Bitcoin

Litecoin vs Bitcoin: Is Litecoin Better Than Bitcoin?

litecoin-vs-bitcoin
First, it was Coke vs Pepsi, then it was Batman vs Superman, and now the main event! Litecoin vs Bitcoin!

Ten years ago, no one knew what a cryptocurrency was. Now there are thousands of them and they’re turning into a very big business. Two superstars of the cryptocurrency world are Bitcoin and Litecoin. The two are closely linked, but which is better?

This Litecoin vs Bitcoin guide is going to teach you everything you need to know about this famous pair. You’ll learn where they came from, how they work, what they’re worth and which is better.

The world of crypto changes fast so we don’t have time to waste. Go to the fridge and grab a can of Coke (or Pepsi, either is fine!) and let’s get started.

A Short History of Litecoin vs Bitcoin

In November 2008, a paper was written by a mysterious coder called Satoshi Nakamoto. The paper was called Bitcoin: A Peer-to-Peer Electronic Cash System. Just like that, cryptocurrency was born.

Bitcoin was the first real digital currency. It promised a future without banks. It offered a future where people could send money to each other, all around the world, quickly and safely.

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In February 2011, 1 Bitcoin was worth 1 US Dollar. By June, 1 Bitcoin was worth 31 US Dollars. Over the next few years, Bitcoin would become more and more popular. However, not everyone was happy with the way it worked.

Charlie Lee thought that Bitcoin could work better. He decided to change some of Bitcoin’s rules. He wanted to make Bitcoin faster and cheaper. His ideas caused a disagreement between Bitcoin users.

In crypto, a disagreement between users over the rules of a currency is called a fork. If a disagreement is big enough, the currency can be split in two. This is called a hard fork.

On November 7 2011, Bitcoin split in two. The hard fork created a new coin called Litecoin. Two years later, all the Litecoin in the world was worth 1 billion US Dollars (USD).

Both coins are now very popular. Which one is the best, you ask? Is it possible to have both, or will one replace the other? These are tough questions to answer.

In order to answer these questions, you need to compare Bitcoin and Litecoin in a number of ways. Below is a table of the main differences between the two coins.

BitcoinLitecoin
CreatedJanuary 3, 2009November 7, 2011
Created BySatoshi NakamotoCharlie Lee
Average Transaction Time10 Minutes2.5 Minutes
Block Reward Per Block12.525
Supply Limit21 Miliion84 Million
Market Cap. in USD153.9 billion9.7 billion
Value of 1 in USD9088.16173.55
Figures accurate as of 03/21/18 (coinmarketcap.com)

Don’t worry if you find all this confusing. By the end of this guide you’ll understand each difference between Litecoin and Bitcoin. You’ll be able to give your own answer to the question, is Litecoin better than Bitcoin?

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In Litecoin vs Bitcoin, Litecoin was created because Charlie Lee wanted to change the way Bitcoin worked. This is the first difference between the two, so let’s start there…

Round 1! Ding!

Litecoin vs Bitcoin: Technology

The special thing about the technology of Bitcoin is it’s blockchain. A blockchain is a huge digital record of trades. The record is stored across a network of thousands of computers called nodes.

Users can send each other money all over the world. They don’t have to use banks or worry about large fees and exchange rates. Let’s use an example to see how it works;

If Michael wants to send Jackson 10 Bitcoin (BTC), the trade needs to be verified. Verification means that the network needs to check that Michael has at least 10 BTC before he’s allowed to send it. If more than half the nodes on the network agree that the trade is legit then the trade can happen, and it’s added to the blockchain.

Transactions are put together into groups called blocks before being added to the blockchain. The nodes that verify blocks get a reward for the work they have done. The reward is new currency. On Bitcoin’s blockchain the reward is 12.5 new BTC. This process is called mining because it’s a bit like digging for gold!

Mining for Bitcoin is expensive. You need a powerful computer to do it and the process uses a lot of electricity. It is also quite slow. Each new block takes about ten minutes to get added to the blockchain. This is where Charlie Lee and Litecoin come in.

The rules for deciding how Bitcoin mining works are called SHA-256. It was these rules that Charlie Lee wanted to change. The new rules he created are called scrypt. Mining with scrypt is 4 four times faster than SHA-256 and requires a lot less electricity.

Each new block of transactions only takes 2.5 minutes to be added to the Litecoin blockchain. The reward for each verified block is 25 new Litecoin (LTC).

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Bitcoin fans say that SHA-256 is safer than scrypt. They say this because SHA-256 takes longer and is therefore more likely to spot errors. They think that scrypt rushes the process of verification.

