Bitcoin (BTC) vs Litecoin (LTC): What’s The Difference?
Bitcoin (BTC) is the number one crypto asset by market cap, everybody knows that. What about Litecoin? It is less popular but also one of the oldest crypto assets created after Bitcoin.
The two crypto assets are both proof-of-work (PoW) networks, but they are different in so many ways. In this guide, we highlight the ways in which these two crypto assets are different with their strengths and weaknesses to help you decide on which to use or buy.
What Is Bitcoin (BTC)?
Bitcoin hardly needs any introduction because even the least crypto literate person may have heard about it, mainly because it was the first cryptocurrency to be created. It is also the biggest crypto asset by market cap.
While the network was created primarily as a means of making electronic transactions, Bitcoin has fallen short of this purpose due to issues with scalability, speed as well as cost of transactions. The network started well but started experiencing congestion when more people began to use it.
The network has a block time of ten minutes, which means transactions need roughly ten minutes to finalize. While many see this as a weakness, Bitcoin developers say that it is part of the network’s design and not a mistake.
Bitcoin has a maximum supply of 21 million coins which must be mined. The mining is done by miners, who also help to verify transactions. As they help to verify blocks of transactions, they get rewarded with new BTC. This is what makes a PoW network, and is how new BTCs come into circulation.
Because of the slow transactions and high fees, Bitcoin isn’t such a popular network anymore for transactions. However, it is recognized by investors as an excellent store of value they can buy and hold as a hedge against inflation.
With the 21 million coins, investors expect the price to increase in the future as more people get interested in it and with the fixed supply, its supply isn’t going to increase. Indeed, Bitcoin has become more popular over the years as concerns over inflation continue to increase.
What Is Litecoin (LTC)?
Litecoin is currently the 18th largest cryptocurrency by market capitalization. Though far away from Bitcoin, they are more similar than you may think. The network uses PoW consensus just like Bitcoin, and its design is pretty much like Bitcoin in many ways.
It was however built as an alternative to improve on some of the shortcomings of Bitcoin as a payment network. One of these shortcomings is the transaction speed, which Litecoin has improved on.
By reducing the block time from 10 minutes to 2.5 minutes, the network is able to settle transactions at four times the speed of Bitcoin. This also means that the cost of transactions has reduced drastically since more transactions are processed.
Because of the lower cost of transactions and higher speed, Litecoin is now fulfilling the purpose for Bitcoin’s creation more than Bitcoin is. It is used by thousands of stores globally as a means of payment.
Although Bitcoin is also accepted as payment for goods and services, it isn’t as popular as Litecoin for this purpose.
Which Should You Buy?
If you’re contemplating on which of these two coins to buy, the answer lies in what you wish to use it for. As a store of value, Bitcoin has proven to be a great choice as the price has consistently risen over the one and half decade of its existence.
This is not to say that Litecoin isn’t a good store of value. The price has also risen consistently over time, but Bitcoin has a smaller supply and other things to offer such as ETFs, which makes it more attractive to investors.
However if your goal is to use it for electronic transactions, Litecoin is better since it is faster and costs much less to send and receive funds than Bitcoin.
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