With the recent explosion of interest in cryptocurrency, more and more people are looking to invest in digital currency. However, with so many different types of cryptocurrency available, it can be challenging to decide which one is right for you. In this blog post, Covemarkets will take a quick look at two of the most popular cryptocurrencies, Litecoin vs Ethereum, and compare their features to help you decide which one might be a better fit for your needs.
Basics of Ethereum Vs Litecoin
Understanding their past, present, and potential futures is useful when contrasting Litecoin vs Ethereum.
Developer Charlie Lee developed Litecoin in 2011, building on the coding of Bitcoin to create a cryptocurrency he believed would be more user-friendly.
For example, Litecoin may confirm transactions more quickly than Bitcoin. In contrast to the relatively rare Bitcoin, it also has an enormous supply, which Lee thought would facilitate simpler spending.
Since then, dozens of additional cryptocurrencies, including Ethereum, have joined Litecoin. Since Litecoin’s launch, numerous so-called “altcoins” have failed, but it has remained one of the most widely used cryptocurrencies.
The supporters of Litecoin released an update in May 2023 that they hoped would enhance transaction secrecy and set it apart from other currencies.
Vitalik Buterin, who had his suggestions on how to enhance Bitcoin, launched Ethereum in 2014. The unique feature of Ethereum was that it gave programmers the ability to directly engage with its underlying network, something that Bitcoin and many other cryptocurrencies from earlier generations, like Litecoin, could not do.
Numerous blockchain applications that were challenging to implement are now possible because of this capability. Smart contracts, software that may automatically carry out payments and other operations when specific circumstances are satisfied, are supported on Ethereum.
The native cryptocurrency of the Ethereum blockchain, sometimes referred to as Ether or ETH, may be used as a general-purpose coin or to pay for services on the network. However, Ethereum also supports a wide range of other cryptocurrencies that use its network while trading independently of ETH.
What Is Litecoin?
Litecoin was created using the Bitcoin source and released in 2011 with the moniker “Bitcoin clone”. But Litecoin also has a few distinctive qualities of its own. One of its distinctive characteristics is a limited quantity of 84 million coins, as opposed to Bitcoin’s 21 million.
Because mining entails confirming transactions and adding them to the cryptocurrency’s ledger, it can be up to four times quicker than Bitcoin, resulting in speedier transaction settlement. Litecoin is frequently referred to as the silver of cryptocurrencies (Bitcoin is gold). As a result, Litecoin frequently focuses on smaller transactions.
However, up to eight decimal places can be used to split Bitcoin and Litecoin. The minor units are not commonly used in transactions right now. The smaller increments will be more valuable if or when the value of these cryptocurrencies rises above their present levels.
Litecoin uses SegWit (Segregated Witness), which allows for more transactions per block, reducing the time it takes to complete a single transaction. One of the main complaints about Bitcoin compared to alternatives has been its slow transaction execution times.
Smart contracts, computer programs that run on the cryptocurrency’s blockchain and regulate transactions or carry out other tasks, are not currently compatible with Litecoin. Ethereum is the primary platform for smart contract creation.
Endurance
Many cryptocurrencies have appeared and disappeared since the creation of Bitcoin in 2009, but Litecoin’s tenacity may be a sign of its long-term viability.
Bans or government regulation of currencies are other issues. Litecoin may have a longer future than other altcoins since it has endured this long (since October 2011) and is one of the few currencies traded on the selective Coinbase platform.
SegWit, a technique for reducing transaction sizes, one of Litecoin’s primary selling points, is also being examined for Bitcoin, which would negate a significant benefit of Litecoin.
But SegWit has been the subject of passionate debate within the Bitcoin community for years and might never be included in Bitcoin.
Like many other cryptocurrencies, Litecoin had a significant price increase between the close of 2017 and the beginning of 2018. Although prices have decreased, they are still much higher than in early 2017.
Litecoin trading methods
Litecoin was designed to be an excellent answer to the limitations that Bitcoin’s technological development brought forth. Because Litecoin was designed as a lighter version of Bitcoin, many characteristics are shared by both currencies.
Most of the features that are not published are merely improvements and fresh concepts that creators thought Bitcoin lacked.
Mining is the procedure used to generate Litecoin, much like it is for Ethereum and Bitcoin. Utilizing computer processing power to start and validate several Litecoin transactions is known as mining.
The cryptocurrency uses a Proof of Work (PoW) algorithm, a kind of consensus method used for a blockchain network. By requiring each participant to demonstrate to all other nodes (network participants) that they contributed some computational effort, the PoW method, in its purest form, increases network security and trustworthiness.
