As of January 2023, it's been 14 years since the cryptocurrency industry came into existence. Over the last decade and a half, almost, the industry has been through a lot. It has seen the launch of over 22,000 different altcoins. It has had a year-long bull market and two year-long bear markets, popularly called crypto winters. The blockchain — the underlying technology of cryptocurrencies — has seen the launch of numerous products.
But, even after all these years, the crypto industry still sees only one altcoin as a real competitor to Bitcoin. That is, of course, Litecoin — silver to Bitcoin’s gold. In this guide, we will compare the two and see what it is that makes them similar as well as different. If you are new to the crypto industry, this Litecoin vs. Bitcoin article might give you some new insight. Also, it might even help you decide which of them you like more.
What is Bitcoin (BTC)?
Bitcoin, the first cryptocurrency, was described in a 2008 document published on October 31 by an individual or group known only as Satoshi Nakamoto. Despite over a decade and a half passing, the identity of Nakamoto remains unknown. The document explains that Bitcoin is a decentralized digital currency run by the members of the community.
No government, bank, or single entity would have any power over it or the network on which it runs. Instead, it would be a peer-to-peer online currency, with an explanation of how it would be implemented. Nakamoto also explained that its underlying technology would be a decentralized ledger of transactions packed into batches or blocks. All of it would use cryptographic algorithms for security, which is how blockchain came to be.
It would also have a fixed supply of 21 million coins, which would be released in small quantities. Whenever a block is “solved” through computing power that processes transactions, a small portion of BTC gets released. Initially, it was 50 BTC, with plans to cut this amount in half whenever 210,000 blocks get solved. This is called the halving, and it happens after every four years, roughly.
Nakamoto made the first Bitcoin transaction on January 3, 2009, thus solving its Genesis block. This launched the first 50 BTC into circulation, and the process has never stopped since.
Essentially worthless at first, Bitcoin’s real value was in the idea that created it. This idea of digital money that no government could control attracted tech geeks but also online criminals. But, it also gave BTC its first price, moving it from $0 for the first time due to simple demand.
To this day, Bitcoin has grown a lot, once even reaching the value of $69,000 per coin. But it all started with Nakamoto. After receiving its value, Bitcoin quickly attracted a group of developers who started working on it. Meanwhile, Satoshi Nakamoto withdraws into the shadows after a few years of spreading the word about his creation. As years went by, new cryptos started to launch, inspired by Bitcoin. Each of them believed it could either do better or bring something new to the growing crypto industry.
About two years after Bitcoin’s launch, its largest competitor emerged — a coin known as Litecoin (LTC).
What is Litecoin (LTC)?
Like Bitcoin, Litecoin also emerged as a decentralized digital asset. It also relied on the decentralized community that would supply it with computing power to maintain security and validity. However, Litecoin was one of the projects that wanted to improve Bitcoin’s technology.
While Bitcoin’s idea was revolutionizing, its technology was (and still is) very flawed. Bitcoin can only process one block per 10 minutes, and each block can only store a handful of transactions. This makes it very slow, and it is unfit to satisfy global demand. So, one developer — Charlie Lee — came up with the idea of creating a similar but better asset.
This is how Litecoin came to be. One of many forks of Bitcoin, Litecoin is named like this because it is the “lite version of Bitcoin.” It is four times faster than the original, thanks to this fact, and more accessible. It never saw the massive transaction fees that Bitcoin has, either. However, it does share a lot of Bitcoin’s characteristics and features.
Some of them include decentralization and the use of the same Proof of Work algorithm. However, Litecoin uses a different hashing function called Scrypt. Its coin supply sits at 84 million cryptocurrencies, and its transaction time is 2.5 minutes.
Litecoin also uses halving; only it happens after every 840,000 blocks. Litecoin’s network is four times faster. Meanwhile, the number of blocks needed for the halving is four times larger. This means that the halving still happens roughly every four years. At the same time, the total supply is four times larger than Bitcoin’s, as well.
All of this means that Litecoin is a lighter, more efficient version of Bitcoin.
The similarities between Bitcoin and Litecoin
Bitcoin and Litecoin share a number of similarities, some of which we already mentioned. They are both decentralized, they rely on Proof of Work, and they operate as utility coins, meaning digital money. They rely on the community to supply them with the computing power needed for confirmation transactions.
They both conduct the halving process after a specific number of blocks, releasing coins in return. Like Bitcoin, Litecoin also started by granting its community 50 LTC per block until the halving had started.
However, the two share a number of differences, and these differences are far more impactful than their similarities.
The differences between Bitcoin and Litecoin
Litecoin, silver to Bitcoin’s gold, was created by Charlie Lee, rather than an anonymous individual or group. Lee is a well-known and respected member of the crypto industry who publicly supports his project.
Another difference between Litecoin and Bitcoin lies in their transaction speed. Bitcoin can process 5 to 7 transactions per second, requiring 10 minutes to form a block. Meanwhile, each block can only store 1MB of data. This makes it incredibly slow. At the same time, Litecoin can process 54 transactions per second. It needs around 2.5 minutes to create a block, and it is four times faster than BTC.
It uses its own cryptocurrency, LTC, which has a significantly smaller market capitalization. Even now, after a year of price drops, BTC has a market cap of $407.4 billion. Meanwhile, Litecoin only has $6.1 billion. Their technology also differs slightly, as Bitcoin uses a SHA-256 mining algorithm, while Litecoin uses Scrypt.
Bitcoin vs. Litecoin on charts
Looking at the charts of the two assets, we can also see differences in their price performance over the years.
Bitcoin, for example, showed several major price surges. The one in late 2017 is now a minor blip, although, at the time, it was a massive development. It was, however, completely overshadowed by two surges in 2021.
Litecoin, on the other hand, barely exceeded its 2017 high during the 2021 bull runs. It managed to do it only once, while the second 2021 price surge did not even reach the 2017 level.
The reason for this is simply the fact that Bitcoin is more popular. Despite having worse technological capabilities, it is the first crypto. Its brand, size, potential use cases, level of adoption, and more, guarantee its success. Litecoin is well-adopted by many online websites in its own right, and it is far from being an unsuccessful coin. However, for the time being, its technological improvements were not enough to beat Bitcoin’s brand.
Bitcoin vs. Litecoin: which is better?
In the end, deciding which of the two is better is a personal choice. Technologically speaking, Litecoin is four times Bitcoin’s superior. However, when it comes to popularity, use cases, brand size, and other aspects, there is no comparison. Bitcoin wins every time if we use these parameters to compare the two. Essentially, it all comes down to what you prefer — the security of Bitcoin’s brand or the benefits of Litecoin’s network.
FAQs
Is Litecoin better than Bitcoin?
Technologically speaking, yes. Litecoin has more advanced technology that makes it four times faster. However, Litecoin is a smaller, less popular altcoin, while Bitcoin dominates the crypto industry.
Will Litecoin overtake Bitcoin?
Currently, it appears unlikely that Litecoin will surpass Bitcoin. Bitcoin has a two-year head start in building its brand. Despite its imperfections, it holds significant value as the first cryptocurrency.
Who created Litecoin?
Litecoin was created by a developer called Charlie Lee. Lee developed it two years after the launch of Bitcoin. Before launching Litecoin, Lee was a Google engineer.
Who created Bitcoin?
The truth is that nobody knows the identity of Bitcoin’s creator. They could be a person or an entire team. All that is known is their alias, Satoshi Nakamoto.
