Wondering about Bitcoin vs Litecoin? How do they stack up against each other?
While there are tons of debates all over the Internet on Bitcoin vs Litecoin (and many are extremely heated), this post will try to give some basic differences between the two.
How do they really compare in terms of history, benefits and usage?
It will also try to answer the question – which is better – Bitcoin or Litecoin? The answer may surprise you!
So let’s dive in:
Bitcoin vs Litecoin – Some Basics
Bitcoin is the mama of cryptocurrency right now. There were cryptocurrencies before BTC but really, when you say “cryptocurrency” to the average guy on the street, Bitcoin is the one he’ll name.
Bitcoin was created by an unknown man (or group) working under the name Satoshi Nakamoto. The first Bitcoin transaction was made in 2009. It is currently the largest cryptocurrency by market cap today. It’s also the cryptocurrency most used by retailers that accept crypto.
Litecoin – another peer-to-peer cryptcurrency came along 2 years after Bitcoin in October of 2011. It was released by Charlie Lee, a former Google employee.
The open source nature of the cryptocurrency means that it can be modified by anyone and used freely for other projects. It bears similar technical resemblance to Bitcoin and is currently the 5th largest true cryptocurrency by market capitalization.
Litecoin – A Better Bitcoin?
Litecoin was created to improve upon what some people saw as the flaws in Bitcoin. And to this day it does have several advantages over Mama-Bitcoin.
Basically Litecoin is just faster than Bitcoin. Bitcoin can take as long as 10 minutes to complete a transaction – and now with the blockchain getting bogged down even more it can sometimes take several hours.
Litecoin on the other hand is much faster. The same transaction that would take 10 minutes with Bitcoin, would take 2.5 minutes on Litecoin.
The adoption of Segregated Witness and the Lightning Network effectively allow a greater amount of transactions to be processed by the network in a given time, reducing potential bottlenecks, as seen in Bitcoin.
#2 Different Hashing Algorithm
Bitcoin uses the SHA-256 hashing algorithm which allows calculations that can be largely expedited in parallel processing. This has resulted in huge demand for ASIC technology thus causing an exponential increase in the difficulty level of Bitcoin.
Litecoin on the other had uses the script algorithm, also know as the s-crypt algorithm, which also makes use of the SHA-256 algorithm but with much more serialized calculations. This algorithm is a sequential memory-based function which requires asymptotically more memory than an algorithm which isn’t memory-hard.
#3 More Coins
While Bitcoin has a 21 million coin limit Litecoin has a higher limit of 84 million coins to be mined. That’s 4 times as many coins – making it easy to see why some people call Litecoin the “silver to Bitcoin’s gold”.
On the plus side for Bitcoin, a lot of people feel that this difference in coin limit will naturally make Bitcoin a higher value per coin than Litecoin.
On the plus side for Litecoin, this mass coin production allows it to accommodate a higher volume of blocks which means that the Litecoin blockchain will be proportionately larger than that of Bitcoin.
There’ll be more transactions processing for the teeming population of new users. Basically Litecoin – as things currently sit right now anyway – is built to handle an ever-increasing user base of cryptocurrencies. Bitcoin is not.
#4 Cheaper Transactions
As Bitcoin usage has increased, so have the transaction costs. Some people have found it takes up to $5 to send one transaction – sometimes more. Litecoin transactions come in much cheaper.
So is Litecoin Better Than Bitcoin?
No – and Here’s Why:
Since it has these advantages over Bitcoin, will Litecoin replace and outpace Bitcoin eventually? It could – but I don’t think so. Here’s why:
#1 Bitcoin has Name Recognition
Bitcoin is what everyone knows. Very few people have ever heard of Litecoin. Litecoin may have user advantages – but right now anyway – Bitcoin has global brand recognition advantages.
It’s kind of like if you found a new brand of pop that tasted better than Coke – similar but better. You might start drinking it instead of Coke. But would everyone in the world start drinking it? Not likely.
This may change if Bitcoin continues to tick people off with slow transactions and higher fees. But that’s still going to take time.
#2 What Happens After The Bitcoin Fork
You may have heard about the Bitcoin fork (that’s a whole new post that is coming soon). The fork is basically a way that the people behind Bitcoin are attempting to fix the problems with Bitcoin scaling and speed.
This is scheduled to happen around August 1st of this year – but nobody really knows what’s going to happen for sure.
But here’s the bottom line: it’s in the best interest of everyone involved to come up with a workable solution. So if they do start to fix the problems with Bitcoin, what happens to Litecoin?
Even if Litecoin still has a small advantage over Bitcoin – will it be ENOUGH of an advantage to make people switch over to using it? Probably not.
#3 Bitcoin Has A Lower Barrier to Entry
Also keep in mind that Bitcoin is the easiest cryptocurrency to buy right now. You can buy Litecoin direct with cash or credit from places like Coinbase – but otherwise you have to buy Bitcoin then move it to an exchange like CEX and buy Litecoin with Bitcoin.
So most people new to the whole cryptocurrency space will just go with Bitcoin since that’s easier (we’re lazy creatures by nature). This may change if Litecoin becomes easier to buy. But again, it will probably take a while for this to happen – if ever.
#4 Other Bitcoin Alternatives Dilute the Market
Litecoin is not the only Bitcoin alternative – there’s also coins like Monero, ZCash and Dash. All of these attempt – in one form or another – to remedy the problems with Bitcoin.
So which one will win?
Which one will people adopt?
I think it’s much too early to answer this question yet.
And what happens if Bitcoin fixes it’s scaling problem? Again, people are lazy and go with the path of least resistance.
They’d far rather stick with a crypto they know and hope the problems get fixed than try to choose between several different alternatives, none of which has yet to prove a clear winner in the “crypto to replace Bitcoin” race.
So at the end of the day, I don’t think Litecoin is better than Bitcoin as far as which crypto will come out ahead. (Litecoin may WORK better than Bitcoin as of this moment – that’s not in question).
But you have to look at the whole picture when answering the question which is better – Bitcoin vs Litecoin.
You have to look at things like brand recognition (Bitcoin wins), Barrier to entry (again- Bitcoin wins) and the whole question of what happens if Bitcoin fixes their problems (thus reducing the motivation to move into Litecoin).
Another thing to keep in mind is that Bitcoin has better advertising than Litecoin. When was the last time you read an article about Litecoin in the main stream media for example? But you’ll find a new one on Bitcoin every week.
And if you think that isn’t affecting the dominance of Bitcoin over Litecoin, you know nothing about the power of marketing my friend. It’s not the best writer that sells the most books – it’s the best marketer. The same is true for Bitcoin.
So at the end of the day, this is why I think Bitcoin is currently the better option over Litecoin. This may change in the future, but for now, Bitcoin is still king. All hail.
Note : This article is an opinion piece only and not meant to substitute for professional financial advice. Before making any investment please consult your financial advisor and never invest anything that you can’t afford to lose!