Litecoin vs. XinFin: Why Permissioned Blockchains are the Need of the Hour

To many, blockchain still remains an alien technology after more than a decade of its existence. Some find it unfathomable while others scare away from it due to some of its lacking or existing features, such as low scalability and high anonymity respectively. With this being the reality, the question arises, can the blockchain industry realize the dream of an all-inclusive adoption of the blockchain technology?

Certainly, there are companies trying best to bring as much of the world on blockchain as possible, but that will keep from coming true if only we leave aside the enterprise sector.

Today, we compare an enterprise-focused blockchain XinFin with the peer-to-peer network and the Bitcoin sibling dubbed Litecoin.

The comparison entails the explanation as to why the pioneer blockchains, which are the most widely recognized, do not necessarily fit the blockchain demands of the enterprise sector.

Drawbacks of Litecoin and How XinFin Solves the Issue

Considering the newly evolving, enterprise-focused blockchains, there are quite a few drawbacks of Litecoin that set it behind them in terms of being used by enterprises.

Permissionless and Permissioned Blockchain

Permissionless blockchains are those blockchains where are transaction details are stored publicly and anyone on the network can easily view them. Litecoin is one such blockchain that allows the storage of transaction data in a public ledger. This isn’t a real drawback of any blockchain, but when considered from the perspective of enterprises, who might want to keep their transactions secret and unavailable to the public, it’s unfit for use.

XinFin blockchain is a combination of both, a permissionless and a permissioned blockchain, also known as a Hybrid blockchain. It allows XinFin blockchain users to use the network as per their need, and decide themselves whether or not they want the transaction data to be stored publicly.

This bears the potential to make XinFin a reliable blockchain for the enterprises.

Blockchain Protocol a.k.a Consensus Mechanism

First and foremost, the Litecoin network deploys the Proof-of-Work (PoW) consensus mechanism to validate transactions and create the blocs. PoW, being the first-ever blockchain protocol to be implemented, has a considerable number of drawbacks. The first of this is the energy inefficiency that comes bound to it.

PoW protocol requires miners to use huge amounts of electricity to run powerful CPUs. This helps in solving complex mathematical problems for the purpose of validating transactions and creating blocks.

Putting this in contrast with the XinFin Delegated Proof-of-Stake (XDPoS) protocol, which is highly energy efficient, makes the protocol not only environment-friendly but also expeditious.

Transaction Speed a.k.a Scalability

The protocol used by a blockchain directly relates to the transaction speed it is able to produce. While there surely can be variations between the scalability of two blockchains using the same protocol depending on how both blockchains put it to use, DPoS is capable of delivering quite a high transaction speed.

Due to using the PoW protocol, the Litecoin network has so far delivered a record transaction speed of 56 transactions per second. Though this is faster than the transaction speed of Bitcoin and Ethereum, which use the same protocol and produce 7 TPS and 15 TPS respectively, enterprises need more scalable solutions.

By using the DPoS protocol, XinFin Network has so far been able to deliver a transaction speed between 2,000 to 3,000 per second. This makes the XinFin blockchain one of the most scalable blockchains in existence and a perfect match for those enterprise players looking to hop into using the technology.

Block Creation Time and Block Reward

Transaction speed brings us to block creation time. The more the number of transactions per second, the smaller is the block creation time.

In the case of Litecoin, one block may take as much as 150 seconds, while for XinFin blockchain it’s only 2 seconds.

Miners, who are responsible for validating transactions and creating blocks on a blockchain, are rewarded in the native blockchain tokens as compensation for the work they put in. At the given time, Litecoin rewards its miners 25 LTC for mining one block, with one LTC being priced at $138.43 at the time of writing.

However, as we cross the 1,680,000 block count on the Litecoin network, miners will have to bear with what is called Litecoin Halving. Due 53 days from the day of writing, the event will cut the mining reward to half and make it to 12.5 LTC for mining each block.

On the contrary, XinFin network rewards 5000 XDC tokens to its miners, with each XDC valued at $0.000575 at the time of writing.

It can be questioned that the block reward for mining is lower in the case of XinFin as compared to Litecoin, but let’s not forget that the block creation time, and hence the energy consumed to create one block on XinFin is far lesser than that of Litecoin.

KYC Compliance

Anonymity is great to have while on the internet. But it’s not required by all and at all times. Some blockchains, like Litecoin itself, are highly anonymous networks and hence unsuitable for enterprises that like to know and keep a record of who is validating what transactions.

XinFin, for that purpose, has made itself KYC compliant. Every masternode on the network that sets itself up for mining the XinFin blocks and validating its transaction will have to upload the KYC documents before proceeding.

Knowing who is able to validate what transactions assures enterprises that their data is secure within trusted parties.

Conclusion

Public or permissionless blockchains undoubtedly create the brain and the soul of the blockchain industry. But the fact that the existence of only permissionless blockchains will keep the enterprises cut off from the potential that blockchain promises cannot be disregarded.

This is the reason why a blockchain such as XinFin, which renders the features of a permissioned or private as well as a permissionless blockchain, is important to exist and bring the enterprise sector into the blockchain industry.

Such an initiative is what holds the potential to make blockchain mainstream, without outcasting any particular industrial sector from leveraging the blockchain technology.