Jeremy Martinez is a modern day coin collector.He collects bitcoin and litecoin and luckycoin and zeitcoin and leafcoin and infinitecoin.Behind his living room television set, Martinez has set up 99 tiny USB devices, and each is equipped with a pair of custom-built computer chips.One chip is designed to mine bitcoin–the world’s most popular digital currency–and the other mines a raft of bitcoin wannabes.As these devices perform countless computations that help drive the worldwide internet software that runs these digital currencies, a pair of 6-inch tall, white, USB-powered fans buzz above the rows of mining chips, blowing cool air over the 150-watt system.It’s an impressive setup.But Martinez doesn’t do this just for kicks.In exchange for all those calculations, he receives some digital currency of his own.Last year, we wrote about the arms race to build customized bitcoin miners — number-crunching machines that process transactions on the bitcoin network and simultaneously compete to solve math puzzles, with the winning computer awarded a bonanza of digital currency.

Over the past year, the value of a bitcoin has jumped from $100 to $450, and as a result, the bitcoin mining game has become highly professionalized.But bitcoin isn’t the only digital currency headed down this road.Litecoin and other digital currencies are also experiencing an arms race of their own.The DualMiner USB system that Martinez uses is based on chips made by a company called GridSeed, which also sells mining computers based on the chip.litecoin virtual miningBut a number of other companies are working to offer new litecoin rigs.usb bitcoin mining device buyBitcoin rig-makers Innosilicon and KnC Miner say they’ll soon be shipping litecoin rigs of their own, and a Los Angeles, California company called Hash Master has sold about 10,000 mining rigs over the past two months–all based on the GridSeed chip–and is readying new systems based on several new generations of custom chips, says Alon Peleo, the company’s owner.bitcoin core raspberry pi

These systems are designed to process a different algorithm from the one used by bitcoin.It’s called Scrypt, and it also happens to be the same algorithm used by dozens of alternative currencies, including luckycoin, zeitcoin, and dogecoin.“Dogecoin and litecoin are the leaders in Scrypt coin,” says Peleo.As new miners jump onto to the network, however, litecoin payoffs become rarer for folks like Jeremy Martinez.ethereum biddingLitcoin mining is now about nine times as difficult as it was back in November.litecoin first blockBut there’s a bright side.ethereum kurs in euroAll of this processing power also makes the currency’s network harder to take over.mine litecoin asicBoth litecoin and bitcoin could fall victim to something called the 51 percent attack, which would let an attacker with control of more than half of the network’s processing power do things like send the same digital currency to two different addresses.litecoin buy in australia

That’s why litecoin’s creator, Charlie Lee, likes to see the new chips, known as ASICs.“Having ASICs come out to mine litecoin means that it’s really gotten to a point where it’s succeeded,” he says.“Now litecoin is being protected by its own hardware.” But for Martinez, the extra difficulty has driven him and his army of dual-miners off of the litecoin network.bitcoin zebraRecently, his behind-the-TV mining rig was mining fedoraCoin and infinteCoin.He’s programmed it to make the sound of a cash register every time it mines a block, and every few minutes, an alert pops up on his screen and there’s be a pleasant “Ca-Ching!”sound coming from his computer.“I could just go and buy these coins, but it’s not as much fun,” he says.“Every time I see my little pop-up, it’s like I hit the jackpot on my slot machine.”Over the past several years, public interest in cryptocurrencies has increased dramatically.

The main focus of this interest has been Bitcoin, which, following the release of its first public client in 2009, has become the dominant name in cryptocurrency.In recent years, however, many other cryptocurrencies have entered the scene.Among these, one name which has garnered increasing interest is Litecoin.Since its launch in October 2011, Litecoin has grown to a market capitalization of roughly $75 million.Indeed, Litecoin’s own developers have long stated that their intention is to create the “silver” to Bitcoin’s “gold”.In this article, we will explore the similarities and differences between these two leading cryptocurrencies.On the surface, Bitcoin and Litecoin share a lot in common.At the most basic level, they are of course both cryptocurrencies.Whereas state currencies such as the U.S.dollar or the yen rely on political and legal mechanisms for value and legitimacy, cryptocurrencies rely only on the cryptographic integrity of the network itself.Yet Bitcoin and Litecoin also differ in important respects.

In what follows, we will address four of their most important differences, progressing from the most straightforward differences to the more complex.(Read more What Is Litecoin And How Does It Work?)At the time of writing, Bitcoin’s market capitalization sits at roughly $4 billion.Whether this figure strikes you as either high or low will depend largely on your historical perspective.When we consider that Bitcoin’s market capitalization was barely $42,000 in July 2010, its current figure seems staggering.When, however, we consider that it has declined by roughly 66 percent since its all-time high in December 2013, its current figure seems comparatively modest.What is clear is that Bitcoin remains by far the most highly valued player in the cryptocurrency space.Litecoin, however, has also made significant progress in recent years.An analysis of Google search data shows that public interest in both currencies have been highly correlated since the launch of Litecoin in 2011.Based on market capitalization and public interest alone, the characterization of Litecoin as the silver to Bitcoin’s gold seems warranted.