However, Litecoin fans think that the changes Charlie Lee made to the rules of Bitcoin are much better. As it makes Litecoin a cheaper and faster platform. Neither blockchain has ever been hacked.

What do you think, whose got the best tech? I’m going to give this one to Litecoin.

Let’s have a look at how the two compare as investments…

Round 2!

Litecoin vs Bitcoin: Investment

Investors are very excited about cryptocurrency. Some are making a lot of money trading with cryptocurrencies. The table below shows the price changes of Litecoin vs Bitcoin over the last five years:

Date1 Bitcoin1 Litecoin
June 16, 2013100.16 USD2.07 USD
Dec 15, 2013849.68 USD29.39 USD
June 15, 2014568.19 USD9.79 USD
Dec 14, 2014347.8 USD3.48 USD
June 14, 2015233.28 USD1.94 USD
Dec 13, 2015433.85 USD3.59 USD
June 19, 2016752.33 USD5.54 USD
Dec 18, 2016791.71 USD3.7 USD
June 18. 20172,621 USD45.33 USD
Dec 17, 201719,528.93 USD318.89 USD
March 18, 20187,720.85 USD148.14 USD
As you can see, both coins reached their highest value so far, in late 2017. Some critics think investing in cryptocurrencies now is a bad idea. They think that the popularity of Bitcoin and Litecoin is part of an investment bubble.

Note: In an investment bubble, the price of a product goes up a lot higher than its real world value. When bubbles ‘burst’, the price of the product goes down, very fast!

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Crypto fans think the coins will continue to be popular because of the real-world uses they have. Remember, all this blockchain tech is still new, no-one knows how important it could become.

Buying Bitcoin now is expensive and a bit risky. As an investment, it might be too late to start buying Bitcoin. The price has gone down a lot this year. However, Litecoin is newer and could still become as popular as Bitcoin. Its growth has been slow but steady.

The future is uncertain for all cryptocurrencies. No-one knows which coins will be valuable and which ones will be worthless. So, which do you think will be more valuable in the future, Bitcoin or Litecoin?

Round 3!

Litecoin vs Bitcoin: Store of Value

If something is valuable it can be traded for goods and services. A store of value is something that is not only valuable but stays valuable. The most well known store of value in the world is gold. Gold has been valuable for hundreds of years in every country on the planet, that’s why it’s called a precious metal.

Currencies can also be stores of value. The currencies of powerful countries, like the USA, are better stores of value than weaker, less stable countries like Syria. What about cryptocurrencies?

Cryptocurrencies are still new. None are stores of value like gold. However, they do have the potential to become stores of value.

Gold is a great store of value because it is precious and there is only a limited amount of it in the world. Gold is inflation proof. This means its value doesn’t go up and down a lot. Its value is predictable and reliable.

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This could also be true in the case of Bitcoin and Litecoin. They both have limited supplies. There will only ever be 21 million Bitcoin and there will only ever be 84 million Litecoin. This means they could both become good stores of value.

Bitcoin is the oldest and most trusted cryptocurrency. It will also reach its supply limit first. Three quarters of all Bitcoin has already been mined. This means that its value should become predictable and reliable in the near future, just like gold!

I think that Bitcoin will become a long-term store of value before Litecoin. Bitcoin wins the round!

Cryptocurrencies aren’t just stores of value though, are they? You’re supposed to be able to buy stuff with them, right? Let’s have a look at which coin is better at being money…

Round 4!

Litecoin vs Bitcoin: Money

Cryptocurrency hasn’t replaced the money in your pocket yet. You can’t go to your local supermarket and pay with Litecoin. You might be able to one day soon though…

There are quite a lot of well-known companies that take Bitcoin as payment. These companies include KFC Canada, Expedia.com, OKCupid and Playboy! What more could you need!

There are fewer companies that accept Litecoin as payment. Although, Uber has taken Litecoin as payment as a part of trials in the Czech Republic.

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So, Bitcoin wins? Maybe not. Litecoin isn’t as popular as Bitcoin but its technology might make it a better currency for spending. The Litecoin transaction time is four times faster than Bitcoin’s. Businesses and customers might like this idea and start using Litecoin instead of Bitcoin.

Or will they? Litecoin fans often say that the Litecoin transaction time makes it a better currency, because it’s fast. If you tried to spend Bitcoin in a shop, you would be standing at the counter for 10 minutes before you could leave! This is because it takes 10 minutes for the Bitcoin blockchain to verify the transaction.

However, this isn’t really how spending Bitcoin works. When you spend Bitcoin in a shop (or KFC Canada!) the shop will only check that your payment is legit with a few nodes on the system. It won’t wait for the full ten minutes it takes for the blockchain to verify the transaction.

By checking with a few nodes, the shop can be almost certain that you have enough money to pay. This is called a zero-confirmation transaction.

