Litecoin vs Ethereum: What New Crypto Investors Should Know
Litecoin was originally designed as a low-cost alternative to Bitcoin. It uses functions similar to Bitcoin, but offers lower transaction fees and requires less resources for miners.
On the other hand, Ethereum focuses on smart contracts and the transfer of asset ownership. It also uses a proof-of-stake platform instead of the proof-of-work process found in Litecoin.
Litecoin and Ethereum are both popular for their short transaction times. However, their general functionalities differ from each other. Litecoin is designed to be somewhat similar to Bitcoin, while Ethereum is more focused on developing decentralized apps, or dApps for short. Here’s a closer look at how these two currencies differ from one another.
Litecoin or Ethereum? Which is the Better?
Introduced in 2011 as part of a fork from Bitcoin, Litecoin, or LTC, is a cryptocurrency designed with technical features similar to Bitcoin. Since then, Litecoin has become a popular gateway into the crypto market, offering users faster transfers and more efficient mining.
Similar to Bitcoin, Litecoin is mainly used as a currency to pay for goods and services.
The proof-of-work mechanism in Litecoin uses a scrypt-based process that does not require as much computing power to manage. In addition, the scrypt function requires more memory from additional users, allowing the mining process to spread out among more people.
Litecoin produces lower transaction fees than Bitcoin and requires less time to mine. In fact, the Litecoin blockchain mines new tokens around a quarter of the time it takes for Bitcoin. Litecoin’s overall design provides access to those looking for a currency that is convenient and trustworthy.
Ethereum is a relatively newer cryptocurrency that was formed in 2015. Designed with a different blockchain platform, Ethereum focuses on smart contracts, transfer of property and dApp production.
The dApps created on the Ethereum blockchain use Ether tokens that come from the chain. While Ether tokens can also be used as a currency, their main focus is to power dApp creation.
Smart contracts are programs stored on a blockchain that execute an action when certain conditions are met. This practice ensures all Ethereum transactions are safe and secure for the user.
Ethereum utilizes a proof-of-stake approach to mining, which requires far less computational power, reduces the hardware requirements and ensures more equal access to the mining process.
What Makes Litecoin and Ethereum Different?
Value
Part of what makes Litecoin an appealing alternative to Bitcoin is that Litecoin is less expensive to manage. One Litecoin token is worth about $150 as of September 2021, which is significantly less than Bitcoin’s $40,000 price tag. With a market cap of $10 billion, Litecoin has become one of the most popular cryptocurrencies on the market. On the other hand, Ethereum has a market cap of around $320 billion as of September 2021, with one token worth around $2,700.
Fees
Litecoin and Ethereum utilize a different fee structure. While Litecoin uses transaction fees similar to Bitcoin, Ethereum uses gas fees. The gas fee entails the effort necessary for executing a smart transaction on the Ethereum blockchain. Litecoin’s lower price makes it easier for people to use without paying significant fees.
Proof Efforts
Litecoin’s proof-of-work system is similar to what Bitcoin uses, although it does require more memory from multiple people for it to function. The system means that people still need to be actively mining for the currency, however, the amount of power required won’t be as immense as Bitcoin.
Ethereum’s proof-of-stake platform requires many miners to validate transactions and agree on the current state of the network. People will earn their stakes when they validate secure blocks and attest to the ones that currently exist. The practice allows equal opportunity for everyone to receive mining rewards.
Limit
Unlike Ethereum, Litecoin has a limit to the number of tokens on their network, supporting up to 84 million coins. While Ethereum has no limit on token production, it’s rate of growth is limited to 4.5% each year.
What Makes Litecoin and Ethereum Similar?
Open Source
Ethereum and Litecoin both operate on open-source networks, granting easy access to anyone who is interested in crypto.
Less Energy
Ethereum and Litecoin both require less energy for mining compared to Bitcoin. In recent years, Bitcoin has become increasingly inaccessible due to its high mining costs and exorbitant surge in value.
Confirmation Times
The confirmation times necessary for Litecoin and Ethereum are very similar, requiring less than a minute to confirm transactions. Although the timing can vary depending on the network's traffic, the average confirmation time is still significantly faster than Bitcoin.
Side-by-Side Comparison of Litecoin and Ethereum
Ethereum and Litecoin are both strong projects within the crypto market. If you’re looking to get a closer look, you can use our side-by-side comparison table to help you gauge which of the two better fits your portfolio.
Feature | Litecoin | Ethereum |
|---|---|---|
Formation | 2011 | 2015 |
General Purpose | For the transfer of assets as currency | Transfer of property and the production of dApps |
Transaction Function | Peer-to-peer cryptocurrency | Smart contract operations |
How Is the Currency Used? | To purchase items of varying needs | To manage dApps and smart contracts |
What Influences the Value? | Demand and the quantity available | Demand and how many dApps are working |
Maximum Available Supply | 84 million | None, but the rate of growth is limited to 4.5% each year |
Mining Standard | Proof of work | Proof of stake |