Bitcoin has been trending for the past decade with a strong wave of investments flowing into cryptocurrencies during the pandemic era. To date, people only knew about Bitcoin as a prominent cryptocurrency available to one and all. There are different categories of cryptocurrencies such as Litecoin, Ethereum, Binance Coin, Dogecoin, etc. that have caught up with the investors who have made huge gains from trading them. But are all the cryptocurrencies the same? Let us understand Litecoin Vs Ethereum.
What is Ethereum?
Ethereum is a software platform created via a blockchain network that has its very own cryptocurrency called Ether and uses its programming language named Solidity. Vitalik Buterin, a Russian-Canadian programmer along with other crypto entrepreneurs created the Ethereum platform back in 2013.
Although Ethereum is just like Bitcoin, it is built on blockchain tech that records all the crypto transactions except people can build their apps on the Ethereum platform. Ethereum has become trendy for decentralizing the financial system whereby it can eliminate the middlemen and keep a track of all the transactions from mortgage to debt using blockchain technology.
What is Litecoin?
Former Google employee Charles Lee created Litecoin in October 2011. Litecoin is a peer-to-peer cryptocurrency that was developed to carry out cheaper transactions at a much faster pace on a daily basis. Litecoin is often referred to as Bitcoin’s smaller brother, however, Litecoin has a higher limit on market cap and a much faster mining process compared to Bitcoin.
With the help of blockchain technology, Litecoin not only helps you transfer funds but also records all the public transactions. Its decentralized system ensures that you are free from government control or any form of censorship.
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Litecoin Vs Ethereum: Difference
|Digital Platform||Financial Asset|
|No limitations||Maximum Limitation|
|Smart Contract Platform||Mode of Payment|
|Faster Block Time||Lower Transaction Fee|
1. Digital Platform v/s Financial Asset
Ethereum is a digital platform based on blockchain where cryptocurrencies like Ether trade. With the help of various algorithms, one can even find out the value of various cryptocurrency assets trading on the platform. On the other hand, Litecoin is a financial asset having its intrinsic value just like Bitcoin. You can easily trade Litecoin on crypto exchanges.
2. No Limitations v/s Maximum Limitations
The Ethereum platform does not have any limitation for mining its tokens whereas Litecoin has a maximum limitation of mining up to 84 Million tokens. In other words, in the future at a point in time, no new Litecoin tokens will undergo mining which means there won’t be any new Litecoins. Ethereum will not face any of such scarcity problems in the future.
3. Smart Contract Platform v/s Mode of Payment
Ethereum is more like a smart contract platform that will help the users to create decentralized applications called DApps. The smart contract feature enables the Ether tokens to transact naturally. Litecoin, on the other hand, is a lite version of Bitcoin that is used as a mode of transaction to fulfill payments.
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4. Faster Block Time v/s Lower Transaction Fee
Ethereum is well-known for having a faster block time of just 15 seconds in comparison to Litecoin’s block time of over 2 minutes 19 seconds. In Litecoin’s defense, the block time is at least faster than Bitcoin’s block time of 10 minutes but Litecoin trumps Ethereum by charging a transaction fee of just $0.04/transaction as against Ethereum’s transaction fee of $0.85/transaction.
Similarities Between Ethereum and Litecoin
From the definition, Ethereum and Litecoin are very different as one is a cryptocurrency platform whereas the other is an actual cryptocurrency. But both can be very similar based on certain parameters such as:
- Transaction time is very fast for both the cryptocurrencies over the parent Bitcoin.
- Both the crypto networks use Proof-of-Work (PoW) mechanism for the miners that helps them use their computational skills to solve new problems by adding a new block to the blockchain network.
- Ethereum, as well as Litecoin, are trading on many crypto exchanges such as Coinbase.
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As an investor, your only dilemma is which one of these makes a better investment. Should you invest in Litecoin or Ethereum? Both have their pros as well as cons in terms of their operations. Both the cryptos serve different purposes and hence it makes it difficult to select which one makes the best investment.
But it is better to invest in both, Ethereum, as well as Litecoin as both are unique in their way. Ethereum serves its purpose through its platform and Litecoin through its payment mode. Both are more advanced than Bitcoin with their incredible speed and low-cost transaction. After all, in terms of investing it is better to hold eggs in multiple baskets rather than having exposure to a risky asset.
Frequently Asked Questions
Which type of consensus algorithm is used for both the cryptocurrencies?
Ethereum records PoW using Ethash whereas Litecoin uses Scrypt.
Should I buy Litecoin or Bitcoin?
Recently the Bitcoin prices have inflated to the highest levels while Litecoin remains in a reasonable range. Litecoin is faster and cheaper compared to Bitcoin and turns out to be a better investment option.
Is Ethereum a currency?
No Ethereum is a platform whereby Ether its currency is traded.
Can investing in Ethereum or Litecoin make you rich?
Any investment will make you rich if it is done wisely. In the case of Ethereum or Litecoin, it is better to invest for the long term to reap gains.
Can Ethereum replace Bitcoin in the future?
Based on the technology that is more advanced with greater functionality, it is estimated that Ethereum can overtake Bitcoin somewhere in the future.