There are countless cryptocurrencies (over 1000 in fact). While most early investors will gear their attention towards the market leader, Bitcoin, attention is quickly shifted to other high market cap coins like Ethereum and Litecoin.
In this guide, we’ve broken down how these two coins stack up against each other when it comes to important factors like use cases, network fees, transaction speed, third-party support, and more.
A Brief History of Litecoin and Ethereum
Ethereum
Ethereum got its start when blockchain programmer Vitalik Buterin first released its white paper in November of 2013. Buterin, who worked at Bitcoin Magazine at the time, initially proposed the idea behind Ethereum as a way of building decentralized applications, arguing that Bitcoin needed a scripting language for app design. After it failed to integrate with Bitcoin, Ethereum was proposed as an entirely new platform (which it soon became).
Litecoin
On the other hand, Litecoin was created by Charlie Lee in 2011 as a global payment network. Litecoin is sometimes referred to as “digital silver” while Bitcoin is considered “digital gold”. In 2017, Litecoin became the first coin to use segregated witness (more about segregated witness or “seg wit” can be found here). Litecoin adopted the off-chain scaling solution “lightning” that same year.
Use Cases
Ethereum and Litecoin are two of the largest cryptocurrencies in the world by market cap. As of the time of publication, Litecoin has a market cap of 2.7B while Ethereum holds a market cap of 14.7B.
However, despite maintaining top-crypto status, the two cryptocurrencies have been developed for entirely different uses.
Ethereum
Ethereum was created as an open-source project for the design of smart contracts as well as cryptocurrency trade without reliance on a third-party. Ethereum offers several methods of exchange: Ethereum cryptocurrency trade, smart contract deployment, and the Ethereum Virtual Machine (EVM).
Smart contracts can be thought of as a code-enforced version of a legal-binding contract from the non-digital world. The EVM is a walled sandbox that serves as an isolated environment in which smart contracts are deployed away from a network, file system, and other processes in a traditional virtual machine.
Smart contracts are often thought of as a system of ensuring an outcome via code.
Imagine the possibilities of having a computer enforce the next time that a relative asks to borrow $50. You might actually get it back. Click here to learn more about smart contract deployment and the EVM.
Litecoin
While Ethereum is marketed as a tool for smart contracts in addition to a tool for cryptocurrency trade, Litecoin is more exclusively marketed as an open-source, peer-to-peer (P2P) digital currency. Thus, Litecoin’s use cases are more one-dimensional compared to Ethereum.
In the value proposition on Litecoin’s website, Litecoin explains itself as a “proven medium of commerce complementary to Bitcoin.”
Simply put, Litecoin is digital money and that’s it.
Network Fees
Ethereum and Litecoin both use the PoW algorithm. While we won’t get too technical regarding what that means you should know that it means a network fee must be paid to send transactions.
Ethereum Network Fees
Like other vehicles, the Ethereum ecosystem requires “gas” to run. Not natural gas like cars, rather, gas is the amount of Ether required to execute a transaction on the network. When someone talks about gas on the Ethereum network, they are usually speaking about either the gas limit or the price of gas.
The gas limit can be thought of as the total amount that you’re willing to spend for a transaction to take place.
Ethereum gas transaction fees are measured in a unit called GWEI, and 1 GWEI is equivalent to 1 billionth Ether. The network fee amount is a function of how busy the network is. If a lot of people are sending Ethereum, the price to send it goes up and vice versa.
Litecoin Network Fees
The Litecoin network’s fee structure is very different than that of Ethereum. When the Litecoin Foundation released Litecoin Core v0.17.1 in 2019, Litecoin lowered its fee from 0.001 LTC/kb to 0.0001 LTC/kb.
What is kb? The unit is a reference to the amount of blockspace your transaction will take if it gets recorded. That means your fee is not dependent on the amount of Litecoin you’re sending, instead, it’s determined by how much space your transaction is taking.
While the calculations required to determine Ethereum’s fees vs that of Litecoin can seem complex, in general, Litecoin’s fees are less expensive than that of Ethereum.
Winner: Litecoin (usually)
Transaction Speed
The speed of a transaction on the Ethereum blockchain is determined by the amount of gas that is spent on a transaction. As you will see from the screenshot below, the amount of gas you’re willing to pay will determine how quickly your transaction goes through.
According to ETHGasStation.info, a typical Ethereum transaction (on an average day) takes between 15 seconds and 5 minutes to process using the standard gas price.
On the other hand, Litecoin has an average transaction speed of 30 minutes with a maximum capacity of 56 transactions per second.
Winner: Ethereum
Third-Party Support
Cryptocurrencies become more accepted every year and there are already some huge companies accepting the digital assets as form of payment. But which coin has more support from outside parties?
Ethereum
When it comes to third-party support, Ethereum is the clear winner.
Ethereum is one of the most widely accepted cryptocurrencies on the planet. Services like Metamask make transacting in Ether online really easy and nearly every major cryptocurrency app or exchange supports Ethereum.
When Samsung first announced it’s blockchain wallet app Ethereum was listed before both Litecoin and Bitcoin.
Ethereum is also the most widely developed-on blockchain ever created. Here are some popular projects that have developed on Ethereum’s blockchain:
Additionally, Ethereum has an extensive enterprise community. The Ethereum blockchain is used by some of the most powerful companies in the world, including extensive integration with Fortune 50 companies like Microsoft, IBM, and Amazon.
A long list of companies that accept payments in Ethereum can be found here.
Litecoin
Even though Ethereum wins when it comes to third-party support, there are still a lot of different payment gateways, online retailers, wallets, exchanges, travel websites, and many more establishments that work with Litecoin.
A full list of businesses that support Litecoin payments can be found here.
Winner: Ethereum
In Conclusion
While Litecoin and Ethereum are both massively disruptive and powerful cryptocurrencies, they are very unique when it comes down to factors like fees and third party support.
Ethereum is more complex with a larger purpose within enterprise blockchain and smart contracts while Litecoin has more of a one-dimensional existence as a peer-to-peer digital currency.
On average, Litecoin transactions are less expensive than that of Ethereum but much slower and, when it comes to integration with third-parties Ethereum is the clear winner.
Both cryptocurrencies have undoubtedly played a large role in the history of blockchain and digital payments and iit will be exciting to see the legacy of both unfold in the larger unraveling of the current banking system.
Until then, keep learning!
The post Comparing Litecoin vs Ethereum | Guide for 2020 appeared first on CoinStats Blog.
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