But Litecoin utilizes the Scrypt PoW algorithm, a little improvement over PoW. The Scrypt PoW technique is based on blocks validated by mining software and made available to everyone who needs to see them.
After verifying the previous block or puzzle, a miner may only add a block to a chain. Ultimately, it becomes a quicker and less resource-intensive method of recording transactions.
How do puzzle-solving ability and processing capacity translate into wealth? The energy used for Litecoin mining is used by high-speed computers competing to solve cryptographic riddles first.
As of January 2023, Litecoin miners who solve the problem and then add the new block are rewarded with 12.5 LTC. At the time of the subsequent halving phase in August 2023, the 12.5 LTC incentive is anticipated to be available.
Every network member benefits from Litecoin incentives since miners may get paid for their efforts while other users experience network security. A helpful method of conducting peer-to-peer transactions is the final result.
Read more: Comparison of Two Blockchain Consensus Algorithms: PoW Vs PoS: Which Is Better For You 2023
What Is Ethereum?
Vitalik Buterin, a programmer from Toronto and Bitcoin enthusiast, created Ethereum. He published a white paper on Ethereum in 2013, outlining its potential applications as an alternative blockchain technology that may serve as both a decentralized platform for application development and a financial instrument.
Ethereum gained pace as more developers joined its ranks, and its network of tech enthusiasts grew. Ether was a functioning coin that ran the ETH blockchain by 2015.
ETH has developed into the second-largest cryptocurrency by market capitalization since its inception just a few years ago.
As a platform for cryptocurrencies, Bitcoin was created. A decentralized application platform called Ethereum also hosts a cryptocurrency that serves as the network’s fuel.
Although the distinction may seem like mere semantics, it plays a significant role in the rapid and widespread adoption of Ethereum.
The smart contracts of Ethereum are pieces of code that run on the blockchain and may be used to enable financial transactions and the transfer of assets with value according to a set of predefined criteria.
Many believe that the potential uses and applications for Ethereum as a platform are still untapped, likening them to the early days of the internet and dial-up modems.
How To Trade Ethereum?
The open-source and permissionless Ethereum platform uses the proof-of-work consensus mechanism. Ethereum (ETH), its token, is used primarily for two things:
Anyone may use Ethereum as virtual money on online marketplaces.
Additionally, to run programs on the ETH blockchain, Ethereum is required as collateral.
A distributed ledger is operated by a decentralized computer network that houses the ETH network. As a result, the money is managed, tracked, and updated entirely via the blockchain of Ethereum.
Because network users are responsible for confirming transactions and preserving data integrity, the blockchain that stores all transactions is effective.
One of the network’s enticing features is decentralization, which allows users to trade money without the aid of a controlling middleman like a central bank.
It also implies that members can swap currencies independently and without intervention from central banks because central banks aren’t included in the picture. Without revealing the parties involved, Ethereum transactions may be publicly verified.
Proof of work is a transaction validation technique used by miners (PoW). Since its conception, Ethereum has operated using the PoW protocol. To add a single block to the Ethereum blockchain, miners must be the first to solve a challenging mathematical challenge, just as Litecoin and Bitcoin.
Ethereum, however, will undergo a significant transition as the platform is about to embrace a proof of stake (PoS) validation method. Individuals can mine or validate transactions using the PoS technique based on their current coin ownership. Having more coins essentially increases your mining capacity.
Ethereum is a cryptocurrency pioneer because it has three distinct traits, including:
- Sensible contracts
- Applications for decentralized finance can run on Ethereum (DeFi).
- On the Ethereum blockchain, nested non-fungible tokens (NFTs) are the most common type.
Similarities Among LTC and ETH
On Coinbase, Litecoin and Ethereum are both exchanged. Like a market maker on a stock exchange, Coinbase makes purchases from sellers and sells to buyers at prices close to the real-time trading price.
The exchange’s platform for experienced traders is called GDAX. Bitcoin vs Ethereum vs Litecoin are available on both platforms.
Litecoin and Ethereum offer fast transactions. While sluggish, Bitcoin is still quicker than many conventional bank transfers.
Litecoin and Ethereum allow quicker transactions than Bitcoin, but they do so differently. Regardless of the technical nuances, a currency’s viability is aided by a speedier transaction time.
Related post: Litecoin Vs Bitcoin Comparison: Which Should You Invest 2023?
What Distinctions Do Litecoin and Ethereum Have?
