Litecoin vs. Ethereum

Posted by in Crypto | Updated on August 23, 2022

At a Glance: Litecoin has a limited supply (84 million coins) while Ethereum has no limit. In addition, Litecoin is used primarily as a currency/store of value while Ethereum can also be used to create contracts and transfer property. Finally, Ethereum’s transactions are much faster than Litecoin.

Although Bitcoin dominates much of the crypto market and media since it was the first to market, there are many other crypto options if you are interested in investing in cryptocurrencies.

Litecoin and Ethereum are both well-established cryptocurrencies that have a large part of the market cap. If you are looking at putting your money into Litecoin vs. Ethereum, you need to choose the one that is best suited to your interests. 

Here we take a look at Litecoin vs. Ethereum so you can determine which one is the best option for you. 

Litecoin Vs. Ethereum

If you are comparing Litecoin Vs. Ethereum, you need to consider the supply and purpose of each coin. You also need to compare the mining strategies, and the impact this has on transaction speed and fees.

What is Litecoin?

Litecoin is a well-established cryptocurrency, having been created in 2011. Litecoin is a fork of the Bitcoin blockchain, making it similar to Bitcoin in several ways.

Litecoin aims to make a faster, fairer, and cheaper version of Bitcoin. It has lower transaction fees than Bitcoin and it is up to four times faster to mine each block. 

Litecoin has a smaller market cap than Bitcoin, making it the ideal place to test new cryptocurrency functionality. This innovative space has meant that Litecoin has some advantages over Bitcoin. With Litecoin, for example, the transaction speed is fast enough to make it possible to do everyday transactions, like buying a cup of coffee.

What is Ethereum

Ethereum is a blockchain platform created in 2015. Ether is the cryptocurrency of the platform.

Ethereums is a much faster blockchain than Bitcoin, making blocks very easy to mine. It is also not a capped cryptocurrency.

Although Ethereum can function as a medium of exchange similar to Bitcoin, its main purpose is to act as a decentralized application platform. The Ether token acts as the medium for contracts and applications built on the platform. Users can create smart contracts on the Ethereum blockchain.

Smart contracts are the main feature of Ethereum and what sets it apart from other players in the crypto space. 

Major Features of Litecoin

Litecoin is a capped cryptocurrency. There are 84 million Litecoins. Each Litecoin can be divided up to 8 decimal places.

Litecoin works on the Lightning Network. This enables small transactions to process off of the main blockchain. 

Litecoin is built using a Proof-Of-Work protocol like Bitcoin. This means a network of miners computes complex calculations to keep the Litecoin blockchain running. It uses a Scrypt hashing algorithm. Miners earn newly minted Litecoins as a reward for their work.

The Scrypt algorithm Litecoin uses prevents miners from pooling together. This lack of centralization in the network means there is less chance of a hostile takeover by a group of miners who band together.

When buyers and sellers make transactions using Litecoin, the data from the transaction gets put into new blocks being mined. When that happens, the transaction goes through. Miners get rewarded with fees for each transaction. The fee for a Litecoin is usually $0.05.

Litecoin is meant to be a transactional currency and/or a store of value. Investing in Litecoin can be compared to investing in gold. Although there is some transactional value in gold, it is mostly used as a store of value.

Major Features of Ethereum

There is not a capped supply limit of Ethereum. Since the Ethereum blockchain was designed to be a platform for decentralized application services, the team decided not to cap the supply.

The Ethereum platform’s main purpose is to act as a decentralized application platform. Its smart contracts can contain information, such as sets of rules or other agreements. The contracts can also include exchanges, such as property transfers or monetary exchanges.

Currently, Ethereum uses a Proof-of-Work mining system. The network is considering switching to a Proof-of-Stake consensus, which would replace miners with validators. Proof-Of-Stake mining requires a lot less energy and fewer resources than Proof-Of-Work systems since Proof-Of-Work miners have to do much more ‘work’ to mine blocks.

Mining Ethereum is already comparatively quick and easy. Blocks are mined every 10 to 20 seconds.

Instead of transaction fees, Ethereum uses a different system called gas. Gas is a unit that measures the amount of computational effort required to execute transactions. This is similar to calculating how much gasoline it would take to get a car from one place to another. When users send Ether tokens, they pay a gas fee to complete the transaction.

Ethereum can be used as a transactional currency. Because it is uncapped, its main function is not a store of value. Instead, smart contracts add a layer of functionality to their design.

Key Differences Between Litecoin and Ethereum

There are many factors to consider in a Litecoin Vs. Ethereum comparison, including:

  • Supply – Litecoin has a supply limit of 84 million coins. Ethereum doesn’t have a fixed supply limit.
  • Purpose – Litecoin is primarily used as a currency and/or a store of value. Ethereum can also be used to create contracts and transfer property.
  • Mining – Ethereum is a much faster blockchain than Bitcoin, making blocks very easy to mine. While both Litecoin and Ethereum currently use Proof-of-Work mining, Ethereum may switch to Proof-of-Stake. This will make it even easier to mine Ethereum.
  • Transaction speed – Because Ethereum is faster to mine, transaction speed is much faster than Litecoin. Because Litecoin transactions get put into newly mined blocks, its transaction speed is slower. This means Ethereum is better for small transactions.
  • Transaction fees – For each transaction that gets put into a newly mined block, Litecoin charges a transaction fee. Ethereum doesn’t have a transaction fee. Instead, for each transaction users get charged a gas fee that corresponds to the amount of computational effort required to execute a transaction.

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Conclusion

Litecoin and Ethereum differ in many aspects. Litecoin is geared more towards purchases and transactions, while Ethereum is designed for other types of information exchange and application building. This is reflected in the Litecoin vs. Ethereum caps: Litecoin is capped at 84 million coins, while Ethereum is an uncapped cryptocurrency. 

Ethereum’s blockchain is faster, leading to faster transaction times and lower mining costs. Ehtereum has lower block rewards for validators, which keeps the supply in check. Litecoin, on the other hand, has very reasonable transaction fees.


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