Many different cryptocurrencies are available today, each with its own advantages and disadvantages. In this blog post, we will compare two of the most popular ones – Litecoin vs bitcoin. Both have pros and cons, but which is better overall? Let’s take a look and find out.
Bitcoin Vs Litecoin Overview
Over the past few years, interest in cryptocurrencies has grown, especially as more people have learned how useful they may be and how they can be used as investments.
One of the most popular cryptocurrencies is bitcoin, which makes sense given that it was the first of its kind to appear.
Several other cryptocurrencies are available now than Bitcoin, each of which has managed to differentiate itself in some manner. However, not every cryptocurrency can stand out, and it might be particularly challenging for new ones to take off, given how congested the market is.
However, one of the currencies still in the race is Litecoin, one of the most widely used cryptocurrencies.
Bitcoin’s market valuation was $1 trillion in March 2021, whereas Litecoin was $13.7 billion. Additionally, the two use distinct algorithms. While Bitcoin uses the SHA-256 algorithm, Litecoin uses the more recent Scrypt method.
Additionally, Litecoin creates more coins and has faster transaction times. It is crucial to remember that this is only a strategy to pique the curiosity of investors; it has no bearing on the usefulness or worth of the coin.
The first cryptocurrency released in 2009 was Bitcoin. Since then, it has changed from being a curiosity to a contentious good, investment, and form of money.
To maintain the reliability and security of a centralized database known as a blockchain, it depends on decentralized and community processing power.
Several distinctive characteristics of Bitcoin include:
- Proof-of-work is the consensus mechanism and validation procedure that validates blocks and transactions on the blockchain using the processing capacity of GPUs and, to a lesser degree, CPUs.
- The cryptographic hash function used to encrypt the blockchain is SHA-256. The hash function encrypts input by converting it to an output of a defined length.
Other programmers soon became aware of Satoshi’s original strategy. Charlie Lee is one such programmer and a Google employee. He was so moved by the idea that he chose to participate in the revolution.
Lee wanted to be the Robin to Bitcoin’s Batman rather than actively competing with it. He describes Litecoin as the silver to Bitcoin’s gold in his own words.
On October 7, 2011, Litecoin debuted as an open-source client on GitHub. One of the first Bitcoin Core client hard forks was Litecoin. The technological components of cryptocurrencies were improved in Lee’s version. For instance, every ten minutes, Bitcoin certifies blocks of transactions. Data in these blocks is restricted to 1MB.
A block is confirmed by Litecoin every 2.5 minutes. Developers estimate the network can process 28 transactions per second, making it substantially quicker than Bitcoin.
Contrary to Bitcoin, this quicker creation rate matches the rise in total supply. Only 21,000,000 BTC will ever be made accessible. The total number of LTCs scheduled for the issue is 84,000,000.
Bitcoin Vs Litecoin: What’s The Difference?
Even though they are two different types of money, Bitcoin and Litecoin have a lot in common. They are decentralized currencies, for instance. Fiat currencies like the dollar rely on the central bank’s support for value, legality, and circulation management.
This is not the case with cryptocurrencies, though. They rely on the network’s cryptographic integrity rather than being controlled by a centralized authority.
Litecoin was once seen as having some connection to Bitcoin. When it first debuted in 2011, Charlie Lee, a former Google employee and the project’s founder described Litecoin as a “lite version of Bitcoin.
This statement was published on a well-used Bitcoin forum at the time. After all, the creators of Litecoin have frequently announced their intention to provide a silver alternative to Bitcoin’s gold.
As a result, Litecoin and Bitcoin share several characteristics, including:
Exchanges and Storage
Investors frequently believe that transactions done using LTC and BTC are highly comparable. They are simple to obtain by using a mining ring or purchasing from the trade.
They must be kept in a “wallet” to be retained securely in between transactions. As time passes, their prices become even more unstable.
Evidence of Work
The fact that both cryptocurrencies operate on proof-of-work ecosystems is another commonality. So, as already said, the technology that makes it possible to mine both currencies is comparable.
Litecoin and Bitcoin vary most noticeably in their hashing algorithms. As was already noted, SHA-256, computed swiftly by the ALUs of graphics processing units, is the algorithm used by Bitcoin.
Capitalization of the Market
The market capitalization, or aggregate dollar worth of all the issued coins, is another crucial distinction between Bitcoin and Litecoin.
Because big farms and mining pools can mine it and there is such tremendous demand for it, the bitcoin conversion rate to dollars is much higher, and bitcoin is more widely used.
The total amount of coins each cryptocurrency may manufacture is one of the critical distinctions between Bitcoin and Litecoin.
In this respect, Litecoin stands apart. In contrast to Litecoin, which can support 84 million coins, the Bitcoin network can never support more than 21 million coins.
This appears to be a significant advantage for Litecoin in principle. Still, in practice, pricing for goods and investments is often determined by supply and demand and investor and consumer mood.
Bitcoin’s price reflects that since both parties seem to think it reflects their interests, beliefs, and financial objectives.
Speed of Transactions
Although, in theory, transactions on the Bitcoin and Litecoin networks happen instantly, it takes some time for those transactions to be validated by other network users. Transaction speed was a priority when Litecoin was created.
The average confirmation time for a transaction on the Bitcoin network (the length of time it takes for a block to be validated and added to the blockchain) is about nine minutes.
However, depending on network load, this might vary considerably. For Litecoin, the corresponding time is around 2.5 minutes.
