A type of Proof-of-Work (PoW) algorithm that is more memory intensive. It was unsuccessfully used by Litecoin developers to make mining less dependent on ASIC machines.
Consensus algorithms make it possible for a blockchain network to function. Each computer (node) on the network has to verify a transaction for a new data block to be added. Nodes that perform these critical tasks are called miners. In return for their validation service, miners receive cryptocurrency rewards.
Consensus algorithms encrypt the entire process so that the network is resistant to cyber-attacks. However, different blockchains have different consensus algorithms. While Bitcoin uses a SHA-256 function, its faster and younger brother - Litecoin - uses the Scrypt function. Both are highly computationally intensive.
As of September 12, 2021, the Litecoin network accounted for 328.6 TH/s. This tells us that miners across the network perform 328.6 trillion hash computations per second. Hash is a mathematical tool that transforms any string of characters/numbers into an encrypted string of fixed length. This makes hashing extremely useful to both find and store data, as well as making it virtually impossible to crack the blockchain.
For example, if you use this online Scrypt generator and set the encrypted length to 6, when you want to encrypt the word "sun," the hash output would be "b17037a4ff43." As you can see, no matter the length of the original input, the hash output remains at a set length, thus fortifying it against code-cracking. Additionally, the encrypted hash would depend on the power of the mining machine - CPU, GPU, and RAM (Random Access Memory). This is where Scrypt mining differs from Bitcoin’s.
To ensure that Litecoin miners don’t have to buy specialized ASIC miners, the Litecoin team switched from SHA-256 to Scrypt hashing. Because it stores its hashes into RAM, it is more memory intensive. Additionally, Scrypt mining has a lower hash rate. This made general-purpose computers more effective at mining than ASIC machines - Application Specific Integrated Circuit.
This is no longer the case. New generation of ASIC machines are now superior to GPU-based mining. In the end, this means that Scrypt mining requires equal mining equipment investment. Nonetheless, Litecoin’s Scrypt hashing still remains about four times faster than Bitcoin hashing.