Comparison between Litecoin and Bitcoin/Alternative work in progress version
Differences in hashing algorithms
The scrypt hash function used by Litecoin depends on fast access to large amounts of memory per hash attempt, rather than depending just on fast arithmetic operations. By using the input as a seed to fill a large amount of memory with a pseudorandom sequence, and then using another seed derived from the input in order to access this sequence at pseudorandom points while generating the output hash, the difficulty to run many instances of scrypt in parallel by using the ALUs of a modern graphics card increases greatly, compared to Bitcoin's GPU-friendly SHA-256 algorithm.
Since memory is the resource of general-purpose computers which is the most expensive to reproduce for ASICs, in particular it's more expensive than ALUs, this means that a one-time investment in ASICs for Litecoin mining would be much more expensive. The memory size parameter of scrypt was selected (originally by ArtForz and Lolcust) to fit into 128.5kB, so that it'd only hit the L1/L2 cache and leave the L3 cache and the RAM alone. This means that it's possible to mine Litecoin without affecting system responsiveness, while still requiring a significantly large amount of memory per hash attempt, and without affecting the GPU's hashing speed if the GPU is already used to mine Litecoin or Bitcoin.
The scrypt parameters that Litecoin uses (N=1024, p=1, r=1) let users who run the Litecoin client--and therefore need to verify the blocks--multitask in their operating system without affecting the responsiveness. This still reduces the advantage of ASIC by a 10-fold estimate, according to Colin Percival, the creator of scrypt.
Since modern graphics cards have plenty of RAM, they do prove useful for Litecoin mining. You can also see the difference in mining difficulty by viewing Litecoin's mining hardware comparison and comparing it to Bitcoin's comparison page. Where a common GPU will mine Bitcoin in MH/s (megahashes), Litecoin is mined in kH/s (kilohashes).
Total number of coins in existence
The total number of litecoins that will come into existence is four times the total number of Bitcoins; 84 million compared to 21 million. The reward for each Litecoin block is 50 litecoins. The rate of Litecoin generation is halved every 840,000 blocks, i.e. four times more blocks than with Bitcoin. Since Litecoin blocks are generated four times faster than Bitcoin blocks, this means that the monetary inflation of Litecoin follows the same trajectory as that of Bitcoin.
Pros of mining Litecoin
- The market entry costs for Litecoin mining are much lower than Bitcoin's. Anyone with a computer connected to the Internet can currently mine Litecoin and sustain the Litecoin network.
- Any CPU can still be used to mine Litecoin, although much less effectively as a modern AMD GPU could. Due to Bitcoin's extremely high difficulty, CPU mining Bitcoin is essentially not an option.
- The common AMD video card can mine Litecoin effectively. NVIDIA video cards are not as capable for mining, though better miner software has improved their mining abilities somewhat. Most people already have a GPU in their computers and can start mining immediately. Mining Bitcoin with a graphics card is essentially not an option, much like CPU mining. The Bitcoin difficulty is so high that even most Bitcoin ASIC units, which are now up to 4000x faster than current GPUs, are not able to make a return on the original investment.
- Since Litecoin is 1000 times harder to mine than Bitcoin, there haven't been any ASIC mining units built for it. These units have already been built for Bitcoin, centralizing the mining aspect of the Bitcoin network (the market entry costs for Bitcoin mining have become too expensive for most people).
- The retarget block is 2016 in both Litecoin and Bitcoin, but because Litecoin blocks are found 4 times faster, the difficulty will retarget about every 3.5 days.
- The difficulty of Litecoin adjusts so that a block is generated every 2.5 minutes on average, instead of the 10 minutes average of Bitcoin. This makes the Litecoin network faster, while also making the network more secure.
- For example, merchants may wish to accept transactions with only 2 confirmations in Litecoin, taking only 5 minutes, while in Bitcoin you would have to wait at least 10 minutes for 1 confirmation.
- Waiting for the additional confirmations during about the same time period that's used with Bitcoin (e.g. 24 Litecoin blocks instead of 6 Bitcoin blocks) means that an attacker will start the gambler's ruin process with a greater deficit, so the probability for a double-spending attack to succeed is smaller.
- There are Litecoin miners, which make use of a visitor's CPU, that can be embedded into websites to allow for websites to be supported by their visitors. Visitors can contribute their spare CPU cycles while browsing, mining for the website's owner. Since CPU mining is no longer effective for Litecoin, the website would have to be extremely popular in order for this method of mining to be of much use. The other downside of such miners is that most antivirus software will report websites, which make use of embedded miners, as infected with malware, often making it impossible for the visitor to access the site without disabling the antivirus software. OpenCL website miners, which would utilize a visitor's GPU, are not yet available, and may never be.
Cons of mining Litecoin
There aren't actually any cons specific to Litecoin mining that wouldn't also apply to mining any other cryptocurrency. The active development of Litecoin helps prevent many exploits that are still a part of other coins, even in Bitcoin.
- The time warp attack is based on a bug in Bitcoin and Litecoin (and their forks) where the difficulty calculation is off by one block. This is an example of a flaw that affects all coins, especially ones with low network hash rates.
- See Time warp attack
- Colin Percival comments on Litecoin scrypt.
- Colin Percival on #litecoin-dev 02.
- Bitcoin Mining Calculator and Hardware Comparison.
- Analysis of hashrate-based double-spending.
- Litecoin Miner for Websites.
- Re: Possible way to make a very profitable 50 plus ish attack for pools?.