Bitcoin and Litecoin – How Are They Different?
After Bitcoin’s introduction in 2009, the public’s interest in everything cryptocurrency-related has been on a steady rise. Even though Bitcoin is synonymous with digital money in many ways, there are hundreds of non-Bitcoin cryptocurrencies available today.
In this article, we want to focus specifically on Litecoin. In the world of cryptocurrency, Bitcoin is often referred to as gold and Litecoin as silver. But are they competitor cryptocurrencies, or are they complementary?
A Brief History of Bitcoin vs. Litecoin
Bitcoin rules the cryptocurrency market, and it can be tough for other digital coins to stand out. However, despite Bitcoin’s domination and the overall crowded field of digital money, Litecoin has stood up well to the competition. In fact, as of March 2021, Litecoin has the sixth largest market cap among all digital currency.
Let’s take a look at the history of Bitcoin and Litecoin for a moment. Litecoin was introduced only two years after Bitcoin by former Google employee, Charlie Lee. He saw the potential Bitcoin has in terms of creating a decentralised network away from any government authority.
It was a space where people could make financial transactions quickly and safely. However, he also wanted to change some of the Bitcoin rules and make it work even better.
The idea was to make it faster and cheaper. At the time, this concept wasn’t very well-received, and it resulted in creating a “fork” in the system, which led to Bitcoin splitting in two. A new digital currency was created by the name of Litecoin, and by the end of 2013, it was worth close to £1 billion.
If you’re interested in Bitcoin mining or trading and investing in other cryptocurrencies such as Litecoin, it might be challenging to decide where to place your focus. To help you decide, we’ll compare these digital currencies more closely, to examine the similarities and differences concerning crypto exchanges and other factors.
Bitcoin and Litecoin – Similarities
At the fundamental level, the main thing that connects Bitcoin and Litecoin is that they’re both decentralised digital currencies. They derive their value from the integrity of the network alone.
Given that Litecoin was created from Bitcoin, the two cryptocurrencies are bound to have some significant similarities.
Proof of Work
Both Litecoin and Bitcoin are Proof of Work ecosystems. Proof of Work or PoW is a type of algorithm which secures many cryptocurrencies.
It means that the way these two digital currencies are generated, authenticated, and added to a public ledger is essentially very similar.
Storage and Transactions
If you’re an aspiring cryptocurrency investor, you should know that the basic elements of transacting Bitcoin and Litecoin are quite similar.
You can buy Bitcoin and Litecoin via crypto exchanges or mine them with a mining rig. You also need a hardware wallet or software wallet to store the digital assets between the transactions safely.
Another similarity between the two cryptocurrencies is that they’ve both been incredibly volatile over the last few years. Several factors impact this volatility, including government regulations and investor interest.
Bitcoin and Litecoin – the Differences
If you’re choosing between Bitcoin and Litecoin, you’re probably more interested in the differences rather than similarities. So, let’s talk about how these two digital currencies differ.
In both Bitcoin and Litecoin, transactions occur instantly. However, time is required for other network participants to confirm the transaction. The speed of transactions is one of the things the Litecoin founder focused on in particular.
Litecoin simply prioritises transaction speed, which has placed it at a significant advantage compared to many digital currencies, including Bitcoin.
Currently, the market cap for Bitcoin is 70 times bigger than Litecoin. Therefore, this is one area where these two cryptocurrencies are significantly different.
It’s fair to say that Bitcoin is still the giant among digital currencies, with even the second closest competitor, Ethereum, having a five times smaller market cap.
Bitcoin enjoys a higher value than all other currencies, but that’s not surprising, given that it’s been around the longest.
Another significant difference between Bitcoin and Litecoin pertains to coin distribution. The total number of coins each of the two currencies can produce is very different.
Bitcoin can never exceed 21 million coins, whereas Litecoin can create up to 84 million coins. It’s clear that in this area, Litecoin distinguishes itself.
Can Litecoin Be Converted to Bitcoin?
One of the common questions about the two cryptocurrencies is whether they can be converted. The answer is yes; they can.
You can turn Litecoins into Bitcoins and vice versa, in the same way you’d convert pounds to dollars. All you need is an account on a crypto exchange platform or a trading app.
Is it Possible to Send Litecoin to a Bitcoin Address?
No, you can’t send Litecoin to a Bitcoin address, regardless of using the same wallet. If you try, the money you send will be lost forever.
Therefore, it’s essential to learn everything you can about cryptocurrency conversion before you send Bitcoin instantly to the wrong address and vice versa.
Will Litecoin Ever Overtake Bitcoin?
In terms of making any predictions about cryptocurrency trends, it mostly comes down to speculation.
Bitcoin will always be the original digital currency, and that status still carries a lot of weight among crypto enthusiasts and experts.
If Bitcoin is ever to lose its “golden” attribute, it’s much more likely to happen by another digital currency, such as Ethereum or Ripple. Still, the speed of transactions Litecoin provides makes it a strong contender, regardless.
Bitcoin vs. Litecoin: Who Wins?
The only honest answer is that there is no right or wrong answer here. Bitcoin will almost definitely always hold a very high value in the crypto community.
But that doesn’t mean Litecoin doesn’t have its place. Especially when you consider all the technical aspects and the longevity it has had over the years. The “silver” digital currency is more affordable, that’s for sure, but it’s still a very wise investment.
Many savvy investors focus on different degrees and view them less as competitors and more as complementary players.