EXTENSIONS OF BITCOIN

At the time of writing, there are almost 500 alternate blockchains (also called altcoins) that offer alternative currency options besides BTCs. Most of these blockchains are clones of the Bitcoin blockchain, with minor configuration changes, namely:

Coin supply A number of altcoins vary the total coin supply in the system.

Hash function A number of altcoins rely on different underlying hash functions, such as SHA256 or SCRYPT.

Block generation times Some altcoins rely on different block generation times/diffici for the underlying proof-of-work.

In the remainder of this section, we briefly describe a number of prominent altcoin instantiations.

Litecoin

Litecoin is a well-known altcoin which, at the time of writing, holds the fourth largest market cap, after Bitcoin, Ripple, and Ethereum.

Litecoin’s code is basically a clone of Bitcoin’s with three basic differences. More specifically, the Litecoin network aims to generate a block every 2.5 minutes instead of the 10-minute interval featured by Bitcoin. This clearly allows for faster transaction confirmation times and in turn faster convergence on consensus in the network. This also suggests that Litecoin is more suited for fast payments where the time between the exchange of services and money is short (e.g., fast-food services). Another difference is that the Litecoin network is expected to generate 84 million Litecoins, which is four times larger than the number of currency units scheduled to be issued by the Bitcoin network.

A major difference between Litecoin and Bitcoin lies in the fact that Litecoin uses scrypt, a sequential memory-hard function, in order to reduce the advantage of computationally powerful miners. Namely, scrypt requires a large amount of memories in order to be efficiently computed; by doing so, scrypt trades off CPU- bound resources with memory-bound resources. The intuition is that memory access times vary much less than CPU speeds, and hence offer a fairer alternative for constructing PoW. There are currently several specialized ASIC mining hardware available for scrypt-based PoW systems.

 
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