In this article, we will cover a comparison between Bitcoin and Litecoin. We will discuss the main differences between them and how each can be used. We will also discuss some important factors to consider when making an investment decision in either of them.
What are the differences between Bitcoin and Litecoin?
Bitcoin and Litecoin are both digital currencies built on the same source code. Litecoin’s creator, Charlie Lee, describes Litecoin as “the silver to Bitcoin’s gold” in the cryptocurrency world. Litecoin was created to improve the accessibility and speed of transaction processing in Bitcoin, making Litecoin more suitable for everyday transactions.
Here are some key differences between Bitcoin and Litecoin:
Block Time
Processing a new block of transactions in Bitcoin takes four times longer than processing a new block in Litecoin. The Bitcoin blockchain adds a new block approximately every 10 minutes, while the average time between Litecoin blocks is only 2.5 minutes. The faster processing time can be critical for daily use of the currency, which can make using a digital currency like Litecoin more convenient.
Number of Coins Mined
Bitcoin sets a maximum limit on the number of available coins at 21 million, while the maximum limit for Litecoin is set at 84 million coins. The doubled number of coins in Litecoin differentiates the two currencies, and therefore Litecoin may have more liquidity due to the additional issued coins, while the scarcity of Bitcoin may make it more valuable. The prices of Bitcoin and Litecoin are notoriously volatile, but Bitcoin’s price is generally several times higher than that of Litecoin.
Transaction Fees
The Bitcoin and Litecoin blockchain networks charge users fees and pay cryptocurrency rewards to miners for processing network transactions. But this is where the similarities end when looking at the fees associated with both currencies. Since transaction fee amounts are determined based on the size of transactions on the blockchain network, transaction fees for Bitcoin are significantly higher than transaction fees for Litecoin. In January 2022, Bitcoin transaction fees were around $1.85, although network congestion at the beginning of 2021 temporarily pushed the fee for processing a single Bitcoin transaction to over $60. In contrast, users on Litecoin typically pay a small fraction of a cent per transaction.
Which one is right for you?
Purchasing some Bitcoin is a common step for beginner investors in the cryptocurrency world, given Bitcoin’s established reputation as a digital currency. You can buy Bitcoin using almost any cryptocurrency trading platform or through a broker that supports cryptocurrency purchases.
Investors who choose to buy Litecoin may do so due to the potential benefits of Litecoin in routine transactions. Litecoin is available, like Bitcoin, through many cryptocurrency trading platforms.
You can opt to purchase both Bitcoin and Litecoin, as each has different advantages and disadvantages. Many cryptocurrency investors hold a mix of currencies, including Bitcoin, Litecoin, and others.
Before investing in Bitcoin or Litecoin, it is important to consider the risks and benefits associated with owning digital currencies. Always follow best online security practices and verify transaction details before completing a purchase, as reversing a digital transaction is generally not possible.
Conclusion
Bitcoin and Litecoin are similar in many respects. Both are digital currencies that are often subject to significant volatility in value. Both can lose value quickly due to government regulatory actions, negative press, or security issues.
If you decide to invest in Bitcoin or Litecoin, or both, it is wise not to invest more money than you can afford to lose. You may decide to invest in only one of these currencies based on the few critical differences between them.
Do not
The Balance provides tax, investment, or financial services and does not offer advice. Information is provided without regard to the investment objectives or risk tolerance or financial circumstances of any specific investor and may not be suitable for all investors. Past performance is not an indicator of future results. Investing involves risks, including the risk of loss of the principal capital.
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Sources:
Bitcoin.org. “Bitcoin: A Peer-to-Peer Electronic Cash System.”
The Lite School. “What Is Cryptocurrency and Litecoin?”
Cryptopedia. “Litecoin (LTC): The Silver to Bitcoin’s Gold.”
Litecoin.org. “What is Litecoin?”
CoinMarketCap. “Litecoin.”
Bitcoin.org. “Some Bitcoin Words You Might Hear.”
CoinMarketCap. “Bitcoin.”
Bitcoin.org. “Capacity Increases FAQ.”
Bitcoin.org. “Frequently Asked Questions.”
BitInfoCharts. “Bitcoin Average Transaction Fee Historical Chart.”
BitInfoCharts. “Litecoin Average Transaction Fee Historical Chart.”
Source: https://www.thebalancemoney.com/bitcoin-vs-litecoin-how-do-they-compare-5215821
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