<p>The major difference between litecoin and bitcoin is the hashing function. Bitcoin uses <strong>SHA-256</strong> while litecoin uses <strong>scrypt</strong>. scrypt "is designed to be far more secure against hardware brute-force attacks than alternative functions"<a href="http://www.tarsnap.com/scrypt.html"> [1]</a>. By hardware brute-force attacks they basically mean ASICs such as the ones coming out of butterfly labs. For instance the advantage that GPUs have above CPUs when mining litecoins is much much smaller than the advantage they have for mining bitcoins. <strong>It may well be that at some point ASICs will be made for litecoin, but the creators of litecoin specifically chose the hash function to make that happen as far in the future as possible.</strong></p>

<p>The other differences are trivial, but it may be nicer to have confirmations come in faster. The only real difference to having blocks made faster will mean that transactions will sit at 0 confirmations for less time. However still the absolute number of confirmations a transaction is not what makes it safe, but rather the amount of computation that has gone into making those confirmations.</p>

CC BY-SA 3.0
2013-03-08T18:18:11.010Z
Even if a confirmation comes in a 0 or less time, won't the potential for more chain splits and merges be greater?
makerofthings7
CC BY-SA 3.0
2013-03-08T18:19:04.167Z
Also I wonder if Litecoin or BTC will incur [more costs for electricity vs hardware over time](http://bitcoin.stackexchange.com/q/8241/1878)  your thoughts are welcome
makerofthings7
CC BY-SA 3.0
2013-03-08T21:21:43.780Z
@makerofthings7 the costs for electricity is directly dependent on the exchange rate, which depends on what people are willing to trade for it. You can't really say which is more cost effective in that respect.
placeybordeaux
CC BY-SA 3.0
2013-03-08T21:22:58.270Z
@makerofthings7 In refrence to the idea of chain splits, a chain split happens when two blocks are found at near the same time, this is directly related to the probability of finding a block, because the probability of finding a litecoin block is higher than the probability of finding a bitcoin block there will most likely be more splits. That is why the higher number of confirmations doesn't mean that it is more secure.
placeybordeaux
CC BY-SA 3.0
2013-12-03T15:35:11.887Z
Certainly with faster blocks comes the fact that more miners will be working on chains that in the end will not become the official one - since transmission time between node is finite this is unavoidable. So instead of the 6+ blocks you wait for in Bitcoin for your transaction to be considered cast in stone, you should wait for 12+ blocks in Litecoin. Why just double blocks and not quadruple, as block generation is 4x faster? Because, with each new block, beating the entire net becomes exponentially more difficult, there's a paper explaining the math in the Litecoin site.
Joe Pineda
CC BY-SA 3.0
2013-12-03T21:19:36.480Z
@JoePineda Ah I didn't think of that when I wrote this, thats a cool result. I might edit this answer later on.
placeybordeaux
CC BY-SA 3.0
2013-03-08T17:53:47.237Z
2013-03-08T17:53:47.237Z
placeybordeaux
<p>The frequency of blocks (2.5 min vs. 10 min) does indeed mean it takes less time to obtain a similar level of security, this is an advantage. The idea that only the total amount of computation matters is a myth - see <a href="https://bitcoil.co.il/Doublespend.pdf" rel="nofollow">https://bitcoil.co.il/Doublespend.pdf</a>.</p>

<p>Of course, there are also disadvantages with the choice of shorter time constant, but it's safe to say that 2.5 min is a better choice than 10 min.</p>

CC BY-SA 3.0
2013-05-22T18:28:04.143Z
Thanks for replying Meni, I enjoy reading your thought provoking posts.  I can't access that PDF, but want to get your opinion: As block frequency decreases, won't the chance of splits, and therefore wasted computation occur in increasing frequency?  Could block witholding be used as an attack? (or one in greater frequency)
makerofthings7
CC BY-SA 3.0
2013-05-23T10:58:37.993Z
@makerofthings7: Indeed, if the time constant decreases (block frequency increases), there will be more forking and reduced effective hashrate, making an attack easier. However, even with 2.5 min this effect is small, you'd need to go lower to really be affected. I don't know of an effect the time constant has on block withholding attacks specifically.
Meni Rosenfeld
CC BY-SA 3.0
2013-12-03T16:03:48.093Z
There was this crazy alt-coin that had blocks every 30 secs., at the cost of massive amounts of orphaned blocks. An alt-coin generating one block every 2 days would have none, though I wouldn't use it. So the interesting question is: what is the optimal frequency? Which I suspect depends on network latency and computing power available...
Joe Pineda
CC BY-SA 3.0
2013-12-03T22:24:47.357Z
@JoePineda: This is indeed an interesting question which is why I once suggested dynamic block time to optimize it - https://bitcointalk.org/index.php?topic=79837.0. But now I can also say - stay tuned for a new research development that might revolutionize this tradeoff.
Meni Rosenfeld
CC BY-SA 3.0
2013-12-28T18:53:53.727Z
Now I'm allowed to disclose that I was referring to http://www.cs.huji.ac.il/~avivz/pubs/13/btc_scalability_full.pdf.
Meni Rosenfeld
CC BY-SA 3.0
2013-05-22T18:11:46.733Z
2013-05-22T18:11:46.733Z
Meni Rosenfeld
<p>One of Scrypts design goals was to make CPU mining and GPU mining equally effective.  They tried to do this through requiring lots of quick memory access, so the process ends up being more limited by memory bandwidth and response time.</p>