Maximum Supply of Coins
The maximum supply of Litecoin is 84 million coins, whereas the max supply of Bitcoin is 21 million.
The maximum coin supply of Litecoin is four times more than that of Bitcoin, just as the Litecoin network processes cryptocurrency transactions four times faster. The Litecoin creator constantly distinguished between the currencies using a multiple of four.
With more coins being produced, Litecoin may have greater liquidity than Bitcoin; however, Bitcoin may be more valuable because of its scarcity.
Despite the well-known price volatility of Bitcoin and Litecoin, Bitcoin routinely trades at a premium of several magnitudes over Litecoin.
Users of the blockchain networks for Bitcoin and Litecoin are charged transaction fees, while miners get cryptocurrency incentives for completing network transactions.
But when you consider the costs connected to each of these cryptocurrencies, that’s about where the similarities end.
Transaction fees for Bitcoin are substantially greater than those for Litecoin transactions since they are based on the number of transactions made on the blockchain network.
Although network congestion at the beginning of 2021 momentarily led the charge to execute a single Bitcoin transaction to increase to over $60.10, Bitcoin transaction fees in January 2022 are currently about $1.85. Users often spend just a tenth of a cent each transaction when using Litecoin.
The marketplaces for Bitcoin and Litecoin have grown significantly. Litecoin’s companion to the BTC has proven to be a successful strategy.
The majority of platforms that support Bitcoin also support Litecoin. This adaptability has enabled Litecoin to maintain its market dominance despite the influx of fierce competitors.
The algorithms used by Bitcoin and Litecoin are also dissimilar. Bitcoin employs SHA-256, while Litecoin uses Scrypt.
The outcomes of mining new currencies are affected differently by the two algorithms. Litecoin and Bitcoin transactions need much processing power to be confirmed. Typically, SHA-256 is a more difficult algorithm than Scrypt.
The miners also explored employing some of the most advanced techniques to mine bitcoins effectively. ASICs, specialized hardware devices designed to mine Bitcoins, were chosen by miners to do this.
More individuals turned to Litecoin because Scrypt was designed in a way that makes it less vulnerable to ASIC-based mining custom hardware solutions. As a result, Litecoin appears to be more approachable to those who desire to work as miners.
LTC Vs BTC: Which One Fits You Best?
Due to Bitcoin’s well-known reputation as a cryptocurrency, purchasing some Bitcoin is a typical starting point for novice cryptocurrency investors. Bitcoin may be purchased through almost any cryptocurrency exchange or a brokerage that accepts cryptocurrency payments.
Due to Litecoin’s potential use for ordinary transactions, investors may decide to acquire it. Like Bitcoin, Litecoin is traded on several cryptocurrency exchanges.
Since each cryptocurrency has unique benefits and cons, you might decide to purchase both Bitcoin and Litecoin. Bitcoin, Litecoin, and other altcoins are joint holdings among cryptocurrency investors.
Both the dangers and rewards of holding cryptocurrency should be considered before investing in either Litecoin or Bitcoin.
Since it’s typically impossible to reverse a bitcoin transaction, you should always adhere to standard practices for online security and double-check the transaction particulars before proceeding.
What Is Litecoin Used For?
People primarily buy and sell Litecoin back and forth. Because Litecoin is a digital currency, individuals and organizations may easily use it to move funds between accounts or purchase various goods and services.
Can Litecoin Be Converted to Bitcoin?
Not only can you exchange Bitcoin to Litecoin, but also convert Litecoin to Bitcoin too. You just need to have a trading software or exchange platform to achieve this.
Will Litecoin Work with a Bitcoin Address?
It is not feasible to send Litecoin to a Bitcoin address since doing so would result in a loss of funds. It would be pretty difficult for you to retrieve it.
Can Litecoin Beat Bitcoin In Price?
It’s difficult to predict if Litecoin will replace Bitcoin. After all, Bitcoin is the first cryptocurrency, and most people automatically think of the cryptocurrency sector as a whole when they mention it. Whether another cryptocurrency can surpass Bitcoin is up for debate.
How Many Litecoins are Left?
The maximum number of Litecoin coins is 84 million. Around 13.48 million left as of June 18, 2022, when there were 70.52 million people.
Is Litecoin Worth Investing in?
Investor and consumer opinion will determine the destiny of litecoin. Cryptocurrency can also be impacted by governmental policies, the state of the economy, government-sponsored cryptocurrencies, and other factors.
Even if this happens, technological developments could make cryptocurrency obsolete.
Why Is Litecoin So Cheap?
Because of its higher supply and lesser demand compared to other cryptocurrencies, Litecoin has a lower LTC/USD exchange rate and weaker buying power.
This is primarily a result of investor and consumer perspectives: if a medium of exchange can be used to buy more products, it has a higher value. People are more likely to pay more for a good or investment if they perceive it to have a higher worth.
Bitcoin is currently valued higher since it is considered a more valuable asset.
Litecoin and Bitcoin can be great investment opportunities, but it’s essential to research before choosing which one is right for you. They do have some similarities, but each also has its unique benefits. If you’re looking to switch between them, you can easily convert from one to the other. Ultimately, the best decision is to choose the option that best suits your individual needs.
Disclaimer: The information provided in this article is not investment advice from Cove Markets. Cryptocurrency investment activities are yet to be recognized and protected by the laws in some countries. Cryptocurrencies always contain financial risks.