Bitcoin, Ethereum and Litecoin. Table of Contents

Bitcoin vs. Ethereum vs. Litecoin

Along with the growing cryptocurrency community, awareness of cryptocurrency is also increasing, and as the understanding of the digital asset trading process increases, the number of investors involved in it is also increasing. In this post Bitcoin (Bitcoin), litecoin (Litecoin), Ethernet Leeum (Ethereum) wants to know about the three main cryptocurrencies so. Let’s look at the key differences between each cryptocurrency, compare them in terms of transaction speed, scalability, algorithms, and mining, and then figure out which cryptocurrency is the best investment.

The main difference between Litecoin, Ethereum and Bitcoin are, in a word, cryptocurrency algorithm. This algorithm influences the process of mining new coins. Bitcoin is encrypted with the SHA-256 algorithm, and the Litecoin network and Ethereum network use Scrypt and Keccak-256 respectively.

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Why is cryptocurrency getting so much attention?

For years, people have been trading cryptocurrencies. But 2020 has shown that investing in cryptocurrencies can yield more returns than stocks or gold. Another bitcoin blast drove the price of many cryptocurrencies up dramatically, especially those in the top 10 on CoinMarketCap. What has driven such a huge interest in cryptocurrencies over the past few months?

There are several reasons why cryptocurrencies are gaining global attention today. First, PayPal (PayPal), including large multinational companies were more likely to work while implementing cryptocurrency go to mass adoption (Mass Air daepsyeon, mass adoption). This allows users and traders to hold, buy, accept, and sell digital currencies. Some major banks are also gradually joining the cryptocurrency market, announcing that they intend to examine the potential of blockchain and cryptocurrency.

Second, most digital tokens have a finite supply, which means they will not be devalued like fiat currencies whose cost rises when supply decreases. For this reason, many companies have started investing in Bitcoin and other altcoins, converting cash into a more secure store of value, Bitcoin.

With thousands of merchants around the world accepting digital assets, especially Bitcoin, as a payment method, the potential to quickly and efficiently pay for products, software, and services is another reason why Bitcoin is gaining global attention.

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Many years have passed since the creation of Bitcoin and Litecoin cryptocurrencies. As such, they are considered one of the pillars of the cryptocurrency community. One of the reasons Bitcoin and Litecoin are so popular is because of the blockchain technology they are based on. It supports peer-to-peer (P2P) transactions while eliminating the need for control by governments or other centralized financial institutions.

Bitcoin and Litecoin markets are driven by supply and demand. The absence of an intermediary allows transactions to be carried out quickly and easily with minimal fees and eliminates the possibility of third-party fraud.

Both cryptocurrencies are global digital payment methods designed to make online financial transactions transparent and secure. Blockchain, a decentralized public distributed ledger, plays a major role in data security as it contains encrypted records of all transactions made so far. These things make Bitcoin and Litecoin very attractive.

Finally, another reason why both cryptocurrencies are so popular is that they have the potential to make money quickly and easily. Over the past few years, cryptocurrencies have shown investors a simple way to multiply their wealth, so the number of people following cryptocurrencies has continued to grow.

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Litecoin vs. Bitcoin vs. Ethereum

Since Bitcoin is the first blockchain-based cryptocurrency, it is inevitably different from all other projects that have emerged since. All cryptocurrencies except Bitcoin are called altcoins, and they are often designed to overcome some of the limitations of Bitcoin.

As a result, altcoins often use different protocols and cryptographic algorithms, the most well-known of which are Litecoin and Ethereum. The key to the differences between the two cryptocurrencies is the mining algorithm, block creation time, total number of coins, transaction speed, market cap, and price difference.

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Different cryptographic algorithms

Bitcoin, Ethereum, and Litecoin use different cryptographic algorithms, which affect how new coins are created. Bitcoin uses the SHA-256 algorithm, and Litecoin uses Scrypt. The Ethereum Network used Ethash, which is currently unrelated to Ethash as the network switched to Proof of Stake (PoS) in the Ethereum 2.0 upgrade.

