Litecoin vs Bitcoin: The debate continues

By Francis Jay
• Updated

Which cryptocurrency would come out on top in a match of LTC vs BTC?

When it first launched in October 2011, litecoin’s developers believed they were creating “silver to bitcoin’s gold”. They believed this new cryptocurrency would solve some of the problems bitcoin was experiencing.

But comparing the two today, which comes out on top: bitcoin or litecoin?

Differences between bitcoin and litecoin

Bitcoin, which launched in 2009, was the brainchild of Satoshi Nakamoto, a mysterious individual or collective whose identity is still unknown. The cryptocurrency is a decentralised digital currency without a bank or single administrator that can be sent from user to user on the global Bitcoin network without intermediaries. Because it has no exchange rates or bank fees, the payments are fast and very cheap.

All transactions are recorded on a public blockchain ledger and must be verified, making them traceable and very secure.

Google developer Charlie Lee took a close interest in bitcoin and believed he could overcome some of its drawbacks. By agreement, a hard fork was created on the Bitcoin blockchain on 7 November 2011, splitting the currency in two: bitcoin (BTC) and a new currency named litecoin (LTC).

One of the main drawbacks Lee had hoped litecoin would solve was how long it took to verify a transaction. While the Litecoin blockchain technology is the same as that used for Bitcoin, Lee proposed using a different, algorithm called scrypt. Unlike the SHA-256 algorithm used by Bitcoin, the scrypt proof-of-work algorithm splits each transaction into two segments, removing the signature from the original data and making transaction processing much faster. So how do they compare?

Litecoin versus Bitcoin: Which blockchain is faster?

Winner: Litecoin, at the moment

In the first round of litecoin versus bitcoin, litecoin gets the edge. Bitcoin can carry out four to seven transactions per second, with confirmation taking 10 minutes. Litecoin, however, can carry out 56 transactions per second, with only a 2.5-minute confirmation time. By comparison, credit-card companies such as Visa can handle up to 4,000 transactions per second.

Imagine having to wait for 10 minutes in a store for your Bitcoin transaction to be confirmed. Even Litecoin’s 2.5 minutes would seem a lifetime – and you’d incur transaction fees, too. As crypto coins become more readily accepted in the real world, companies must consider how practical their use will be.

Zero-confirmation transactions are one idea for overcoming this. Transactions can be accepted without confirmation by the miners, making the process very fast. However, there are fears that double-spend could occur, with coins being spent twice. (According to Investopedia, “Double-spending occurs when a blockchain network is disrupted and cryptocurrency is essentially stolen. The thief would send a copy of the currency transaction to make it look legitimate, or might erase the transaction altogether.”)

Another solution is the lightning network. This is a secondary blockchain layer that sits on top of the main blockchain, allowing payment channels to be created between users and retailers.

By storing some of your crypto coins on what is known as a multi-signature address you agree to pay a retailer a set amount of that currency. You can think of this like buying a gift card from a certain shop. When you agree to pay for an item, the transaction is secured and recorded on a balance sheet but importantly, not the main blockchain. This makes it very fast. More transactions can be carried out in the same way.

When the payment channel is closed by either party, spent coins are transferred to the retailer, the balance sheet is verified by miners and a single transaction is recorded on the blockchain.

By creating a network of such payment channels, fast transactions are possible between users and retailers. With fewer transactions to verify, the load on the main blockchain will be eased and the fees can be kept to a minimum.

Litecoin vs bitcoin: market capitalisation

Winner: bitcoin, by a mile

With a market cap of $1.163trn, bitcoin holds the number-one ranking in the market capitalisation table. Litecoin is currently 18th, with a market cap of $13.6bn.

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LTC vs BTC: mining rewards

Winner: bitcoin

Bitcoin rewards miners for completing a block – and while this was set at BTC50 when bitcoin was first mined, it halves roughly every four years. Since the bitcoin halving on 11 May 2020, miners earn BTC6.25 for completing a block – the equivalent of $384,800 at today’s price.

Litecoin also rewarded miners with 50 coins for completing a block in the early days, but now halves the reward every 840,000 blocks. A miner can currently earn LTC12.5 per block, currently worth around $2,455.

The cost of the equipment and electricity required to mine bitcoin or Litecoin nowadays, however, can far outweigh any profit made.

Litecoin vs bitcoin: coin acceptance

Winner: bitcoin – for the moment

Bitcoin is becoming widely accepted as a currency in its own right, with a growing number of retailers allowing users to spend BTC directly. Some of the big names that are willing to accept payment in bitcoin include Microsoft, Expedia, PayPal, Kentucky Fried Chicken (KFC), Subway, Virgin Galactic, AT&T, Amazon and Starbucks. But be warned, this is often via an intermediary such as Spedn or Purse.io.

Litecoin’s smaller-value coin, faster transaction speed and cheaper fees make it potentially more attractive for smaller purchases. Its list of accepted retailers is growing fast. This was helped in part by it being named the official cryptocurrency of American football team the Miami Dolphins in 2019. It has some way to go to catch up with bitcoin, however.

Litecoin versus bitcoin: Which to buy?

Winner: an even draw between the two

Both BTC and LTC can be easily bought through sites such as currency.com. Investing in digital coins is, however, a risky business.

Many analysts remain bullish about the prospects for cryptocurrencies. Bitcoin has a long history and plenty of users. With 18.9 million coins already mined, it is fast approaching its 21-million coin maximum. What’s more, an estimated five million coins have already been lost, improving the value of those that are left.

Litecoin, too, has a long history, but with faster transaction times and cheaper fees. Both currencies have high trading volumes, making them popular with investors. Cryptocurrencies, however, are notoriously volatile. Provided you don’t invest more than you can afford to lose, either coin might be worth acquiring – but it depends on your risk appetite and the balance of your portfolio. As always, however, you need to do your own research before investing – you shouldnt take any article you read on the net as trading advice, including this one. And remember that prices can go down as well as up.

Final analysis

So, bitcoin appears to have won the battle of the crypto coins. Yet this doesn’t mean we should rule out litecoin. In many ways, there is little difference between bitcoin and litecoin as the two cryptocurrencies are using the same blockchain technology.

As Charlie Lee said: “Litecoin and bitcoin will work together to solve the world’s transaction needs in the future.” Being the world’s first cryptocurrency, bitcoin is always going to be better known, but litecoin has strengths too, particularly with smaller, faster and cheaper transactions.

In a world that is beginning to embrace digital currencies, there is room for both.

FAQs

Is litecoin better than bitcoin?

In the category of transaction speed, the answer is yes.

Bitcoin can carry out four to seven transactions per second, with confirmation taking 10 minutes. Litecoin, however, can carry out 56 transactions per second, and only requires a 2.5-minute confirmation time.

Will litecoin replace bitcoin?

Bitcoin is the undisputed leader due to its brand recognition. So it’s not about to be replaced. But Litecoin has many advantages: faster transaction times and cheaper fees. Both currencies have high trading volumes, making them popular with investors.

How many litecoins are there?

The litecoin supply is capped at 84 million.

Litecoin to Bitcoin
Daily change
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Low: 0.0027089
High: 0.00273909

Further reading

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