If you are wondering about the essential differences between Bitcoin and Litecoin, keep reading to find out.
What’s the Difference Between Bitcoin and Litecoin?
Bitcoin and Litecoin are both cryptocurrencies based on the same code. Litecoin’s creator Charlie Lee describes Litecoin as “the silver to Bitcoin’s gold.” Lee created Litecoin to improve upon the accessibility and transaction throughput speed of Bitcoin, making Litecoin better suited for everyday transactions. These are some of the main differences between Bitcoin and Litecoin: Bitcoin’s software limits the size of a new block to 1MB, which means that not all Bitcoin transactions always get processed within 10 minutes. If the Bitcoin network is busy or congested, it can take up to 90 minutes to receive a transaction verification. The Litecoin network is less busy and does not experience these same network congestion issues.
Maximum Coin Supply
The Bitcoin supply is limited to 21 million coins, while Litecoin’s maximum supply is capped at 84 million coins. Just like the Litecoin network processes crypto transactions four times faster, Litecoin’s maximum coin supply is four times higher than that of Bitcoin. The Litecoin designer consistently used a multiple of four to differentiate between the currencies. Litecoin, with more coins issued, may have more liquidity than Bitcoin—but the scarcity of Bitcoin may make it more valuable. The prices of Bitcoin and Litecoin are notoriously volatile, but Bitcoin’s price is consistently orders of magnitude higher than the price of Litecoin.
A Note About Fees
The Bitcoin and Litecoin blockchain networks both charge transaction fees to users and pay crypto rewards to miners for processing the network’s transactions. But that’s about where the similarities end when considering the fees associated with each of these cryptocurrencies. Since transaction fee amounts are determined by the transaction volume of the blockchain network, fees for Bitcoin transactions are significantly higher than Litecoin transaction fees. Bitcoin transaction fees in January 2022, are around $1.85, though network congestion in early 2021 caused the fee to process a single Bitcoin transaction to temporarily spike to over $60. With Litecoin, users typically pay, on average, just a fraction of a penny per transaction.
Which Is Right For You?
Buying some Bitcoin is a common starting place for beginner crypto investors, due to Bitcoin’s well-known status as a cryptocurrency. You can buy Bitcoin using nearly any cryptocurrency exchange or through a brokerage that supports crypto purchases. Investors who purchase Litecoin may choose to do so because of Litecoin’s potential usefulness for routine transactions. Litecoin, like Bitcoin, is available through many cryptocurrency exchanges. You can choose to buy both Bitcoin and Litecoin, since each has different advantages and drawbacks. Many cryptocurrency investors hold a mix of currencies, including Bitcoin, Litecoin, and other altcoins. Before you invest in either Litecoin or Bitcoin, it’s important to consider both the risks and benefits of owning cryptocurrency. Always follow online security best practices and double-check the transaction details before completing a purchase, since reversing a cryptocurrency transaction is generally not possible.
The Bottom Line
Bitcoin and Litecoin are similar in more ways than not. Both are cryptocurrencies that often experience major swings in value. Both could quickly lose value due to government regulatory action, negative press, or security issues. If you decide to invest in Bitcoin or Litecoin, or both, it’s wise to not invest more money than you can afford to lose. You may decide to invest in only one of these cryptocurrencies, based on the few critical differences between the two coins. The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