It’s like spending money with a normal bank card. If I buy a hat with my bank card today, the money won’t leave my account until tomorrow. The hat store is happy to let me have my hat today. It has done a quick check and knows that I have enough money in my account to pay.

Bitcoin is more popular and it’s taken as payment in more places. It also makes use of zero-confirmation transactions to make buying things faster. Sorry, Litecoin fans! Bitcoin wins again!

I’ve talked a lot about the tech and the numbers. It’s easy to forget why cryptocurrencies got started. Cryptocurrencies were invented to help people. Their creators wanted to take power away from banks and governments. They wanted to give power back to the people of the world.

So, which is more democratic, Litecoin or Bitcoin?

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Round 5!

Litecoin vs Bitcoin: Democracy

The main difference between Litecoin vs Bitcoin is the way mining on each platform works. As I said earlier, mining Bitcoin is more difficult and more expensive than mining Litecoin. So, to make money mining Bitcoin, you need a very powerful computer.

Most people use special computers that are designed to mine Bitcoin. Which are called ASIC miners. As Bitcoin has grown in value, Bitcoin mining has become its own industry. Whole warehouses have been set up to mine Bitcoin. This means that new Bitcoin is going to fewer and fewer people.

The risk here is that a high percentage of Bitcoin’s total supply will be owned by a small number of people and companies. Cryptocurrencies are supposed to be different. They were created to spread wealth more evenly.

It can also be argued that the amount of power used to mine Bitcoin is bad for the environment.

Charlie Lee knew all this when he created Litecoin. Litecoin can be mined using normal computers. ASIC miners can’t be used to mine Litecoin. So, new coins go to a wider group of users.

Litecoin is more democratic because more people can get involved. This round is an easy win for Litecoin.

Before you decide who the overall winner is, let’s have a look at what new stuff Bitcoin and Litecoin are doing now…

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Round 6!

Litecoin vs Bitcoin: New Developments

Bitcoin vs Litecoin both want to speed up transaction times. Both are using the same idea to get this done. It’s called the Lightning Network. The Lightning Network is a way of verifying transactions away from the main blockchain. Miners will have less work to do and the whole system will work faster.

The Lightning Network will allow users to open their own mini-networks. These networks are called payment channels. The transactions that happen in these networks will be guided by rules called smart contracts.

Note: A smart contract is a set of conditions that must be met before a transaction can happen.

It’s hoped that thousands or even millions of transactions could take place in this way. Using this system would also make trading across platforms possible. This means that you could change your Bitcoin to Litecoin without using a crypto exchange. Which is great because crypto exchanges charge fees and aren’t as safe as trading on blockchains.

If you wanted to change your Litecoin to Bitcoin then all you would need to do is set up a payment channel with a user on the Bitcoin network. This kind of transaction is called an atomic swap. As long as both users have enough currency to do the swap, it will happen. If one user doesn’t have enough currency then it won’t happen.

Bitcoin and Litecoin have both started using the Lightning Network. However, some people think that Bitcoin using the Lightning Network will end Litecoin. They think that faster Bitcoin transaction times will make Litecoin useless.

I disagree. I think that the introduction of the Lightning Network will bring the two platforms closer together. Charlie Lee described the Lightning Network as a bridge between two roads. He said that the Bitcoin road is full of cars, moving slowly. The Litecoin road is nearly empty. The Lightning Network bridge will make it easier for cars to move between the two roads.

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Who wins this round? It’s too early to say. They might both be winners here. It’s a tie!

You now know everything you need to know. Litecoin vs Bitcoin: Which is better?

And the Winner Is…

Over six rounds of exciting competition, Litecoin wins two rounds and Bitcoin’s wins two. However, this is just one person’s opinion. My opinion doesn’t change the fact that the biggest name in cryptocurrency is still Bitcoin.

Some people think that Bitcoin is the only cryptocurrency worth using. So, if you’re one of those people, remember this, Bitcoin can’t serve the whole world. It’s thought that Bitcoin can only support about 500 million users. That’s about 15% of the world’s population. There is a place in the market for other coins. Out of these other coins, Litecoin is one of the best.

Bitcoin and Litecoin are often compared to gold and silver. However, I think they’re more like Coke and Diet Coke. Some people love Coke, others want that great Coke taste but with less sugar. Coke and Diet Coke are on supermarket shelves all around the world. They are right next to each other and they probably always will be.

I’ll leave you with a quote from Charlie Lee, “Litecoin and Bitcoin will work together to solve the world’s transaction needs in the future”.

What do you think about Litecoin vs Bitcoin? Is Litecoin is better than Bitcoin? Do you think the two can work together? Let me know!

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