Litecoin vs Bitcoin: LTC is silver to Bitcoin’s gold?

As Bitcoin gained popularity over time, several other cryptocurrencies were developed as an alternative to Bitcoin. One of these cryptocurrencies is Litecoin.

Launched a couple of years after the inception of Bitcoin, Litecoin developers promised faster transaction speeds and fees while still having the same benefits that the blockchain network can provide. Initially, there were debated and predictions that LTC could eventually take over Bitcoins spot as the largest cryptocurrency. However, as we see today, Bitcoin is still the leader.

Despite this, LTC is still interesting, and many choose to include it in their cryptocurrency portfolio. Many compare Litecoin as silver to Bitcoin’s gold as they debate over whether Bitcoin or Litecoin will perform the best. How does their transaction fee compare? Therefore, let`s take a closer look at Litecoin transaction versus Bitcoin transaction and the key features, differences, and use cases for them.

What is Litecoin?

litecoin vs bitcoin

Litecoin is an open-source, peer-to-peer digital cryptocurrency, or as we commonly call – cryptocurrency. Invented by Charlie Lee, it is a version of Bitcoin and was launched in October of 2011. It is technically similar to Bitcoin as it used the same fundamental principles.

The main idea why Charlie Lee created LTC was to facilitate more transactions faster while still keeping the safety and semi-anonymity of decentralized cryptocurrency. The key feature that allowed this improvement is that Litecoin uses a shift from a block of transactions from every 10 minutes to 2.5 minutes. Therefore, each LTC block is generated four times as fast, allowing Litecoin transactions to reach their destination much faster. The total planned supply for LTC is 84 million coins.

Litecoin mining and reward

Mining Litecoin is done the same way as Bitcoin – with the process called hashing. Hashing is done by specifically built miners – application-specific integrated circuits – that produce new blocks every 2.5 minutes – instead of Bitcoin’s ten minutes. These mining rigs are the reason why the network runs and creates new blocks of transaction records. As mentioned, in Litecoin, each block is generated four times faster compared to Bitcoin.

Just like with Bitcoin, Litecoin also utilizes reward halving to decrease the supply of cryptocurrencies into the economy. In the case of Litecoin, rewards are halved every 840,000 blocks, which means four times as many blocks need to be created before every halving.

Another key difference for LTC is the use of different hashing algorithms to make LTC faster than BTC. Bitcoin’s algorithm uses SHA 256, while Litecoin uses scrypt algorithm. Scrypt algorithm is more complex than SHA 256 and is considered to be “memory-hard”.

In cryptography, scrypt (pronounced “ess crypt”) is a password-based key derivation function created by Colin Percival, originally for the Tarsnap online backup service. The algorithm was specifically designed to make it costly to perform large-scale custom hardware attacks by requiring large amounts of memory. Therefore, mining devices for Litecoin’s blockchain are more complex.

Litecoin today

As of today, Litecoin has exceeded the price of $200 and has a total market cap of over $13 billion. For a long time, it was ranked among the top 5 cryptocurrencies by market cap. However, over time, many other crypto projects have taken over LTC, and it currently ranks in 9th place by total market cap.

Overall, Litecoin is considered to be Bitcoin`s little brother – just like silver to bitcoin’s gold. Therefore, it still attracts much attention from investors and speculators across the world. Some of the features that the digital currency utilizes today were effectively tested on LTC, one of them being Lightning Network. Many still consider the LTC to be a much better version of  Bitcoin’s system due to faster block times and smaller fees.

What is a Lightning Network?

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Lightning Network is a second-layer payment protocol that runs inside the blockchain itself. It allows for faster communication between nodes without the need to communicate every microtransaction to the main system, which causes a lot of congestion. Therefore, Lightning Network effectively creates a network within the network, which allows for more speed, privacy, and fewer fees paid.

Does Litecoin support smart contracts?

As of now, Litecoin does not support Smart Contracts. This functionality is planned later on in 2021 with the introduction of Flare Network. It`s a third-party project and has support from Litecoin’s foundation, which is the main organizing body of coins’ development. Therefore, we still have to wait for this functionality to be introduced.

Features of Litecoin

  • SHA 256 Proof of work algorithm
  • New block every ten minutes
  • Faster than Bitcoin
  • Smaller transaction fees
  • Smaller capitalization and lower price
  • Block reward halving per every 840,000 blocks
  • Max supply of 84 million coins

What is Bitcoin?

Bitcoin is the most popular open-source cryptocurrency right now. It was designed in 2008 and launched for use and trading in 2009. It uses a peer-to-peer network, also called Blockchain or distributed ledger to store and record Bitcoin transactions without the need for a centralized server.

Bitcoin’s network was developed by an unknown developer who operated under the pseudonym Satoshi Nakamoto. To this day, there are debates about who this developer or perhaps a group of developers. Despite Bitcoin being initially developed by a single person, this system is considered to be highly secure and stable.

