Both of these cryptos are attractive assets that have been around for ten years and greatly improve the capabilities of Bitcoin. In order to choose the better investment, we should understand their major differences.
Compare Litecoin and Ethereum
1. Ethereum is not just a token – it is a platform
Ethereum is a blockchain platform that provides Ether (ETH) as a currency, while Litecoin is just a cryptocurrency that operates on a separate blockchain platform.
ETH has more advantages as it can support other applications and projects in its own network. On the other hand, Litecoin is based on Bitcoin, with some differences to increase usability. The coin’s main goal is to help users transfer money safely and quickly.
2. Ethereum supports smart contracts
This is a unique feature of Ethereum because Bitcoin or Litecoin only supports basic contracts with many limitations.
Ethereum makes smart contracts possible and developers can use the programming language to write any kind of transaction. Considering smart contracts as payment methods on shopping sites, it will allow customers to select a list of items and only complete the order if paid the required amount.
3. In short supply
To remain the scarcity of tokens, creators often set limits or rules that determine the number of tokens to be issued at a given time.
In the case of Litecoin, it has a limit of 84 million tokens, which means that at some point in the future, no more tokens will be issued out of this number.
In contrast, Ether has no limit to issuing tokens. However, the network uses a different mechanism to control scarcity. Ethereum only allows a maximum of 18 million new ETH within 1 year, in order to maintain the stable supply.
4. Different block times
Block time is required time to mine a single block. Ethereum and Litecoin have very different block times. It takes up to 15 seconds to mine an Ether block, while a Litecoin block takes 2 minutes and 19 seconds. This means new Ethereum blocks are generated faster than Litecoin and more transactions can be validated in a minute.
5. Proof of Work and Proof of Stake
Litecoin is mined through the Proof of Work (PoW) mechanism. This method requires individual miners to provide computing power to solve cryptographic problems. Meanwhile, in 2022, Ethereum transferred to Proof of Stake (PoS), a more energy-efficient mechanism.
Which one should we invest in?
The basic function of Litecoin and Ethereum are both impressive with good returns over the years. In terms of market cap, Ethereum is currently 5 times larger than Litecoin. On the other hand, about price, Litecoin is currently 5 times cheaper than Ethereum. So, no token is superior, as each project has its own pros and cons.
Wise investors should combine the two cryptocurrencies to diversify their portfolios. This will minimize volatility risks and bring lucrative returns over time. To do so, investors need to have a deep research on the market and skillfully adjust their portfolios according to different investment strategies.
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