<p>ASIC and FGPA has not and will not solve the problem, because adding the amount of memory needed is a daunting design task.</p>

<p>Outside of Scrypt there is very little difference between BTC and LTC.</p>

<p>I'm honestly not sure why anyone even buys into LTC, where are the people using it?  Is Silk Road using LTC or is there some kind of LTC gambling?</p>

CC BY-SA 3.0
2013-03-09T00:26:08.247Z
`This was broken and GPUs seem just as good at Scrypt as at SHA256.` Do you mean that scrypt is broken in general? Are you pointing out a design flaw? Citation needed.
Nick ODell
CC BY-SA 3.0
2013-03-09T01:19:12.947Z
Broken was the wrong word to use, rephrased it.
Liquid5n0w
CC BY-SA 3.0
2013-03-09T01:44:18.337Z
That's simply not true - a GPU is an order of magnitude more efficient at mining bitcoins than a CPU, which is absolutely not true of GPUs/CPUs mining litecoin.
Nick ODell
CC BY-SA 3.0
2013-03-09T00:16:42.277Z
2013-05-21T20:54:35.253Z
2013-05-21T20:54:35.253Z
Liquid5n0w
<p>What protects you from a double-spend attack is not how slow or fast are the blocks generated, but the amount of processing power applied into creating those blocks so that it's unfeasible for an attacker to beat the combined hashing power of the rest of the network, minus the uncertainty inherent in the (unavoidable) orphaned blocks.</p>

<p>Now, whence do you get that the protection for a double spend attack comes from 6 blocks in Bitcoin, but 150 in Litecoin? Even a very naïf analysis would yield 24 blocks which still equals an hour (4x generation speed, I wait for 4x blocks). It's actually just 12 blocks, so only need to wait for half an hour.</p>

<p>If I were to accept a virtual currency in exchange of a cup of coffee, I'd definitely prefer Litecoin if only because of this.</p>

CC BY-SA 3.0
2013-12-03T15:59:01.717Z
2013-12-03T15:59:01.717Z
Joe Pineda
<p>The main differentiator between Litecoin and Bitcoin appears to be the quantity of coins available, the frequency in which the blocks are mined, and the mining technology is different.</p>

<p>The first benefit "Quantity" appears to be a subdivision of another arbitrary fixed value.  Since BTC is easily divisible, I don't see the the benefit of having more units that can also be subdivided.</p>

<p>The second benefit "Frequency" appears to create more blocks for the sake of creating blocks, and the safety zone of one 1 hour double spend attack has changed from 6 blocks BTC to 150 blocks Litecoin.  (no benefit) </p>

<p>So what economic value does litecoin provide </p>

<ul>
<li>During the high value mining period?  (high block reward)</li>
<li>During the low value mining period? (low block reward)</li>
</ul>

<p>In other words, it seems that the initial differences between BTC and Lightcoin deal with the block reward, but once that is used up (or too low of a value) there isn't much more that makes Lightcoin more exceptional than BTC.</p>

<litecoin>
What is the economic value of Litecoin? Is it simply a subdivision of BTC?
makerofthings7
# What is the economic value of Litecoin? Is it simply a subdivision of BTC?

(Asked by: username_0 on 2013-03-08)

The main differentiator between Litecoin and Bitcoin appears to be the quantity of coins available, the frequency in which the blocks are mined, and the mining technology is different.

The first benefit "Quantity" appears to be a subdivision of another arbitrary fixed value. Since BTC is easily divisible, I don't see the the benefit of having more units that can also be subdivided.

The second benefit "Frequency" appears to create more blocks for the sake of creating blocks, and the safety zone of one 1 hour double spend attack has changed from 6 blocks BTC to 150 blocks Litecoin. (no benefit)

So what economic value does litecoin provide

* During the high value mining period? (high block reward)
* During the low value mining period? (low block reward)

In other words, it seems that the initial differences between BTC and Lightcoin deal with the block reward, but once that is used up (or too low of a value) there isn't much more that makes Lightcoin more exceptional than BTC.

**Tags:** litecoin


---

## 4 answers

### Answer by username_1 on 2013-03-08. Score: 8

The major difference between litecoin and bitcoin is the hashing function. Bitcoin uses **SHA-256** while litecoin uses **scrypt**. scrypt "is designed to be far more secure against hardware brute-force attacks than alternative functions" [[1]](http://www.tarsnap.com/scrypt.html). By hardware brute-force attacks they basically mean ASICs such as the ones coming out of butterfly labs. For instance the advantage that GPUs have above CPUs when mining litecoins is much much smaller than the advantage they have for mining bitcoins. **It may well be that at some point ASICs will be made for litecoin, but the creators of litecoin specifically chose the hash function to make that happen as far in the future as possible.**

The other differences are trivial, but it may be nicer to have confirmations come in faster. The only real difference to having blocks made faster will mean that transactions will sit at 0 confirmations for less time. However still the absolute number of confirmations a transaction is not what makes it safe, but rather the amount of computation that has gone into making those confirmations.

