Blog Crypto Litecoin vs Ethereum: Which One Should You Invest In?

Litecoin vs Ethereum: Which One Should You Invest In?

date October 4, 2021 time 5 min read 252 views

In terms of capitalization and trading volume, litecoin vs ethereum are the among most prominent cryptocurrencies currently trading in the market. Each one has its own distinguishing features as well as trading characteristics, so how do you figure out which coins are the best to invest in? In this article, you will learn everything you need to know to weigh up litecoin vs ethereum and make the right crypto investment strategy

Overview of  Litecoin vs Ethereum

Key Characteristics of Litecoin

Litecoin (LTC) is a virtual currency released by Charlie Lee – a former Google engineer, in 2011 on the Github source code. Lee’s initial goal was to develop a new, easier-to-mine version of bitcoin, one of the oldest cryptocurrencies in existence. litecoin, like bitcoin, is based on an open-source, decentralized global payment platform. 

Litecoin has distinguishing characteristics which sets it apart from bitcoin. This virtual currency has a maximum supply of 84 million coins, which is four times that of bitcoin. Bitcoin takes an average of 10 minutes for a transaction, while litecoin’s speed is only about 2.5 minutes. Because litecoin mining involves verifying transactions and adding them to the cryptocurrency’s ledger, transactions settle faster. 

While bitcoin is frequently referred to as the cryptocurrency equivalent of gold, litecoin is likened to silverand and used for smaller transactions. For example, this coin will meet your daily needs such as purchasing a hamburger or a cup of coffee.

Litecoin price and volume chart
Litecoin price and volume chart. (Source: World Coin Index)

Litecoin experienced a significant bull run in May of this year, surpassing its previous high in 2018. The peak price was US$412, and a coin is currently trading at US$152, with a market capitalization of more than US$10 billion.

Key Characteristics of Ethereum

Vitalik Buterin, the Russian-Canadian programmer, is the Ethereum network co-founder. In 2013, he wrote a white paper describing the idea of ​​overcoming the disadvantages of Bitcoin and further exploiting the potential of blockchain technology. Then attracted a lot of developers to participate. Ethereum’s coin, ether, was first launched in 2015 when Buterin was just 21 years old. Since its inception just a few years ago, ethereum has gained wide acceptance and has become the second largest cryptocurrency by market capitalization.

Ethereum (ETH) is regarded as a cryptocurrency with a broader range of applications thanks to smart contracts. This is a collection of code that executes a set of instructions and runs on the blockchain in the crypto world. These smart contracts are pieces of code that live and execute on the blockchain and can facilitate monetary exchanges as well as the transfer of content, property, shares, or other valuable items based on a set of rules built into each contract. 

Ethereum price and volume chart
Ethereum price and volume chart. (Source: World Coin Index)

In more recent developments NFTs (Non-Fungible Tokens) have gained popularity, with investors accepting ethereum as payment. This has resulted in a significant increase in the volume of ETH transactions. At the time of writing, ethereum’s market value has dropped by 30% from its all-time high earlier this year, but it is still the second largest cryptocurrency, with a market capitalization of $354 billion.

Weighing up ethereum vs litecoin

The decision is yours to make. Both these coins have their unique characteristics and have achieved top ten status in the crypto world. First of all, let’s see what they’ve got in common:

Similarities between ethereum and litecoin

  • Both Litecoin vs Ethereum networks allow for faster transactions than Bitcoin. Litecoin uses SegWit (Segregated Witness), a mechanism that allows for more transactions per block, reducing transaction processing time. The Ethereum blockchain consistently processes more transactions per second than Bitcoin’s.
  • Litecoin vs Ethereum are both traded on the most reputable cryptocurrency exchanges, including Coinbase, Binance and PrimeXBTBoth are open source, peer-to-peer networks. You can also earn interest on crypto-backed peer-to-peer lending platforms through collateral-backed loans, delivering a great return on investment with reduced risk.
Litecoin vs ethereum is a widespread debate, but does it need to be?
Litecoin vs ethereum is a widespread debate, but does it need to be? (Source: Pixabay)

Key differences between Litecoin vs Ethereum

  • Litecoin was released shortly after bitcoin in 2011. Ethereum, on the other hand, is a relatively new coin that debuted in 2015.
  • In terms of scarcity, litecoin and ethereum are not the same. LTC has a supply limit of 84 billion coins, whereas ETH has an unlimited supply.
  • Litecoin is mainly used as a currency as a faster and less expensive alternative to Bitcoin. Furthermore, Ethereum is also a platform allowing to create contracts and transfer assets in addition to a cryptocurrency.
  • In Ethereum, the average transaction fee is $0.85 per transaction, but Litecoin’s is extremely low, at only $0.04 per transaction.
  • Litecoin transactions take roughly 2.5 minutes, which is four times faster than Bitcoin. Meanwhile, because Ethereum’s block period is only 15 seconds, many transactions can be completed in less than a minute.

Litecoin vs Ethereum mining

Mining Litecoin is similar to mining Bitcoin because both use the proof-of-work (PoW)  protocol. To keep the Litecoin blockchain running, a network of miners performs complex calculations. Whoever solves this puzzle first will receive newly minted litecoins in what is known as a block reward. 

If you want to mine litecoin, you must provide processing power to the Litecoin network, which is referred to as hashpower. Litecoin employs a fundamentally different algorithm known as “Scrypt” to process hash functions . In addition, miners on the PoW system must pay recurring operating costs such as electricity and hardware equipment.

Ethereum is switching to a proof-of-stake (PoS) consensus from its current PoW mining system similar to Litecoin. The advantage of PoS over PoW is that it consumes less energy and resources. Validators will stake some coins to generate mining power and validate blocks before voting. If they are successful, they will receive a reward equal to their stake. 

This is a development to keep an eye on when it comes to ethereum.

Cryptocurrency, Concept, Blockchain, Money, Litecoin
New coins are considered a reward for Litecoin vs Ethereum miners. (Source: Pixabay)

Litecoin vs Ethereum? Invest in both

Both Litecoin vs Ethereum were released relatively early in the crypto industry. They have a large capitalization and a large number of followers, so this is a long-term investment opportunity. However, because the crypto market is volatile, you could diversify their basket to reduce risk, and increase their chances of achieving higher returns in the future. 

The debate between litecoin vs ethereum will go on, but as an investor, you will be interested in returns. By investing in both coins, you will be able to leverage the risk and increase your chances of making a profit. 

It is essential to understand with any investment, there is risk. You should only invest what you can afford to lose, and make those investments as diversified as possible. 

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George Schooling

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