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Difference between bitcoin and ethereum and litecoin
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This post is aiming to educate people on the basics of a few coins. No one knows who that is to the date, as the creator of Bitcoin lives in anonymity. The purpose of Bitcoin is to be another way to store money and pay for goods and services. Some refer to it as digital gold. The way Bitcoin operates in a decentralized fashion is due to how the coins are mined.
In a nutshell, when one person sends BTC to another person, there are thousands of people across the world who validate to make sure that that transaction is valid. Once validated, the transaction executes and the person who helped validate gets a percentage of a Bitcoin as a thank you for helping make that transaction occur. This process is called mining, and you can learn more about it here.
Bitcoin is the first example to utilize blockchain technology , which is now being used by organizations all over the world. Still, blockchain technology is in its infancy. Soon after Bitcoin was created, several altcoins were developed after it, one of these being Litecoin. Litecoin Litecoin has a very similar function to Bitcoin.
Litecoin is one of the oldest altcoins in existence, and many say if Bitcoin is gold, Litecoin is silver. When it comes to daily transactions, Litecoin does have many advantages over Bitcoin. Transaction times are must faster, as they take about 2. This means that if you were in a store and wanted to pay in Bitcoin versus Litecoin, it could take 4 times longer for your Bitcoin transaction to go through compared to Litecoin.
This obviously poses challenges to Bitcoin, and gives Litecoin an edge when it comes to smaller payments. Still, when looking from a high level, Litecoin and Bitcoin serve a very similar purpose. Ethereum, on the other hand, serves a totally different need.
Bitcoin network can process just 4—5 transactions per second TPS on average, and 7 at maximum. It takes approximately 10 minutes to create a new block. As for the Litecoin network, its speed is 56 TPS, and it takes 2. However, this improvement has a drawback in the form of the so-called orphaned blocks which occur when two miners produce blocks at the same time.
Ethereum 2. Currently, its speed is 12—15 transactions per second on average, confirming blocks every 15 seconds. The Lack of Scalability and the Impacts on Bitcoin Network One of the biggest issues of the Bitcoin network is related to the lack of scalability. The more users try to send funds over the network in a given moment of time, the more congested it becomes.
As transaction fees are defined on the basis of an auction, those who make higher bids get their transactions confirmed. This leads to high network fees and longer confirmation times. Though Litecoin suggests much lower fees, it still has the same problem. To speed up transaction time and lower transaction costs, Bitcoin and Litecoin have implemented some scalability improvements. Among them are SegWit , which increases the block size limit by pulling signature data from transactions, and the Lightning Network, which keeps the transaction data off the blockchain.
Ethereum blockchain does not have this problem. Now that it has finally switched to PoS, the problem of scalability is no longer relevant for this network. Total Coin Supply and Block Rewards Litecoin and Bitcoin have a preset coin limit on the amount miners receive for validating transactions. Once they reach their supply limits, no new coins will be issued. According to a predefined protocol, the Bitcoin supply is limited to 21 million BTC to prevent inflation. On average, new Bitcoins are being mined per day.
With Bitcoin halving occurring every four years, rewards for mining blocks have decreased significantly. After the last halving, in , miners got only 6. Litecoin has a limit of 84 million LTC. The last Litecoin halving took place in , reducing the rewards to The next halving is expected in Unlike these two currencies, Ethereum has no final issuance cap.
However, it has an annual minting limit of 18 million coins. With the transition to PoS, block rewards are no longer irrelevant. Cryptocurrencies Swing High In the prices of major cryptocurrencies increased immensely following another Bitcoin bull run. After a slight fall, the upward trend has continued.
This growth led to the increase of the Bitcoin trade market. Litecoin has grown as well. Market Capitalization of the Cryptocurrency Another integral difference between the three currencies is their market capitalization. On December 1, , Ethereum started its move to Ethereum 2.
The transition will be realized in four phases, bringing some upgrades and improving the blockchain. Sharding, the layer-one solution, and Plasma, the layer-two solution, will be installed to solve the scalability issue. Bitcoin is likely to install scaling and privacy protocol upgrade Taproot, with the lightning network upgrade still growing.
Will Ethereum Overtake Bitcoin? Considering the past bullish trends of the market, we can see that Bitcoin has always led to the rise of other altcoins, whose values are often pegged to it. Now, it has continued to rise after breaking through the previous high. Bitcoin differs a lot from Ethereum and Litecoin. Ethereum is a decentralized platform created for developing decentralized applications and smart contracts, fueled by gas fees. Bitcoin is a store of value and a form of payment for goods.
Litecoin is used as a purely digital currency. After moving to the Proof of Stake algorithm, Ethereum can become a game-changer. But it will be difficult to overtake Bitcoin in terms of market cap. Besides, Bitcoin is turning into a store of value, called digital gold, because of a finite number of coins.
It has the biggest user base. To summarize, we can say that both Litecoin and Ethereum have a future, with each of them taking their place in the ecosystem; but neither of them will be able to overtake Bitcoin. The cryptocurrency market changes very fast, making it difficult for investors to choose the best investment options. With all the hype around this industry, many people are wondering if they should invest in Bitcoin, Litecoin, or Ethereum. New currencies are brought to the market every month, so there is no guarantee that they will remain popular.
Still, all the currencies compared in this article have a strong user base, experienced developing teams, and are available on most exchanges. BTC has high prospects, as more investors are interested in it every day. If Bitcoin solves its scalability problem, transactions will be fast and cheap, making the currency more attractive than any other altcoin. However, due to its limited supply, Bitcoin will not be able to serve the whole world.
It can only support about million users.
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