifying the Bitcoin open source software. Litecoin was released in October 2011, and by November 2013, it had a market cap of $1 billion.
Bitcoin transactions take place on a publicly accessible ledger known as a "blockchain." When a user exchanges another money for Bitcoin price aud, the resulting balance is stored in a Bitcoin wallet.
Unlike Bitcoin, the Ethereum platform was created in such a way that decentralized applications (DApps) can be built on top of it. In fact, 1,629 applications have been built on its blockchain as of today. On Ethereum's platform, users can write and execute smart contracts, which serve as the foundation for DApps. The platform's in-built programming language, Solidity, is utilized to create these smart contracts and DApps. The ETH token serves as their principal facilitator. As a result, Ethereum is also known as programmable money.
Litecoin, like Bitcoin, is based on blockchain technology. While Litecoin is distinct from Bitcoin, the two cryptocurrencies function in very similar ways. Their distinctions, however, play an important role in the evolution of Litecoin.
While anyone can mine, only a few people can afford the time and equipment required to mine Bitcoin. Bitcoin mining not only requires a lot of time but also it will cost a good amount of money to build the setup of mining. As a result, small organizations frequently join forces to form mining pools. The most powerful pools are headquartered in China, and the majority of the computer power required to add new blocks is concentrated in only two mining pools. Mining has become somewhat centralized as a result of this.
Mining profitability has a significant impact on the increase and, more importantly, the collapse of the ETH price. The higher the price of ETH, the more miners are drawn to it. The more they mine, the more transactions will be possible. For a miner to be incentivized, the reward from mining Ethereum must significantly outweigh the cost of mining.
Litecoin mining, like Bitcoin mining, uses the proof-of-work protocol. Scrypt, on the other hand, is utilized in place of SHA-256 to alleviate the concerns connected with mining centralization and energy consumption. Scrypt enables any user with spare RAM to become a miner without the need for expensive ASIC hardware such as Bitcoin miners. At the time of writing, the current Litecoin block reward is 25 LTC, which is around $2,500.
Cryptographic algorithms can be classified in a variety of ways. They will be classified for ease of understanding depending on the number of keys used for encryption and decryption, and further characterized by their application and use. The three kinds of algorithms that will be discussed are as follows:
Secret Key Cryptography (SKC): This type of encryption and decryption uses a single key for both encryption and decryption; it is also known as symmetric encryption. Primarily used to protect one's privacy and confidentiality.
Public Key Cryptography (PKC): Encryption with one key and decryption with another; also known as asymmetric encryption. Authentication, non-repudiation, and key exchange are the most common applications.
Hash Functions: A mathematical change is used to irreversibly "encrypt" information, resulting in a digital fingerprint. Primarily used to ensure the integrity of messages.
Bitcoin vs Ethereum vs Litecoin: Difference between Algorithms
Different cryptographic methods are used by Bitcoin, Ethereum, and Litecoin, which influences how new currencies are produced. Bitcoin employs the SHA-256 algorithm, Litecoin employs Scrypt, and the Ethereum Network previously relied on Ethash, which is no longer relevant as the network has transitioned to Proof of Stake (PoS) as part of its Ethereum 2.0 update.
The Influence of Algorithms on These 3 Coins
Bitcoin: With SHA-256, the greater the network size, the more difficult it is to find a new block, and hence the greater the energy usage. Bitcoin mining necessitates the employment of costly mining machines known as Application-Specific Integrated Circuits (ASICs), which are both pricey and energy-intensive. As a result, solo miners can no longer earn and must join mining pools.
Litecoin: Scrypt, on the other hand, was created to enable anyone with a desktop computer to mine Litecoin. It employs simple and low-cost CPU and GPU hardware solutions. End-users can still make money as standalone miners with Litecoin.
In terms of mining, Bitcoin and Litecoin both use a Proof of Work (PoW) consensus process. Mining entails employing high-powered computers and specialized hardware to solve complicated riddles required to validate transactions and generate new blocks. New coins are awarded to the first miner, or node, to confirm the block. Transactions are recorded on a public ledger, which is also kept by nodes.
Ethereum: With the use of the Proof of Stake consensus mechanism, the Ethereum blockchain has eliminated the necessity for mining. Participants stake their coins in the system, and depending on the quantity of the stake, everyone has a fair chance of receiving a payout.
