Differences Between Litecoin And Ethereum

June 22, 2018, by Doru D
Litecoin came into existence with the goal to serve as a fairer currency and become the silver to Bitcoin’s gold, while Ethereum is more than just a cryptocurrency.

Both Litecoin and Ethereum are altcoins, that were created with the aim to improve Bitcoin’s inconsistencies. Both cryptocurrencies belong to the top 10 in terms of market cap, although they serve different purposes.

Litecoin was initially created in 2011 as Bitcoin update. Failing to achieve consensus, a hard fork occurred. Litecoin maintained Bitcoin’s blockchain but optimized the transaction time by four times and significantly decreased the fees involved.

Litecoin VS Ethereum

Although Ethereum is much younger than Litecoin (2015), its creator Vitalik Buterin, diversified from other cryptocurrencies by introducing smart contracts. In short, smart contracts utilize the blockchain technology to act as the middleman, to keep and release funds once the agreed upon terms from two parties have been met. Smart contracts were a huge novelty for the digital currencies and different use cases are being explored by numerous industries.

Additionally, Ethereum allows decentralized applications (DApps) to be built on its blockchain. Actions can be triggered by the use of Ether, the native token of the Ethereum blockchain. Decentralized casinos, prediction markets, and intellectual property are only some of the decentralized applications that run on Ethereum.

Litecoin has 84 million number of coins that will ever be mined. Like Bitcoin, this scarcity adds value to the price of Litecoin. To fulfill its purpose as a fair cryptocurrency, Litecoin introduced the memory-hard Scrypt algorithm. Unlike the SHA256, Scrypt would enable single PC users to mine Litecoin and achieve better decentralization than Bitcoin. In time, however, ASICs mining hardware has been optimized for the Scrypt algorithm. In contrary, Ethereum releases the same amount (18 million) of ETH tokens every year. Ethereum currently uses the Proof-of-Work mining algorithm, but Buterin has announced that it will migrate to the Proof-of-Stake in the future.

Ethereum’s transaction fees are variable, based on the computational complexity. Fees can vary greatly, depending on the network’s congestion. Indicative, in December 2017 the average transaction fee on the Ethereum blockchain exceeded $4, while the same fee was $0.4 at the time of writing (June 2018). Litecoin implements a completely different approach to ensure low transaction fees, that in June 2018 was $0.123. In a sense, Litecoin fulfills its purpose, that is to make micropayments a reality.

Due to the similarities with Bitcoin, Litecoin has been the testbed for new technologies that will be tailored to Bitcoin’s blockchain. The SegWit protocol, the first scaling solution for Bitcoin, was initially activated on Litecoin. Moreover, the first-ever Lightning Network transaction and atomic swap, have been executed on Litecoin’s blockchain. Ethereum’s scaling solutions like the Raiden Network, are still under development.

In terms of acceptance, Ethereum is the winner by far. At the time of writing, ETH has almost ten times higher market capitalization with $60 billion, compared to Litecoin’s $6.8 billion. While Litecoin is a fork that benefits by Bitcoin’s hype, Ethereum may be the only available cryptocurrency that has differentiated from Bitcoin and paves its own way.

Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.