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Litecoin vs. Ethereum: What’s the Difference?

7 mins
Updated by Artyom Gladkov
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Litecoin and Ethereum share functionalities but differ in several ways. Both currencies use blockchain technology and facilitate transactions between users. On the Ethereum blockchain, users can develop their own applications to run independently of any central organization. Meanwhile, Litecoin (LTC) is a fork of Bitcoin and is a low-cost alternative to the original crypto and blockchain. Litecoin uses similar functions to Bitcoin in order to move data around quickly. This Litecoin vs. Ethereum guide examines how the two networks differ.

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What is Litecoin? 

litecoin vs ethereum

Litecoin is a decentralized, open-source cryptocurrency built for peer-to-peer (P2P) transactions. It uses the same codebase as Bitcoin. Charlie Lee, a former Google employee, created the network.

The Litecoin network launched on Oct. 7, 2011. It was originally branded as the “silver” to Bitcoin’s “gold.” The Litecoin blockchain is based on an open-source protocol that allows anyone to view or modify the code and make their own version.

Litecoin has many similarities to Bitcoin but also has some key differences:

  • Litecoin has faster block times, meaning you can mine more coins more quickly than on the Bitcoin network.
  • Transactions are faster, and fees are lower than on the Bitcoin network.
  • Litecoin uses a hashing algorithm called Scrypt rather than the SHA-256 encryption algorithms used by Bitcoin. This makes it harder for ASIC hardware manufacturers (like Bitmain) to dominate the mining process.

The Litecoin network aimed to improve Bitcoin’s weaknesses while retaining its strengths. It uses the Lightning Network to facilitate quicker transactions. LTC’s supply is capped at 84 million coins, with the aim of ensuring that the last litecoin and the last bitcoin are mined at the same time.

What is Ethereum?

litecoin vs ethereum

Ethereum is a public blockchain with the added feature of a distributed computing machine called the Ethereum Virtual Machine. Unlike Bitcoin, and many first-generation blockchains, it is Turing complete.

In layman’s terms, Ethereum has smart contract functionality, which means that you can build applications on it. Proposed in late 2013 by Vitalik Buterin, the network went live on July 30, 2015.

Ethereum can tokenize assets, bootstrap, and secure just about anything built on top of it. This includes domain names, voting, financial exchanges, governance, crowdfunding, contracts, or intellectual property.

The Ethereum platform provides developers with tools for building and deploying decentralized applications (DApps). DApps are applications that run on top of Ethereum’s virtual machine (EVM). Users can deploy smart contracts that execute automatically when certain conditions are met.

Ether (ETH) is the native currency of the Ethereum blockchain. People who own ether can send it or “spend” it with other users on the network. This allows them to purchase services and goods from those who accept ether as payment. Ethereum allows developers to create markets where buyers and sellers can transact without needing a third party.

Litecoin vs. Ethereum: what are the differences?

Litecoin vs. Ethereum: what are the differences?

1. Litecoin vs. Ethereum: mechanism

There are many differences between Ethereum and Litecoin; however, the most obvious is the Sybil protection mechanism. The two popular mechanisms are proof-of-work (PoW) and proof-of-stake (PoS).

Proof-of-work is a mechanism used to decide which nodes (miners) have the right to attach new blocks to a blockchain or validate transactions. It requires users (miners) to dedicate computing power to solving complex mathematical problems in order to prove that they have done the “work.”

Both Litecoin and Bitcoin rely on the PoW mechanism. In contrast, Ethereum uses proof-of-stake as its Sybil protection mechanism. Proof-of-stake lets users stake their coins or tokens to verify blocks on the blockchain. In doing so, they get rewarded with additional coins proportional to how much they have staked.

Ethereum moved from PoW to a PoS mechanism in September 2022 (termed the Ethereum merge or Ethereum 2.0). The move reduced Ethereum’s energy output by 99.9%, according to reports from ConsenSys. As such, the Ethereum network is cheaper, more scalable, and environmentally friendly than the power-guzzling PoW mechanism used by the Litecoin blockchain.

2. Litecoin vs. Ethereum: programming language and virtual machine 

Solidity is the most popular native programming language for the Ethereum blockchain. It was specifically created for constructing and designing smart contracts on blockchain platforms.

