Bitcoin vs. Litecoin
Cryptocurrencies have been around for a decade now, and they continue to attract the attention of people all over the globe. Many cryptocurrencies have become popular over the past few years, and among the most active are Bitcoin, Ethereum , and Litecoin.
Comparison is part and parcel of every industry, and it is no different with the crypto space. Bitcoin has been compared to virtually all cryptocurrencies but more so to Litecoin due to their striking similarities. Technically, Litecoin is nearly identical to Bitcoin.
In this post, we will look at the differences between these two leading digital currencies and the advantages and disadvantages of each. But first, here is a brief insight into the two cryptocurrencies.
Bitcoin is the first and most popular cryptocurrency. Created in 2008 by Satoshi Nakamoto, Bitcoin created the path for the establishment of the crypto space. As the leading cryptocurrency, Bitcoin has a market cap of $132 billion (as of 3rd December 2019). This astonishing rise was achieved in just a few years; BTC’s total market cap was just $42,000 in July 2010. It reached its all-time high price of $20,000 in December 2017.
Popularly regarded as Bitcoin’s brother coin, Litecoin was created by Charlie Lee and released under the MIT/X11 license to correct some of the shortcomings of Bitcoin. This cryptocurrency was designed to work as a regular currency and it has a faster transaction time than Bitcoin. Litecoin is currently the sixth largest crypto with a market cap of $2.9 billion.
Bitcoin and litecoin, both cryptocurrencies are being stored in a cryptocurrency wallet. Find out how to choose the best bitcoin wallet and the best litecoin wallet or find one cryptocurrency wallet where you can have both.
Bitcoin vs Litecoin: The Differences
Although Bitcoin and Litecoin work similarly, there are a few differences between the two cryptocurrencies. Here are some of the critical differences.
- Transaction time Litecoin has a faster transaction time than Bitcoin. Data obtained from Blockchain.com shows that Bitcoin has an average transaction confirmation of roughly ten minutes, while that of Litecoin is less than three minutes. In this regard, Litecoin is a more preferred option for merchants.
- Coin limits The total coin supply of Bitcoin is 21 million, while Litecoin’s total amount is four times that of Bitcoin (84 million). Once the coin limits are reached, no new coins will be released into the system.
- Reward halving Although the mining reward for both cryptocurrencies is reduced by half at a predetermined time, the halvening blocks differ. For Bitcoin, the reward halving is done after every 210,000 blocks, while it is slightly more for Litecoin, which is reduced by half at every 840,000 blocks.
- Cryptographic algorithms Bitcoin and Litecoin use different cryptographic algorithms. Bitcoin uses the SHA-256 algorithm, while Litecoin uses the new Scrypt algorithm. The algorithms affect the mining procedures of the cryptocurrencies. Bitcoin’s SHA-256 is more complex and uses a higher level of power to process transactions. Litecoin’s scrypt is best suited for personal computers because it is less powerful and consumes less electricity to process transactions.
- Store of value Currencies can serve as a store of value. However, some currencies carry out this function better than others. Bitcoin is a better store of value because it is the oldest and most trusted cryptocurrency. Because over two-thirds of Bitcoin has been mined, BTC’s value should be more predictable and reliable in the future, thus making it a better store of value than Litecoin. Due to its features, Litecoin best serves as a currency at the moment.
Bitcoin and Litecoin offer benefits to the crypto space. They also have some weak areas they need to work on if they are to improve their stance and challenge the dominance of fiat currencies in the financial landscape. Here are some of the advantages and disadvantages of each of the cryptocurrencies.
- Greater liquidity. As the largest cryptocurrency, Bitcoin has greater liquidity than Litecoin and other cryptocurrencies, making it the obvious choice for most people in the crypto space.
- Wider acceptance as a payment method. Due to its popularity, Bitcoin is widely accepted as a means of payment by thousands of merchants across the globe, including the likes of Overstock, Microsoft, and others.
- Easier international transactions. Although this benefit is obtainable with other cryptocurrencies, it is still worth mentioning. International transactions using Bitcoin are easier and faster than the traditional form of banking.
- Built-in security. Bitcoin was developed on a blockchain, which is one of the most secure technologies currently available in the world.
- Anonymous transactions. Bitcoin is not regarded as a privacy-focused cryptocurrency, but it still offers users anonymity when carrying out transactions.
- High power consumption. The use of the SHA-256 algorithm makes mining Bitcoin power-intensive.
- No chargebacks or refunds. While it solves several problems, Bitcoin also created a few others. It is easy to lose money to scammers because there are no chargebacks or refunds with BTC transactions. Bitcoin transactions are irreversible.
- Low scalability. Compared to Litecoin, XRP, and some other cryptocurrencies, Bitcoin transactions are slow.
- Faster transaction time. Compared to Bitcoin, Litecoin has a quicker transaction processing time. Litecoin Network aims to process a block every 2.5 minutes. The quick transaction time makes Litecoin more suited for micropayment and merchant use.
- Low power consumption. Mining Litecoin consumes less power than mining Bitcoin due to the Scrypt algorithm. This algorithm also makes it easier for people to mine Litecoin because specialised mining hardware such as Asics is not needed.
- More abundant coin supply. With a total of 84 million coins, Litecoin will have a larger number of coins in circulation than Bitcoin.
- Centralised mining. Litecoin introduced its professional mining machine last year, and there has been an uneven distribution of LTC mining since then. Thus, mining Litecoin is heavily centralised.
- Lower liquidity. With a current total market cap of $2.9 billion (as of 3rd December 2019), Litecoin is not liquid enough to compete with Bitcoin yet. Thus, merchants prefer Bitcoin due to its large market cap.
Litecoin has always been the understudy of Bitcoin, with most people regarding it as a carbon-copy of the leading cryptocurrency. Despite their similarities, Bitcoin and Litecoin differ in a few crucial areas which ultimately affect how they operate. Each coin has its advantages and disadvantages, and they both contribute positively to the development of the crypto space.