SHA-256 increases the difficulty of finding new blocks as the network grows. Therefore, energy consumption also increases. Bitcoin mining is expensive as it requires the use of expensive miners called Application-Specific Integrated Circuits (ASICs), which consume a lot of energy. As a result, individual miners are no longer able to make a profit by joining the mining pool.

On the other hand, Scrypt is designed to allow anyone with a personal computer to mine Litecoin. It uses a simple and inexpensive CPU and GPU hardware system. Users will have the opportunity to profit as an independent miners with Litecoin.

Bitcoin and Litecoin are similar in terms of using a Proof of Work (PoW) consensus mechanism for mining. The mining process involves solving complex puzzles using high-performance computers and specialized hardware, which are required to validate transactions and create new blocks. The first miners or nodes to confirm a block will be rewarded with new coins. Transactions are recorded on a public ledger and are also stored on a per-node basis.

As long as the Ethereum blockchain has switched to a proof-of-stake consensus algorithm, the need for mining is eliminated. When participants staking coins into the system, everyone has a fair chance to be rewarded according to the size of their staking.

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What is TPS and how does it affect crypto?

Another difference between the three cryptocurrencies is the transaction speed. The Bitcoin network has an average number of transactions per second (TPS) of 4-5 and can handle up to 7 transactions. It takes about 10 minutes to create a new block.

For the Litecoin network, the speed is 56 TPS, which takes 2.5 minutes to verify a block, which is 4x faster than Bitcoin. However, this improvement presents problems when both miners create blocks at the same time, i.e. in the form of so-called orphaned blocks.

Ethereum 2.0, released in November 2020, promises to speed up to 100,000 TPS. Currently, blocks are checked every 15 seconds, and the rate averages 12–15 transactions per second.

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Lack of scalability and its impact on the Bitcoin network

One of the biggest problems with the Bitcoin network has to do with its lack of scalability. The more users trying to send funds through the network within a given amount of time, the more congested it gets. Transaction fees are set based on the auction, so the person with the higher bid will confirm the transaction. This results in higher network charges and longer confirmation times. Litecoin offers much lower fees, but it still has the same problem.

Bitcoin and Litecoin implemented several scalability enhancements to shorten transaction times and lower transaction costs. Some of them pulled out a block size that limits the height of the signature data in the transaction segment above include network Lightning (Lightning Network) to secure the transaction data and the (SegWit) to block the chain.

The Ethereum blockchain does not have this problem. Now that the Ethereum blockchain has switched to Proof of Stake (PoS), the issue of scalability is no longer relevant to the Ethereum network.

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Total number of coins supplied and block reward

Litecoin and Bitcoin have a pre-limited amount of coins that miners receive for transaction verification. Once the amount of coins reaches the set limit, no new coins will be issued.

According to the predefined protocol, the Bitcoin supply is limited to 21 million BTC to prevent inflation. An average of 900 bitcoins is being mined per day. As Bitcoin halved every four years, the rewards for mined blocks also fell significantly. In 2020 after the last halving, miners only earned 6.5 BTC from block confirmations, a significant reduction from the 50 BTC in the first four years.

Litecoin is limited to 84 million LTC. As with Bitcoin, 50 coins per block were rewarded after coin creation and halved every 4 years. With the last Litecoin halving in 2019, the rewards have been reduced to 12.5 LTC per block. The next halving is expected in 2023.

Unlike these two cryptocurrencies, Ethereum does not have an issuance limit. However, there is a limit to minting only 18 million coins per year. With Ethereum moving to PoS, block rewards are no longer relevant. Instead, participants will now be rewarded for staking coins on the network, with a 2-20% reward size fluctuating across various staking programs.

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Cryptocurrency swing high

In 2020, another Bitcoin blast drove the price of major cryptocurrencies significantly higher. And after a slight decline, the uptrend continues. On January 9, 2021, Bitcoin price crossed $42,000 and soared to an all-time high of $61,000. This growth has led to an increase in Bitcoin trading volume.