We can now ask the question, what other characteristics set Bitcoin and Litecoin apart?One of the main differences between Bitcoin and Litecoin concerns the total number of coins which each cryptocurrency can produce.The Bitcoin network can never exceed 21 million coins, whereas Litecoin can accommodate up to 84 million coins.Although in theory this sounds like a significant advantage in favor of Litecoin, its real-world effects may be negligible.This is due to the fact that both Bitcoin and Litecoin are divisible into nearly infinitesimal amounts.In fact, the minimum quantity of transferable bitcoin is one hundred millionth of a bitcoin (0.00000001 bitcoins) known colloquially as one “satoshi.” Users of either currency should therefore have no difficulty purchasing low-priced goods or services, regardless of how high the general price of an undivided single bitcoin or litecoin may become.Despite this, Litecoin’s greater number of maximum coins might offer a psychological advantage over Bitcoin.

At today’s prices, purchasing a $2 coffee would cost approximately 0.007 bitcoin, or roughly 1 litecoin.In a video interview posted by IBM’s banking division in November 2013, IBM executive Richard Brown raised the prospect that some users may prefer transacting in whole units rather than in fractions of a unit—a potential advantage for Litecoin.Yet even assuming that this is true, this problem may be solved through simple software changes introduced at the level of the digital wallets through which Bitcoin transactions are made.As Tristan Winters points out in a November 2013 Bitcoin Magazine article, “The Psychology of Decimals,” popular Bitcoin wallets such as Multibit and Electrum already offer users the option of displaying the value of their bitcoins in terms of official (or fiat) currencies such as the U.S.This can help circumvent the psychological aversion to dealing in fractions when using bitcoin.Although technically transactions occur instantaneously on both the Bitcoin and Litecoin networks, time is required in order for those transactions to be confirmed by other network participants.

According to data from Blockchain.info, the Bitcoin network’s long-term average transaction confirmation time is just over 9 minutes per transaction.In principle, this difference in confirmation time could make Litecoin more attractive for merchants.For example, a merchant selling a product in exchange for Bitcoin would need to wait nearly four times as long to confirm payment as if that same product were sold in exchange for Litecoin.On the other hand, merchants can always opt to accept transactions without waiting for any confirmation at all.The security of such zero-confirmation transactions is the subject of some debate.However, recent innovations such as Bitpay’s proposed Inter-Channel Payments system (nicknamed “Impulse”) may make these kinds of instantaneous transactions significantly more secure, mitigating Litecoin’s faster confirmation time advantage.Different Algorithms: Bitcoin’s SHA-256 vs.Litecoin’s Scrypt By far the most fundamental technical difference between Bitcoin and Litecoin are the different cryptographic algorithms which they employ.

Bitcoin makes use of the longstanding SHA-256 algorithm, whereas Litecoin makes use of a comparatively new algorithm known as Scrypt.The main practical significance of these different algorithms is their impact on the process of “mining” new coins.In both Bitcoin and Litecoin, the process of confirming transactions requires substantial computing power.Some members of the currency network, known as miners, allocate their own computing resources toward the task of confirming the transactions of other users.In exchange for doing so, these miners are rewarded by earning units of the currency which they have mined.(Read more What Is Bitcoin Mining?)SHA-256 is generally considered to be a more complex algorithm than Scrypt, while at the same time allowing a greater degree of parallel processing.Consequently, Bitcoin miners in recent years have utilized increasingly sophisticated methods for mining bitcoins as efficiently as possible.Today, the most dominant method for Bitcoin mining consists of the use of Application-Specific Integrated Circuits (ASICs).

These are hardware systems which, unlike the simple CPUs and GPUs which came before them, can be tailor-made for the sole purpose of mining bitcoins.The practical consequence of this innovation has been that Bitcoin mining has become increasingly out-of-reach for the everyday user.Scrypt, by contrast, was deliberately designed to be less susceptible to the kinds of custom hardware solutions employed in ASIC-based mining.This has led many commentators to view Scrypt-based cryptocurrencies, such as Litecoinm as being more accessible for users who also wish to participate in the network as miners.In recent years, however, companies such as Zeus and Flower Technology have brought Scrypt AISCs to the market, suggesting that Litecoin’s vision of easily accessible mining may become a thing of the past.While Bitcoin and Litecoin may be the gold and silver of the cryptocurrency space today, history has shown that the status quo in this dynamic and emerging sector can change profoundly in even a few months.