In the U.S., we often think of cryptocurrencies’ value relative to U.S. dollars, and their performance compared to traditional investments. Much of the demand and utility for cryptocurrencies is on a global level or provides localized benefits.
Buy Litecoin on Coinbase, the best place to buy cryptos. Consider countries where runaway inflation has ravaged the value of earnings and savings (Venezuela) or countries where bank assets can be frozen at any time (Greece). Cryptocurrencies have a value that reaches far beyond these limitations and can potentially become a more stable alternative to fiat currencies around the world.
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 currency, with major retailers accepting Litecoin as payment.
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 support smart contracts, which are computer programs that live on the cryptocurrency’s blockchain and govern transactions or perform other functions. However, much of the 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. Probably one of the biggest fears that people have about cryptocurrencies is the fear that they buy vaporware, a digital asset that will simply disappear into cyber-oblivion without any clear explanation of where their money went.
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 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.
Litecoin 7 Day Chart
Source: World Coin Index
Litecoin 1 Year Chart
Source: World Coin Index
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, Ethereum was a live cryptocurrency. Since its beginnings just a few years ago, Ethereum has grown into the second-largest cryptocurrency by market capitalization. While we think of Ethereum as a cryptocurrency, its developers see the value of the tokens, called “ether,” as an aside.
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 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.
Ethereum 1 Year Chart
Source: World Coin Index
Ethereum 7 Day Chart
Source: World Coin Index
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 — and an alternative 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.
As promising as cryptocurrencies are, the technology is still new. Tomorrow may bring a new platform that gets right what everyone else got wrong. The technology is volatile, as is the pricing.
However, if you view Litecoin or Ethereum as speculative investments, a small part of your portfolio could go a long way if either of these cryptocurrencies gains widespread acceptance. Consider this: A $1,000 investment in Bitcoin in 2011 would be worth over $21 million today. Could Litecoin or Ethereum be next?