Ethereum vs Litecoin: How Do The Two Compare?

Ethereum (ETH) and Litecoin (LTC) are two of the market’s most well-established and well-known cryptocurrencies today. Ethereum is currently the second-largest cryptocurrency in terms of market cap and popularity. Additionally, it also supports a burgeoning DeFi (decentralized finance) ecosystem. On the other hand, Litecoin was originally designed as a low-cost alternative to Bitcoin (BTC), offering lower transaction fees and consuming significantly lesser resources. 

In this article, we will compare Ethereum and Litecoin, understand how each works, and how each can be used. 

Ethereum vs Litecoin: Key Points 

• Ethereum was founded by Vitalik Buterin and the Ethereum Foundation. It is a programmable blockchain, and its native cryptocurrency is ETH. 
• Charlie Lee founded Litecoin (LTC) two years after Bitcoin (BTC) as a low-cost alternative.
• Ethereum recently made its highly anticipated switch from Proof-of-Work to Proof-of-Stake. 
• Litecoin uses the Proof-of-Work consensus system but offers faster transaction speeds than Bitcoin. 

What Is Ethereum? 

Ethereum is a decentralized blockchain platform allowing users to conduct transactions, stake assets, earn interest, trade cryptocurrencies, buy or sell NFTs, play games, and more. The protocol was launched in 2015 by Vitalik Buterin and has established itself as the second-largest platform and cryptocurrency by market capitalization. The protocol can be used to create any secured digital technology. The platform’s native token, ETH, can be used to pay or reward users for supporting the blockchain. However, users can also pay for services and tangible goods. 

Unlike Bitcoin, Ethereum was created to be much more than a store of value or a medium of exchange. The protocol was created to establish a global, decentralized platform that could leverage blockchains’ open nature and security for different applications. Designed to be programmable, scalable, decentralized, and highly secure, it has become the blockchain of choice for developers. The Ethereum Foundation also claims that the blockchain can secure, codify, trade, and decentralize pretty much anything and already features a host of financial tools and databases running on it. 

Ethereum also supports smart contracts, a vital cog in the larger decentralized finance (DeFi) ecosystem, and decentralized applications (dApps). 

What Is Litecoin? 

Litecoin was one of the first altcoins created from Bitcoin’s original open-source code. The cryptocurrency was created in 2011 through a hard fork of the Bitcoin blockchain and was intended to be the “silver to bitcoin’s gold.” Litecoin was designed to address the developer’s concerns that bitcoin was becoming too centralized and make it difficult for mining firms to gain an unfair advantage when it came to mining. Although eventually unsuccessful in achieving its original goal, Litecoin realigned itself into a minable coin and a viable alternative to Bitcoin. 

Lite Bitcoin, Litecoin also runs on an open-source blockchain protocol, free from the influence of any centralized authority. Each node operator maintains a copy of the blockchain, ensuring that new transactions are up to date and do not contradict the transaction history. Like Bitcoin, it also uses a Proof-of-Work consensus mechanism. However, instead of using the SHA-256 hashing algorithm used by Bitcoin, Litecoin uses something called Scrypt. Scrypt can work with regular CPUs, allowing the protocol to achieve significantly faster transaction times. 

A week before the official launch of Litecoin, its creator, Charlie Lee, released its source code and binary. This enabled developers and users to test mine the cryptocurrency before it officially went live. The Litecoin community also decided the day and launch of the cryptocurrency through a poll on the Bitcointalk forum. 

How Does Ethereum Work? 

Like Bitcoin, Ethereum also works using blockchain technology. However, it takes this technology further, adapting it to support applications beyond money and the transfer of value. Ethereum is highly decentralized, existing on nodes spread across the globe. This means that even if part of the network goes down, the network remains unaffected.

The Ethereum blockchain maintains all records of transactions and smart contracts on the Ethereum blockchain. Every node on the network maintains a copy of the blockchain. When a transaction or smart contract is initiated or executed, nodes ensure all rules are followed while also storing the state of each smart contract. This ensures that all information pertaining to the smart contracts is up to date. 

Ethereum Virtual Machine (EVM) 

The Ethereum Virtual Machine (EVM) is basically the CPU of the Ethereum ecosystem. All smart contracts are processed within the EVM. 

Smart Contracts 

Smart contracts are lines of code that ensure the automatic execution of operations on the Ethereum network once predefined conditions are met. Unlike conventional contracts that see documents outlining the terms enforceable by law, smart contracts codify the agreements, ensuring that the rules are automatically enforced. 

Consensus Mechanism 

Ethereum, having switched from Proof-of-Work, now uses a Proof-of-Stake consensus mechanism, where participants called validators create new blocks and verify the information contained within each block. The blocks contain information related to the state of the blockchain, a list of attestations, transaction details, and more. Proof-of-Stake does not require dedicated, energy-intensive computing requirements as Proof-of-Work. 

Validators are required to stake 32 ETH to activate their validation privileges. However, individuals can join staking pools by staking smaller amounts of ETH. 

How Does Litecoin Work? 

As mentioned earlier, Litecoin was created through a fork of the original Bitcoin blockchain. As a result, it shares several similarities with Bitcoin. Its primary use case was to be used as a mode of payment for goods and services. 

Blocks containing transactions are verified and added to the blockchain by miners, who are rewarded for their efforts. The current reward stands at 12.5 LTC. Litecoin’s supply is capped at 84 million, out of which around 66 million are in circulation. It also features a faster block propagation time, with miners on the platform mining a block every 2.5 minutes compared to Bitcoin’s 10 minutes. 

Consensus Mechanism 

Litecoin’s Proof-of-Work consensus mechanism uses an updated version of Bitcoin’s original code, allowing it to achieve significantly faster speeds. While the scrypt-based process does not require too much computing power, it requires more memory from additional users, allowing the mining process to be spread out among more users. 

Litecoin Features 

• Lightning Network – The lightning network is a scaling solution that was first implemented on Litecoin before its eventual adoption by Bitcoin. The lightning network processes transactions on a separate layer built on top of the blockchain. 
• SegWit – Segregated Witnesses was first proposed for Bitcoin in 2015. However, Litecoin was the platform to adopt the technology first. With no significant incidents or errors reported after adoption, it was adopted by Bitcoin. 
• MimbleWimble – Litecoin recently adopted MimbleWimble, a significant privacy and scalability upgrade, in May 2022. 
• Atomic Swaps – Atomic Swaps add interoperability to the blockchain, facilitating the trade of multiple cryptocurrencies without actually exchanging them.

Ethereum vs Litecoin: Overview

Ethereum vs Litecoin: In Closing

Since its inception, Ethereum’s vision has been to become the go-to platform for decentralized applications and DeFi. Ethereum has to com

On the other hand, Litecoin’s history is intricately linked with that of Bitcoin, as it emerged as one of the first prominent altcoins in the crypto space. Litecoin is also credited with bringing various innovations into the crypto space, such as Lightning Network, SegWit, and Atomic Swaps.

If you want to know more about Ethereum and Litecoin and their latest prices, you can head over to CoinSmart, Canada’s most trusted exchange.