As the 2021 bull run continues to heat up, new cryptos find themselves in the spotlight each day. There are a few, however, that haven't quite kept up. Litecoin reached an all time high of $420 in 2017, and has yet to make its way back. While many consider Litecoin to be a dead currency, supporters claim they hold it for transactional purposes, and latch on to its fundamental strength.
Ethereum is a decentralized global computing platform, and the most actively developed project in the blockchain space by a wide margin. Ethereum erased it's 2018 all time high ($1,420) by February of 2021, and hasn't looked back since. In fact, it now trades for nearly triple that. The outlook for Ethereum has never been higher as Vitalik and his team take on the most challenging problems the intersection of politics, finance, philosophy and computer science have to offer.
What are the similarities and differences in the fundamentals of these projects, and why isn't Litecoin seeing the same gains as its old rival, Ethereum?
Main Takeaways: Litecoin vs. Ethereum
- Both cryptocurrencies have fast transaction time and can be traded on most major exchanges.
- Ethereum excites developers and is loved for its ability to transfer property, while Litecoin is primarily viewed as a transactional currency.
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What is Litecoin?
Introduced in 2011 and described as a clone of Bitcoin, Litecoin began with the Bitcoin codebase. However, Litecoin brings a few unique traits of its own. Among its distinguishing features is a finite supply of 84 million coins compared to Bitcoin’s 21 million.
The cryptocurrency can also be mined up to four times faster than Bitcoin, which means that transactions settle faster because the process of mining involves verifying transactions and adding them to the cryptocurrency’s ledger. Litecoin is often referred to as the cryptocurrency equivalent of silver (Bitcoin is gold). As such, Litecoin often targets smaller transactions.
However, both Bitcoin and Litecoin can be subdivided up to eight decimal places. In today’s transactions, the smallest units are not currently in wide use. If or when the value of these cryptocurrencies increases well beyond their current values, the smaller increments will become more useful. Litecoin uses SegWit (Segregated Witness), a technology that allows more transactions within a block, which speeds up the processing time for individual transactions. Slow transaction completion times have been one of the leading criticisms of Bitcoin compared to alternatives.
Litecoin can't yet support smart contracts, which are computer programs that live on the cryptocurrency’s blockchain and govern transactions or perform other functions. Active development for smart contracts is centered on Ethereum.
Since Bitcoin was invented in 2009, many cryptocurrencies have come and gone but Litecoin’s endurance may speak to its future longevity.
Government regulation of currencies or bans are also a concern. The fact that Litecoin has survived this long (since October 2011) and that it is one of the few currencies that has been available on the highly-selective Coinbase exchange could indicate a better future than other altcoins.
A potential risk of owning Litecoin is that one of its main selling features, SegWit, a method of shrinking transaction sizes, is being considered for Bitcoin as well, which would eliminate a significant advantage of Litecoin. However, SegWit has been a topic of spirited discussion within the Bitcoin community for years and may never be added to Bitcoin.
Like many cryptocurrencies, Litecoin enjoyed a massive runup in price at the end of 2017 and into early 2018. Prices have fallen since that time but remain substantially higher than early 2017 levels.
What is Ethereum?
Ethereum was the brainchild of Toronto programmer and Bitcoin enthusiast Vitalik Buterin. In 2013, he released a white paper about Ethereum, detailing the potential uses of an alternative blockchain technology that could work as both a financial instrument and decentralized platform for developers to build applications.
More developers joined ranks and Ethereum had momentum and a growing community of high-tech enthusiasts. By 2015, Ether was a live cryptocurrency powering the Ethereum blockchain. Since its beginnings just a few years ago, ETH has grown into the second-largest cryptocurrency by market capitalization.
Bitcoin was built as a cryptocurrency platform. Ethereum is a decentralized application platform — one that also hosts a cryptocurrency, a fuel for the network. The difference may seem like semantics, but the distinction is a large part of why Ethereum has had such wide adoption in such a short amount of time.
Ethereum’s smart contracts are code that lives and executes on the blockchain and can facilitate monetary exchanges, or transfer content, property, shares, or other items of value based on a set of rules built into each contract. Many think that we’ve only scratched the surface of what can be done with Ethereum as a platform, comparing the current uses and applications to the early days of the internet and dial-up modems.
Similarities Between LTC and ETH
- Both Litecoin and Ethereum are traded on Coinbase. Coinbase works in a similar manner to a market maker on stock exchanges, purchasing from sellers and selling to buyers at prices that approximate the real-time trading price. GDAX is the exchange’s platform for advanced traders. Both platforms offer Bitcoin, Litecoin, and Ethereum.
- Litecoin and Ethereum provide fast transactions. Bitcoin is slow, although still faster than many traditional bank transfers. Both Litecoin and Ethereum enable faster transactions than Bitcoin, but they use different approaches to speed those transactions. Regardless of the technical details, a faster transaction time helps a currency to be viable.
Differences Between LTH and ETH
- Litecoin is primarily viewed as a currency — a transactional supplement to Bitcoin. Both were inspired by Bitcoin, with Litecoin as a fork of Bitcoin. (A fork is a divergence of existing open-source code to start a new project or related project.) However, Litecoin and Ethereum have taken very different directions in development. Litecoin is a faster and cheaper version of Bitcoin and Ethereum and attracts the attention of developers who see more applications for the platform.
- Ethereum is on a roll. Rising from white-paper obscurity, the ambitious dream of a young coder, to the world’s second largest cryptocurrency is an impressive feat and speaks to the enthusiasm the community has for Ethereum and its long-term applications. With the ability to host applications, store data, transfer value, and communicate — all on the blockchain — it’s not surprising that Ethereum has captured the imagination of investors and developers alike.
While it is impossible to predict the future of the cryptocurrency bull run, it is apparent that Ethereum as a project and foundation has much stronger fundamentals and progress than Litecoin. While there are a few people who still hold Litecoin, LTC's failure to reclaim its 2017 price by the end of April is a clear indicator of a dying currency. However, that doesn't mean that there isn't still money to be made.
Ethereum is the clear winner of this battle, and a much safer investment relative to LTC. It is important to remember that we are still in the very early days of crypto, blockchain and smart contracts - so all investments should be categorized as speculative. Don't invest any money you can't afford to lose.
Frequently Asked Questions
When was Ethereum listed on Coinbase?
Ethereum was listed on Coinbase on May 24th, 2016. Before the listing, Coinbase was a Bitcoin-only exchange.
How do Litecoin and Ethereum differ in terms of transaction speed and cost?
Litecoin has a faster block generation time of 2.5 minutes, which allows for faster transaction confirmations compared to Bitcoin’s 10-minute block time. Additionally, Litecoin generally has lower transaction fees compared to Bitcoin. Ethereum’s transaction speed and cost can vary depending on network congestion and the complexity of the smart contracts being executed.
How are Litecoin and Ethereum mined?
Litecoin and Ethereum are both mined using proof-of-work (PoW) algorithms. However, Litecoin uses Scrypt as its mining algorithm, which is different from Bitcoin’s SHA-256 algorithm. Ethereum is planning to transition from PoW to proof-of-stake (PoS) in the future.
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