Bitcoin Mining and reward

Bitcoin uses Application-Specific Integrated Circuits which basically are customized chips designed for the specific purpose of mining Bitcoin. Therefore, there are barriers to entries for mining Bitcoin as these kinds of mining devices can not be easily bought. Due to this reason, many other cryptocurrencies were designed to run on commercially available Central processing units (CPU) and graphics processing units (GPU).

Another key feature to mention about Bitcoin’s network is the fact that it halves block reward size every 210,000 blocks or roughly every four years. Therefore, mining Bitcoin is becoming less profitable over time. Partly, the process of reward halving is mitigated by the fact that the Bitcoin price increases faster than the block reward. The feature or reward halving is done to reduce the inflow of coins into the market. Therefore, the supply of new coins is overwhelmed by the demand, creating positive pressure on the overall price.

Bitcoin today

litecoin vs bitcoin

As of today, Bitcoin’s market cap has exceeded $1 trillion and a price of over $60,000 per single coin as it continues to expand its way to a maximum of 21 million coins. Trading volumes regularly exceed $50 billion, indicating huge interest from around the world.

The crypto has been compared to digital gold, and there are several price predictions that the capitalization of Bitcoin will eventually exceed that of Gold. Additionally, just like gold, Bitcoin is increasingly gaining popularity as an alternative store of value.

Despite this, it still is a very volatile asset when compared to traditional investment options like stocks or bonds. Therefore, many financial experts to this day deny Bitcoin`s use case as a store of value.

Features of Bitcoin

  • Scrypt Proof of work algorithm.
  • Store of value.
  • Best-known cryptocurrency.
  • Most stable in terms of price fluctuations.
  • Block halving per every 210,000 blocks
  • Max supply of 21 million coins.

History of Bitcoin vs Litecoin

As mentioned, Bitcoin is the original blockchain that began to operate in 2009. Litecoin was launched a couple of years later, in 2011, and used the same but modified version of the Bitcoin network. At first, both Bitcoin and Litecoin used simple CPUs and GPUs to process transactions. However, over time, Application-Specific Integrated Circuits were introduced specifically for the purpose of mining these cryptocurrencies.

A couple of years later, in 2013, the LTC‘s total capitalization value over $1 billion. This showed everyone that new cryptocurrency projects have their place in the ecosystem and that there is a potential for a new currency to overtake Bitcoin eventually. Investors took Litecoin as silver to Bitcoin’s gold as it was cheaper per coin and experienced larger price fluctuations.

Therefore,  Litecoin and Bitcoin are frequently bought together in order to diversify their crypto portfolio despite the debates on who will perform the best – bitcoin vs litecoin.

First forks of Litecoin

Both Bitcoin and Litecoin are famous for having several forks. Bitcoin has Bitcoin Cash and Bitcoin SV, while LTC has Cash and JunkCoin – both forks created in 2013. Now well-known cryptocurrency DASH is also a fork of the coin and used the same basic blockchain at first. Overtime, DASH did the upgrade and changed it by so much that it barely has any similarity to LTC. However, DASH does remain to be the most successful fork of the coin.

Some additional coins that are forks of the crypto are Monacoin (2013), Cloakcoin(2014), and Feathercoin. None of them have come close to the coins market cap and have long been forgotten. Therefore, when considering who had the best forks – Litecoin vs Bitcoin, the answer is simple – Bitcoin forks have had the most success.

Litecoin 2017 – a test for SegWit?

As both Bitcoin and Litecoin use the same underlying blockchain, LTCs developers were first to test the Segregated Witness (SegWit) upgrade in 2017 with the aim of further increasing the speed of Litecoin’s network, whose implementation went well and proved to enthusiasts and developers that this approach works. This resulted in SegWit eventually being adopted by Bitcoin developers and launched on the blockchain.

Price History of Bitcoin vs Litecoin

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Source: Trading View

When looking at the price history of Bitcoin vs Litecoin (LTC/BTC) we can see that overall, BTC has outperformed LTC overall. The coin increases in its price vs BTC cyclically, as seen on the chart during the beginning of 2017, end of 2017/start of 2018, as well as the last upswing during the first months of 2019.

Therefore, the historical data on Litecoin vs Bitcoin in terms of pure price-performance don’t lie – BTC has outperformed and will likely continue doing so in the future. However, since Litecoin vs Bitcoin has some price floor, we could see another LTC pump in the upcoming months. This is due to fact that the price of Litecoin vs Bitcoin has approached a historical low, indicating a massive undervaluation.

Litecoin`s creator – Charlie Lee sells everything?

In December of 2017, the creator of this version of Bitcoin- Charlie Lee, made a Reddit post where he announced that he is selling all his crypto in order to remove any conflict of interest as he was accused of helping to manipulate the market price. Today, he still works for Litecoin Foundation with the aim to increase crypto`s adoption across the world.

Is Litecoin better than Bitcoin?

When considering whether Litecoin is better than Bitcoin, the question is what are the features you want from the digital currency. Bitcoin has performed the best in terms of price and offers stability and security. Litecoin`s, on the other hand, offers faster block times while having lower transaction fees.

