What’s the Difference: Bitcoin vs. Litecoin

by | May 13, 2021

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The year is 2011; it’s already been two years since the first-ever cryptocurrency known as Bitcoin came into existence. And now there’s another player in the town, calling itself Litecoin. Started with a disagreement over some Bitcoin core rules, the blockchain split into two chains – one staying the same (Bitcoin) and another one with a new name and token – Litecoin. 

It’s been a decade now, there are thousands of new cryptocurrencies available, and new ones are popping left and right. Still, newcomers in the crypto town get confused among Bitcoin and Litecoin. Why one to buy, what value proposition do they offer, and most importantly, what’s the difference between Bitcoin and Litecoin? Let’s find out.

Bitcoin vs. Litecoin

To find the difference between these two cryptocurrencies, let’s go through various parameters to judge and differentiate among them.

Algorithm & Distribution

The fundamental difference between Bitcoin and LItecoin is the use of a hashing algorithm. Bitcoin, on the one hand, makes use of the well-known SHA-256 algorithm. Litecoin, on the other hand, uses a comparatively new hashing algorithm known as Scrypt.

Even though SHA-256 is comparatively better at parallel processing, it also leads to centralization of the mining process through Application-Specific Integrated Circuits (ASIC). To do away with the initial cost barrier, Litecoin opted for a completely new algorithm that is less susceptible to centralized mining farms through the means of ASIC hardware.

Coming to the distribution, both of these digital currencies have a hard cap on their supply. Bitcoin has a total supply capped at 21 million, whereas Litecoin has a total supply of 84 million. This makes Bitcoin a more scarce asset than Litecoin. 

Market Cap & Transaction Speed

When it comes to market cap, Litecoin is nowhere close to Bitcoin anymore. Gone are the days when Bitcoin and Litecoin were on the top two positions on the market cap leaderboard. Bitcoin is still ruling the crypto town with its fixed position on top and a market cap of over 1 trillion USD. 

Whereas Litecoin is not even in the top 10 position anymore. Currently, the total market cap of Litecoin is around 20 billion USD. 

When it comes to transaction speed, the Litecoin network processes a block every 2.5 minutes compared to the Bitcoin network’s 10 minutes per block. Thus, Litecoin offers a better transaction speed than Bitcoin. Talking about the block rewards, the Litecoin network currently allocates 12.5 coins per block to miners, whereas the Bitcoin network allocates 6.25 BTC.

Store of Value & Institutional Adoption

One of the major edge Bitcoin has over Litecoin, or any other digital currency, is its status as a store of value. Many experts believe Bitcoin offers a range of features similar to that of gold. It is even being called digital gold. 

Even though it’s still too early to say, Bitcoin is gradually turning out to be a safe-haven asset, a hedge against inflation. As Robert Breedlove likes to put it, “Bitcoin is digital cash money, a self-sovereign asset that contains within it all the trust factors and permissions necessary to transact with it. Bitcoin is not the liability of any counterparty, hence its nickname — digital gold.”

That’s one of the key reasons institutions across the world are adopting Bitcoin. As per Bitcoin Treasuries, over 7.8% of total Bitcoins are currently held by institutions, including publicly traded companies, governments, and in ETF-like funds. That is over 1.6 million Bitcoins in total; among these, over 91,850 BTC are held by a single company called MicroStrategy Inc.

Conclusion

In conclusion, Bitcoin adoption is where the world is looking right now. Litecoin is nowhere to be seen when it comes to the long-term store of value assets. In fact, looking at the horizon, Ethereum looks like the one that might challenge Bitcoin for the first place in the crypto world. That’s because, unlike Litecoin, Ethereum offers a sound value proposition as a smart contract platform. Thus, opening gates for innovations such as DeFi (Decentralized Finance) and NFTs. 

So, personally, I would always pick Bitcoin over Litecoin. A thousand times over…

Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"
Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"

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