Among cryptocurrencies, Bitcoin receives the most media headlines but did you know that less well known Bitcoin alternatives might be faster and have more functionality? Two of the leading contenders are Litecoin and Ethereum. When you compare Litecoin vs Ethereum, which cryptocurrency is best?
Along with Bitcoin, Litecoin and Ethereum have grown like mushrooms in recent years towards multi-billion dollar market capitalizations but don’t let that fool you into thinking either cryptocurrency is a sure bet.
Before speculating on either Litecoin or Ethereum, you should consider how comfortable you are owning highly volatile digital assets. In virtually the blink of an eye, the prices of cryptocurrencies have been known to swing by double digit percentages.
Over time, they have created enormous wealth for some early adopters but prices can plummet so fast and soar so quickly that you may feel like you are on a rollercoaster ride if you track prices daily.
With that consideration in mind, which cryptocurrency is best? Is it the relatively new cryptocurrency, Ethereum, which launched in 2015 and quickly rose to second in the ranks behind Bitcoin? Or Litecoin, the more established digital currency, that has been around since 2011?
Litecoin Vs Ethereum
Perhaps the biggest difference between Litecoin and Ethereum is that the former is a cryptocurrency only while the latter, Ethereum, is an open-source, blockchain-based distributed computing platform that can support smart contract functionality.
That’s a complicated way of saying that Ethereum not only makes a cryptocurrency called ether possible, but can also support the launch of new cryptocurrencies and make it possible to crowdsource funding for new projects.
The simplest way to think about Ethereum is to compare it to something you probably use every day, your mobile phone. If you have an Android or iOS phone, you have apps that can perform a wide variety of functions from ordering an Uber to mapping a route across town.
Apps are written in a wide variety of languages for many purposes and can be downloaded by anyone. Similarly, Ethereum was designed as the foundational Blockchain layer that understands general purpose programming languages to bring flexibility to the blockchain world.
What Is Blockchain?
So Ethereum is a general purpose Blockchain but what is a Blockchain? A Blockchain is a decentralized system that contains some kind of shared memory.
For example, in the case of bitcoin, the shared memory is how many bitcoins everyone has at some time.
A blockchain application needs to be decentralized and have shared memory.
Once you have a decentralized Blockchain, you can build many things on top of it.
The way it works is through what are called smart contracts, which are computer programs that control digital assets.
With Ethereum, you can send ether to a computer program, which controls where the money goes. For example, it can send money to any address.
Think about an insurance contract as a real life example whereby digital currency is sent to purchase coverage.
Crowdfunding is another application example whereby if people contribute enough money within a certain time frame, a project is funded, similar to how Kickstarter works. If insufficient money is raised to fund a project then everybody gets refunded.
These sets of rules can be applied to many applications beyond the financial world which is why a big challenge for blockchain developers is to figure out how to support the scale and size of the opportunity for blockchain applications in the real world.
Currently, blockchain is not capable of supporting as many transaction as Visa processes payments or even Uber processes rides.
For now, the blockchain is limited to more niche applications, though lots of work is being done to one day cater to the scale and size of the opportunity to disrupt everything from financial transactions on Wall Street to insurance purchases, and many more applications.
What Is Ethereum?
Ethereum was created by Vitalik Buterin, who theorized that Bitcoin needed a scripting language for application development.