Among the top cryptocurrencies in use, today are Litecoin and Ethereum. Despite having various use cases, they have some inventive concepts in common. Additionally, both were developed to address some of Bitcoin’s flaws.
Let’s examine the main distinctions between Ethereum and Litecoin.
History
In 2011, Litecoin followed Bitcoin, then in 2015, Ethereum was introduced. While Ethereum, which uses the native token Ether, is a blockchain platform, Litecoin is a cryptocurrency in its own right.
Purpose
Litecoin is primarily designed to handle peer-to-peer payments swiftly and affordably without the involvement of an outside financial body. Ethereum, on the other hand, allows the creation of numerous apps and can handle more complicated transactions.
Provider Limit
With a maximum supply of 84 million coins, Litecoin is fixed, similar to how Bitcoin is. Beyond that magic amount, which is about four times the supply of BTC, there will never be any more Litecoins. In contrast, Ethereum does not have a set supply cap, which makes it less rare.
Mining
ETH is now quicker to mine than LTC. According to Investopedia, Litecoin employs proof-of-work. Still, unlike Bitcoin, it doesn’t just rely on CPU or GPU computational power but also on access to enormous quantities of memory.
Even though Ethereum also employs the proof-of-work system, which enables users to earn mining rewards for validating transactions, it is switching to the proof-of-stake (PoS) protocol, which facilitates mining.
Speed of Transactions
Varying transactional speeds. Ethereum is faster than Litecoin because it is simpler to mine. Transaction speed in Litecoin is slowed by the requirement to mine new blocks for each transaction (54 per second, and blocks on the Litecoin blockchain can be created about every 2.5 minutes).
We have a clear winner here compared to ETH, whose block time is 15 seconds (meaning numerous transactions may be verified per minute).
Transaction Fees
Some estimates place the average transaction cost for an ETH transaction at $0.85 while the average transaction price for an LTC transaction at $0.04.
As a result, the transaction fee on the Ethereum network is greater than that of Litecoin, and it is sometimes made worse by high gas expenses.
Should I Buy Litecoin Or Ethereum?
Of course, most bitcoin investors desire a respectable return on their capital. The acceptance of these use cases and the degree to which they provide value for consumers and investors will determine the future demand for Ethereum and Litecoin.
Litecoin and Ethereum have demonstrated strong returns on investment over time. Compared to Litecoin, which has a market size of $4.5 billion at the time of writing, Ethereum has a market cap of $22.62 billion, or roughly five times that amount. Comparing pricing, it is clear that Ethereum is substantially more costly than Litecoin.
It is simple to select a coin based on specific criteria when making a purchase choice, but history has repeatedly taught us that nothing in the cryptosphere can be guaranteed.
So, where does that leave us in deciding whether to buy ETH or LTC? Litecoin is not a significant rival to Ethereum, and as more people start using dApps and blockchain technology becomes more widely accepted, demand for ETH will only rise.
Last but not least, Jay Blaskey (in the Forbes mentioned above article) believes that Litecoin may be a valuable addition to the cryptocurrency portfolio of an experienced investor, particularly for those who “want a combined store-of-value asset with the side bonus of quick transfers”.
FAQs
When Did Coinbase List Ethereum?
On May 24, 2016, Ethereum was listed on Coinbase. Coinbase was a Bitcoin-only exchange before the IPO.
Read more: Why You Should Buy Bitcoin on Coinbase Pro and not Coinbase? Best Answer 2023
Is Investing In Litecoin A Wise Idea?
Litecoin does have a bright future in the cryptocurrency industry if you believe the majority of the experts. Despite not ranking among the top 10 most traded or best cryptocurrencies, it is universally accepted and simple to trade.
Can Litecoin Reach 10000 Dollars?
According to our Litecoin forecast, it won’t happen until 2030 for Litecoin to hit $10,000 per coin. This does not imply that it is impossible to reach this level; it simply indicates that Litecoin needs more time.
Will Litecoin’s price soar?
Since its all-time high price record was established in 2017, Litecoin has already reached its first higher high in 2021. An uptrend is defined as a higher high after a higher low.
Since the top was reached at the beginning of 2021, Litecoin has started to decline, but it now seems to be retesting previous resistance that has now turned into support.
Conclusion
Ethereum is a more vital project than Litecoin, with better fundamentals and progress. Litecoin has failed to reclaim its 2017 price by the end of April, which indicates that it is a dying currency. However, there is still money to be made from investing in Litecoin.
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.
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