What is Litecoin and how does it work?

There are multiple cryptocurrencies around the world just like with regular currency. Bitcoin was the first, hence it gets all the publicity but it competes with several other alternatives. One of these alternatives is Litecoin.

Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. It is an open-source, worldwide payment network that is completely decentralized without any central authorities. Measured by the amount of currency on the market, Litecoin is the third-largest cryptocurrency after bitcoin and XRP. Similar to its counterparts, it operates as an online payment system.

How is it made?

Just like other cryptocurrencies, Litecoin is not issued by a government. Litecoins are created by an extensive process called mining, which involves processing a list of transactions. The supply of Litecoins is fixed and every 2.5 minutes, the Litecoin network generates what is called a ‘block’. This is a ledger entry of recent Litecoin transactions across the globe.

Worth

Litecoin is able to process more transactions, given the quicker block generation time. Litecoin also has a barely tangible transaction fee. It costs 1/1000 of a Litecoin to process a transaction. Also, Litecoin’s rarity makes hyperinflation impossible, but there’s still the challenge of getting more people to use the currency with more general acceptance.

1 LTC Litecoin = 3659.88 INR at the rate on 16/10/2020

What is Ethereum and how can you use it?

Ethereum is the second-largest cryptocurrency platform by market capitalization, behind Bitcoin.

Ethereum has open access to digital money and data-friendly services for everyone despite your background or location. It’s a community-built technology behind the cryptocurrency Ether (ETH) and thousands of applications you can use today.

1 ETH Ethereum = ₹28,140.0 INR at the rate on 16-10-2020.

Ethereum gives you easy access to financial services and all you need to access its lending, borrowing, and savings products- is an internet connection. Your personal details are not required to use an Ethereum application.

Better products and experiences are being built all the time because Ethereum products are compatible by default. Customers have a secure, built-in guarantee that funds will only change hands if you provide what was agreed.

Litecoin vs. Ethereum

Differences

Litecoin (LTC) and Ethereum (ETH) are two of the most popular cryptocurrencies that do very different things.

Litecoin is similar to Bitcoin, which was envisioned as peer-to-peer digital cash. Litecoin is essentially a ‘lighter’ version of Bitcoin that has quicker transactions and lower transaction fees. Hence, Litecoin is meant to be fast with cheap digital payments.

Meanwhile, Ethereum serves a completely different purpose. While Ethereum can be used for payments as well, Ethereum in the era of ‘Blockchain 2.0’, can be used for things other than just payments.

Ethereum allows the use of blockchain to develop decentralized applications (Dapps) that can run without any middlemen.

Similarities

Although these cryptocurrencies do different things, there are still some similarities between the two.

For example, Litecoin and Ethereum, both have a faster transaction time than Bitcoin.

Both use the Proof of Work (PoW) consensus mechanism, which can be traded on many crypto exchanges and both support smart contracts.

Mining & Fees

Mining is the process by which certain crypto networks validate transactions. With Litecoin, mining works through a Proof of Work (PoW) system. PoW involves miners using computational ability to solve difficult cryptographic problems.

Ethereum also uses PoW to validate transactions. However, with the upcoming launch of Ethereum 2.0, Ethereum is set to transition to a new model: Proof of Stake (PoS).

When it comes to transaction fees, Litecoin has the upper hand. Ever since Ethereum became more popular, Litecoin’s average transaction fees have been lower.

Speed

While Litecoin has lower transaction fees, Ethereum has better transaction speed.

The average time it takes for grouping of transactions to be added to the blockchain is about 15 seconds on Ethereum and 2.5 minutes on Litecoin.

Conclusion: Which is better?

After reading this article, you may be wondering which is better, however, there is no clear winner.

Each cryptocurrency has its own advantages and fulfills a different role.

Litecoin may be more of a payment utility while Ethereum can be more than just a mode of payment as it can serve as a platform for potential.

You can invest in both depending on their unique advantages and uses.

Litecoin is helpful in making daily transactions and has shown resilience by sticking around when you consider how many cryptocurrencies have died out over the years. While Ethereum has much more potential for different uses and functionality by providing developers with the power to build the next generation of decentralized applications.

Therefore, it’s safe to say that both cryptocurrencies are set to play an important role in the future of our digital world.

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