> **Comments:**
> **username_0**: Even if a confirmation comes in a 0 or less time, won't the potential for more chain splits and merges be greater?  
> **username_0**: Also I wonder if Litecoin or BTC will incur [more costs for electricity vs hardware over time](http://bitcoin.stackexchange.com/q/8241/1878)  your thoughts are welcome  
> **username_1**: @username_0 the costs for electricity is directly dependent on the exchange rate, which depends on what people are willing to trade for it. You can't really say which is more cost effective in that respect.  
> **username_1**: @username_0 In refrence to the idea of chain splits, a chain split happens when two blocks are found at near the same time, this is directly related to the probability of finding a block, because the probability of finding a litecoin block is higher than the probability of finding a bitcoin block there will most likely be more splits. That is why the higher number of confirmations doesn't mean that it is more secure.  
> **username_2**: Certainly with faster blocks comes the fact that more miners will be working on chains that in the end will not become the official one - since transmission time between node is finite this is unavoidable. So instead of the 6+ blocks you wait for in Bitcoin for your transaction to be considered cast in stone, you should wait for 12+ blocks in Litecoin. Why just double blocks and not quadruple, as block generation is 4x faster? Because, with each new block, beating the entire net becomes exponentially more difficult, there's a paper explaining the math in the Litecoin site.  
> **username_1**: @username_2 Ah I didn't think of that when I wrote this, thats a cool result. I might edit this answer later on.  

---

### Answer by username_3 on 2013-05-22. Score: 3

The frequency of blocks (2.5 min vs. 10 min) does indeed mean it takes less time to obtain a similar level of security, this is an advantage. The idea that only the total amount of computation matters is a myth - see <https://bitcoil.co.il/Doublespend.pdf>.

Of course, there are also disadvantages with the choice of shorter time constant, but it's safe to say that 2.5 min is a better choice than 10 min.

> **Comments:**
> **username_0**: Thanks for replying username_3, I enjoy reading your thought provoking posts.  I can't access that PDF, but want to get your opinion: As block frequency decreases, won't the chance of splits, and therefore wasted computation occur in increasing frequency?  Could block witholding be used as an attack? (or one in greater frequency)  
> **username_3**: @username_0: Indeed, if the time constant decreases (block frequency increases), there will be more forking and reduced effective hashrate, making an attack easier. However, even with 2.5 min this effect is small, you'd need to go lower to really be affected. I don't know of an effect the time constant has on block withholding attacks specifically.  
> **username_2**: There was this crazy alt-coin that had blocks every 30 secs., at the cost of massive amounts of orphaned blocks. An alt-coin generating one block every 2 days would have none, though I wouldn't use it. So the interesting question is: what is the optimal frequency? Which I suspect depends on network latency and computing power available...  
> **username_3**: @username_2: This is indeed an interesting question which is why I once suggested dynamic block time to optimize it - https://bitcointalk.org/index.php?topic=79837.0. But now I can also say - stay tuned for a new research development that might revolutionize this tradeoff.  
> **username_3**: Now I'm allowed to disclose that I was referring to http://www.cs.huji.ac.il/~avivz/pubs/13/btc_scalability_full.pdf.  

---

### Answer by username_4 on 2013-03-09. Score: 1

One of Scrypts design goals was to make CPU mining and GPU mining equally effective. They tried to do this through requiring lots of quick memory access, so the process ends up being more limited by memory bandwidth and response time.

ASIC and FGPA has not and will not solve the problem, because adding the amount of memory needed is a daunting design task.

Outside of Scrypt there is very little difference between BTC and LTC.

I'm honestly not sure why anyone even buys into LTC, where are the people using it? Is Silk Road using LTC or is there some kind of LTC gambling?

> **Comments:**
> **username_5**: `This was broken and GPUs seem just as good at Scrypt as at SHA256.` Do you mean that scrypt is broken in general? Are you pointing out a design flaw? Citation needed.  
> **username_4**: Broken was the wrong word to use, rephrased it.  
> **username_5**: That's simply not true - a GPU is an order of magnitude more efficient at mining bitcoins than a CPU, which is absolutely not true of GPUs/CPUs mining litecoin.  

---

### Answer by username_2 on 2013-12-03. Score: 1

What protects you from a double-spend attack is not how slow or fast are the blocks generated, but the amount of processing power applied into creating those blocks so that it's unfeasible for an attacker to beat the combined hashing power of the rest of the network, minus the uncertainty inherent in the (unavoidable) orphaned blocks.

Now, whence do you get that the protection for a double spend attack comes from 6 blocks in Bitcoin, but 150 in Litecoin? Even a very naïf analysis would yield 24 blocks which still equals an hour (4x generation speed, I wait for 4x blocks). It's actually just 12 blocks, so only need to wait for half an hour.

If I were to accept a virtual currency in exchange of a cup of coffee, I'd definitely prefer Litecoin if only because of this.


---

