Since Bitcoin was launched in 2009 there has been an ongoing wave of alternative cryptocurrencies entering the crypto market created to build on what the original cryptocurrency (and blockchain technology) can do. While Litecoin and Ethereum differ vastly in their design, one similarity is that they were both created to improve on so-called weaknesses in the Bitcoin network.
In this piece, we’re taking a look at both Litecoin and Ethereum individually, covering everything from concept to market integration, as we explore Litecoin vs Ethereum.
The Litecoin network
Litecoin is a digital currency created from a hard fork off of the Bitcoin blockchain. The cryptocurrency was designed to be a "lighter" version of the original cryptocurrency (hence the name) and to provide a more efficient peer-to-peer digital cash. Litecoin (LTC) is the native coin to the network.
With similar coding, the Litecoin team made several changes to their blockchain to ensure that it was faster and more cost-effective. It was never designed to overtake Bitcoin, merely to offer an alternative and complement the Bitcoin network.
Created in 2011, Litecoin was launched by a former Google engineer and MIT graduate, Charlie Lee. Lee, alongside a team of developers, increased the block size as well as its total supply. Litecoin has a max supply of 84 million coins.
Transaction per second
Today, the Litecoin network can process 56 transactions per second compared to Bitcoin which can do 7 transactions per second (outweighing Ethereum which can currently do 30 transactions per second, expected to increase greatly with the launch of ETH 2.0).
Litecoin also trumps both cryptocurrencies when it comes to lower transaction fees, charging a minute fee that is not subject to fluctuations. Most cryptocurrencies' transaction fees fluctuate due to demand on the network, increasing the fees when the network is busy.
The network also reduced the block time, meaning the amount of time it takes to validate a transaction. Litecoin transactions take 2.5 minutes on average, whereas Bitcoin transactions take 10 minutes. In conclusion, a Litecoin transaction can be processed at a lower cost, four times faster, and with 3% of the energy consumption.
While Litecoin makes use of the same Proof of Work mining consensus as Bitcoin, it uses another hashing algorithm known as Scrypt that requires specifically designed mining software and hardware. This is the same setup as Dogecoin, allowing miners to mine both cryptocurrencies simultaneously.
The Ethereum blockchain
Ethereum is a decentralized platform that allows developers to create their own decentralized applications (dapps) and smart contracts. Ethereum is well-known for its neutrality and immutability features, contributing to its effectiveness as a platform for developers to launch new projects. On the blockchain platform, it uses Ether (ETH) as its native cryptocurrency.
Ethereum was created to leverage the open-source nature of Bitcoin and bring greater innovation to the cryptocurrency industry. Providing a platform on which developers can create new blockchain projects has led to a large number of new cryptocurrencies and the inclusion of many industries far beyond the finance sector.
Ethereum uses ETH to fuel all operations on the network, requiring users to pay what are known as "gas fees" to facilitate any Ethereum transactions. These gas fees are designed to compensate miners for the computational power required.
These fees fluctuate when the network is congested, often leading to exorbitant prices for users wishing to implement smart contracts or send funds across the network.
Smart contracts are digital agreements that automatically execute once certain criteria are met. When the smart contract is created, the agreement and criteria are written into its code, and once the criteria are met, that contract will automatically execute.
Due to the nature of the Ethereum blockchain providing a platform on which users can build and develop, the cryptocurrency does not have a limited supply of tokens. With no cap, the network can continue creating tokens as required and developers can continue using the platform to execute operations and build apps.
Ethereum does have a limit on the total number of new coins that can enter circulation each year. Its supply growth model ensures that no more than 18 million coins can be released per annum.
Currently, the Ethereum network uses a Proof of Work mining consensus, however, it is in the process of moving to a Proof of Stake consensus, expected to launch at the end of this year. The new version will use the same cryptocurrency (ETH) but adopt a more sustainable method of validating transactions and creating new coins.
Which is better: Litecoin vs Ethereum
While Litecoin provides a peer-to-peer form of digital cash, Ethereum offers more than just a coin, it provides a platform. When it comes to functionality, Ethereum takes the cake.
However, when it comes to executing fast and cheap transactions, and in terms of scarcity with its limited supply, Litecoin provides a better blockchain technology alternative.
When it comes to Litecoin vs Ethereum and which cryptocurrency is better, one must first observe their intentions. Are you looking to build dapps or for a quick and cheap means of sending funds across the globe?
Both networks have avid supporters and great teams behind them, so when deciding which cryptocurrency to invest in consider your own goals and how these two networks align with them, or seek investment advice from a professional that can help you with making an advised decision.