Similarities Between Litecoin and Bitcoin

Since Litecoinis derived from the same basic Blockchain as Bitcoin, they are technically very similar. Both use ASIC miners to maintain operations and both have a built-in mechanism of block reward halving. As mentioned, Bitcoin and Litecoin are frequently mentioned together and compared to Gold and Silver. Despite this, there are some key differences for the digital currencies and this has reflected in their market capitalization over time.

Differences between Litecoin and Bitcoin

First of all, Litecoin offers a much faster block time of 2.5 minutes, compared to Bitcoin`s 10 minutes. This is also reflected in the block reward havening mechanism as there need to be four times as many blocks produced before each halving.

Another key difference is Litecoin`s use of Scrypto hashing algorithm that utilizes a more complex process than the SHA 256 that Bitcoin`s blockchain uses. Therefore, miners for Litecoin’s algorithm are more complex and expensive. This, however, is outweighed by the increase of block reward times.

Litecoin FAQs

Will Litecoin reach $10000? – Litecoin Price Prediction

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In order for Litecoin to reach $10,000, it would need to grow by a factor of 50. Right now, it is still too early to tell whether that is possible. However, when looking at the previous history, the crypto was priced at just $4 at the beginning of 2017, meaning that the price of the crypto has already increased 50 times before.

As of the time of writing Litecoin is priced just under $200, with a market capitalization of just over $13 billion. Therefore, there is still a long way to go before the market cap even reaches the Satoshi Nakamoto masterpiece that Bitcoin is.

Will Litecoin be as big as Bitcoin?

As mentioned before, the coin has struggled to outperform Bitcoin in the past. There are brief periods when the price of Litecoin has sharp spikes against Bitcoin. However, ultimately if you only want to choose Bitcoin or Litecoin for your holdings and your goal is to achieve the best returns, choose Bitcoin.

Is Litecoin a good investment?

Yes, Litecoin is a good investment overall if you want to diversify your holding as it has performed well in the past and has maintained its value in the top 10 cryptocurrencies by market cap over the years. Trading volumes and the number of transactions for the coin are often high across the top exchanges, meaning that there are no issues trading even with large quantities.

Where to buy Litecoin (LTC) and Bitcoin (BTC)?

Both Bitcoin and Litecoin are available on practically every change as both coin have a good historical performance and there is a lot of trading volume and amount of transactions for both coin. Therefore, if you already have an account on a cryptocurrency exchange, trading both shouldn’t be an issue. Additionally, both Litecoin and Bitcoin are frequently top assets for margin trading.

Litecoin vs Bitcoin: which one should you choose?

Ultimately Bitcoin and Litecoin are both great choices. Bitcoin is the original Blockchain, and Bitcoin’s market cap has always been the largest. If the stability of price and store of value is what you are looking for, then choose Bitcoin.

Alternatively, If the average transaction speed is what interests you, choose Litecoin’s blockchain as it offers lower block times. When considering transaction volume, BTC is still the king as the volume of transactions is frequently 20 times larger than that of LTC crypto coin.

When considering Litecoin mining, it requires more complex ASIC (Application-Specific Integrated Circuits)miners than Bitcoin. Therefore, Bitcoin mining is the go-to option. Today, however, the bitcoin miner still takes up the largest piece of the pie in the industry, with both miners requiring a lot of investment before a piece of the reward can be mined.

An atomic swap – brought to life by Charlie Lee in 2017 – is an automated, self-enforcing crypto exchange contract that allows cryptocurrencies to be traded peer-to-peer without the need for a trusted third party. Today, atomic swaps offer the potential to change how cryptocurrencies are traded and exchanged. Cryptocurrency exchange platforms, like those mentioned above, do not allow users and investors to exercise complete control over their wallets. So, the users are always at risk and dependent on the exchange platform when it comes to the security of their assets. Atomic swaps mitigate such risks and add value by giving traders more flexibility at lower costs and less computing power.

Conclusion

Overall, Litecoin vs Bitcoin choice is up to you. Bitcoin has been and will likely continue to be the market leader. The comparison of Bitcoin being gold Litecoin silver is good to keep in mind as LTC transaction does outperform the market leader periodically. Effectively, they both are pioneers of blockchain technology and support a hardware wallet to ensure any investor funds can be safely stored off exchanges.

The main technical difference between them is that the Bitcoin block is 10 minutes long and the setup of the mining algorithm is slightly different. This results in faster transaction times and a lower average transaction fee for Litecoin.

Trading for both of them is widely available on practically any exchange, and there should be no difference in which of the coins you choose. As mentioned before, both of them are crypto assets that a serious investor looks at.

That`s it for this comparison of Bitcoin and Litecoin. This is not investment advice, but for further reading, see our explanation on Bitcoin halving, cryptocurrency wallets, including a litecoin wallet long-term price prediction on Bitcoin or see the comparison article on Bitcoin vs Ethereum and Bitcoin Cash

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