Bitcoin vs Ethereum vs Litecoin: The Trustworthy One
Since the growth in the price of Bitcoin, more investors from all over the world have flocked to the cryptocurrency market to secure advantageous positions. Despite the rush to purchase Bitcoins, public opinion is divided between perceiving Bitcoin investing as a wise decision and as a dumb one. Controversies regarding bitcoin are not a new thing for any investor nowadays. On the one hand, Bitcoin is praised as a commodity whose price will continue to climb as new users increase demand. Speculators, on the other hand, are sure that Bitcoin has no fundamental value and hence is not a suitable investment.
Given Ethereum's scale, popularity, and plethora of use cases, there are several compelling reasons to invest in the cryptocurrency, as well as a few compelling ones not to. 1 ETH is currently worth around $500, a significant decrease from $1,200 in January 2017. In the world of investment, six months is all it takes for major changes to occur. If the price of Ethereum may fall to this level owing to market instability, a user may wonder, "Why should I invest in Ethereum?"
The solution is simple: there is money to be made. Before the price of ETH plummeted to where it is currently, it rose steadily from $7 in January 2017 to over $1,400 in December. So, if a person held 100 ETH worth $700 in January, the same quantity of ETH would now be worth $140,000, a staggering 10,000% rise.
LTC's growth record has demonstrated that long-term investment in cryptocurrency is preferable. While there is no guarantee of a rapid increase in the price of LTC in the near future, its community remains unconcerned. LTC price projections continue to saturate the internet, with diverse perspectives. 1 LTC was worth $4 in January 2017, and by December of that year, it had increased by more than 9,000 percent to a peak price of $375.29. If this is the case, it makes sense to purchase low and hold for a long time (maybe years). Despite the fact that the cryptocurrency's price is nowhere near that of Bitcoin, it continues to be a windfall to investors.
The first Bitcoin transaction was made by a user who paid 10,000 Bitcoins for two boxes of pizza. Following then, the currency was largely used by software professionals who understood how it operated. However, as the cryptocurrency's popularity and user base grow, a new wave of businesses have begun to accept it as a medium of transaction. Lot’s of big names are accepting Bitcoin as their payment method.
Because Litecoin is not as popular as Bitcoin and Ethereum, its adoption has been slower. As the cryptocurrency develops in popularity, its use as a means of payment is projected to increase.
Currently, a few firms accept Ethereum to fund their decentralized applications. Because consumers continuously buy and sell Ether, it is also accepted on the majority of major exchanges.
Bitcoin vs Ethereum vs Litecoin: The Future Winner
If only it were that simple. Nobody knows if any cryptocurrency will gain in value or even exist in a year's time. Having said that, there are major differences between these three that may be used to justify investing in or mining one over the other.
Bitcoin is the most popular option. It's a no-brainer if you're seeking for a cryptocurrency with first-mover advantage, unrivaled popular visibility, and the greatest market capitalization. On the downside, it is now nearly impossible to mine financially, is extremely energy-intensive, and may have exhausted most of its potential for growth after surging more than 1,000% in the last year.
Litecoin has its own set of perks. Its founder is a well-known and active member of the bitcoin community. It is capable of speedier transactions, which is a potential advantage in and of itself, and it also allows for a different set of use cases than bitcoin. And, unlike bitcoin, it still has the potential for profitable mining.
Ethereum is backed by some big names, which might be a plus or a disadvantage depending on your view of the present financial industrial complex. Like Litecoin or bitcoin, it has the potential for intrinsic value, but it also has more clear business applications. And, like bitcoin, it has spawned hundreds of new coins based on the underlying blockchain technology.
While the legal and regulatory climate for digital money in many countries remains uncertain, the Bitcoin business continues to expand. It provides benefits that fiat currencies cannot match, including decentralization, transparency, speed, and anonymity. If you have not not joined the hype, you should do so as soon as possible. Having a diverse coin portfolio is a valuable asset for any cryptocurrency fan. As they say, don't keep all your eggs in the same basket, so it’s always better and safer to invest in multiple coins. However, in order to make a sensible investment decision, it is critical to carefully analyze the benefits and drawbacks of each alternative. Before making any decision you should also research BTC vs ETH or Ethereum vs Litecoin.