In 2020, Ethereum’s (ETH) price surged from $131 at the beginning of the year to $750 on December 31, marking the second-largest increase.

Litecoin has also grown. At the beginning of the year, Litecoin started at $56 per LTC but is now trending around $125 per LTC. And it looks like Litecoin will continue to rise.

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Cryptocurrency market cap

Another important difference seen between the three cryptocurrencies is their market cap. At the time of writing this post, the market capitalization of Bitcoin is over $737 billion, which is higher than that of companies such as PepsiCo, Toyota, HSBC, Citigroup, and Netflix. This amount pushed the total cryptocurrency market value to over $1 trillion for the first time ever.

Ethereum’s market capitalization exceeded $141 billion, and Litecoin’s market capitalization also reached $10 billion, making it the world’s sixth-largest cryptocurrency.

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Future Projects of Smart Contracts

Litecoin plans to collaborate with the M.Pay platform. This enables the exchange of Litecoin (LTC) for fiat currency at over 13,000 ATMs in Korea.

On December 1, 2020, Ethereum started the move to Ethereum 2.0, which is based on a proof-of-stake mechanism. The transition will be realized in four phases, including several upgrades and blockchain improvements. To solve the scalability problem, layer 1 solution sharding and layer 2 solution Plasma are installed.

As Lightning Network upgrades continue to grow, Bitcoin will likely introduce Taproot, a scaling and privacy protocol upgrade.

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Will Ethereum Overtake Bitcoin?

If you look at the bullish trend of the market in the past, you can see that the rise of Bitcoin has always led to the rise of other altcoins, and the value of altcoins is often pegged to Bitcoin. Now, Bitcoin is continuing its uptrend after breaking through its previous highs.

Bitcoin is very different from Ethereum and Litecoin. Ethereum is a decentralized platform created for the development of decentralized apps and smart contracts backed by gas rates. Bitcoin is a store of value and a form of payment for goods. Litecoin is used as a purely digital currency.

Moving towards a Proof of Stake (PoS) algorithm, Ethereum could be a game-changer. However, it will be difficult to overtake Bitcoin in terms of market cap. Moreover, Bitcoin has a limited number of coins, turning it into a store of value called digital gold. Also, Bitcoin has the largest user base. The advantages of Litecoin are its relatively low price and fast transaction speed.

To recap, we can say that both Litecoin and Ethereum have good prospects, but they will not be able to overtake Bitcoin.

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Which coin should you invest in?

With the cryptocurrency market changing very quickly, it has become difficult for investors to choose the best investment option. With all the hype about this industry pouring in, many are wondering whether to invest in Bitcoin, Litecoin, or Ethereum. As new cryptocurrencies are launched on the market every month, there is no guarantee that these coins will remain popular. However, it should be noted that the currencies mentioned in this post, namely Bitcoin, Ethereum, and Litecoin, have a strong user base, an experienced development team and are available on most exchanges.

With more and more investors interested in Bitcoin (BTC), the prospects for Bitcoin are bright. For example, according to a study by Fidelity Investments, about 36% of financial institution investors added Bitcoin to their investment portfolio at the end of 2020. If Bitcoin solves the scalability problem, Bitcoin, which is fast to transact and cheap, will be a more attractive currency than other altcoins.

However, due to limited supply, the Bitcoin service will not be available worldwide. Only about 500 million users can access the service. Thus, Litecoin, which has similar features and functions, and is much cheaper, can be used in place of Bitcoin.

All three of these currencies are already offering high profitability to investors, and have proven to have great potential for growth over the next few years.

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Conclusion

Although the legal regulatory environment for digital currencies has not yet been established in many countries, the cryptocurrency industry continues to evolve. It has features that fiat currencies can never imitate, including decentralization, transparency, speed, and anonymity. If you haven’t joined the cryptocurrency market yet, hurry up. Having a variety of coins in your portfolio will be a positive asset for any cryptocurrency enthusiast. However, a smart investment requires careful consideration of the pros and cons of each option.

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