It is a high-level language for creating applications on the Ethereum Virtual Machine. Yul is also another programming language native to the Ethereum environment. It is a low-level language.

The Ethereum Virtual Machine (EVM) is a global network of nodes that runs smart contracts on Ethereum. EVM ensures the security and execution of programs through this global network of public nodes, essentially computers running EVM software. The EVM prevents denial-of-service attacks while certifying that programs don’t have access to each other’s state.

On the other hand, Litecoin’s programming language is C++ which is used in many blockchain projects. Note that it does not have a virtual machine, which means that it has limited complexity for programming.

3. Litecoin vs. Ethereum: decentralization

One of the main differences between Litecoin and Ethereum is the respective network’s degree of decentralization. The Litecoin network is innately decentralized, maintained by miners who earn litecoin (LTC) by verifying transactions on the blockchain.

Ethereum, on the other hand, is more centralized than Litecoin. Vitalik Buterin and other developers created it as an alternative to Bitcoin because they wanted to create a platform for decentralized applications (DApps).

Developers and validators still maintain the platform, but there are some differences between them regarding how much power each group has over the platform.

4. Litecoin vs. Ethereum: transaction cost

Transaction costs are one of the most important metrics when choosing a cryptocurrency. Ethereum uses gas to measure the computational effort required to execute transactions.

This is similar to calculating how much gasoline it would take to get a car from one place to another. Users who send Ether tokens pay a gas fee to complete the transaction.

Litecoin users can expect to pay around $0.03 or $0.4 on average transaction fees, while the average Bitcoin transaction fee is around $7.60. This is because Litecoin’s network sets aside LTC that doesn’t derive from transaction fees to incentivize miners, meaning there is less competition for space in blocks than with Bitcoin. The result is lower user fees, making it easier to use as a currency.

5. Transaction speed: Litecoin vs. Ethereum?

Ethereum features a block time of 15 seconds. In contrast, Litecoin features a block time of 2.5 minutes, with new blocks created after every 2.5 minutes. Multiple transactions can be confirmed every minute on the Litecoin platform.

Compared to Ethereum, Litecoin mining requires mining new blocks, which reduces the transaction speed (by 54 per second), with new blocks created after every 2.5 minutes.

6. Litecoin vs. Ethereum: Market cap and coin price

As of July 6, 2023, Litecoin has a market cap of $7.19 billion. One LTC is $98.09.

LTC to USD chart: CoinMarketCap
LTC to USD chart: CoinMarketCap

In contrast, Ethereum’s market cap is $226.27B, while one ETH is, at the time of writing, worth $1881.53.

ETH to USD chart: CoinMarketCap
ETH to USD chart: CoinMarketCap

7. Litecoin vs. Ethereum: DApp and NFT support

When it comes to DApp support, Ethereum remains the leader in this field and is the best blockchain for building a DApp. Despite the growth of multiple competing altchains, most developers still choose to build DApps on Ethereum for all kinds of services.

This includes supply chain management software to increasingly sophisticated DeFi protocols and NFT marketplaces. Litecoin is primarily a payments coin. It makes payments accessible to everyday consumers, making it easier to use crypto for payments at retail stores like Starbucks or Amazon.

Regarding NFTs, Ethereum again leads the pack, with the highest NFT collection market cap of all blockchains (estimated at $3.7 billion in DAppRadar’s NFT valuation report published February 2023). Litecoin also supports NFTs, specifically Ordinals, as of February 2023.

Ethereum and Litecoin are solid networks with strong coins

Ethereum remains the dominant DeFi protocol and is heavily focused on smart contracts. In contrast, Litecoin, one of the oldest and most established cryptos, is designed to improve upon, but more generally, imitate, Bitcoin. The bottom line in the Litecoin vs. Ethereum battle is that both are well-established crypto networks. Choosing which network and/or crypto you prefer will depend on your activities and goals within the web3 ecosystem.

Frequently asked questions

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Chris Adede
Chris Adede is a versatile professional with five years of experience in content creation, IT, and project management. He has expertise in cryptocurrencies, fintech, and blockchain and has published author work with BeInCrypto, Hanshow, and NFT Monday. A project manager at Smart Prop Trader, Chris holds a number of professional qualifications and a BSC in Information Science from Moi University. Previously, Chris worked as a Digital Marketing Manager at Webnavs, where he honed his skills in...