Explore the differences and similarities between Litecoin and Bitcoin Cash and find out which crypto is better for you to invest in.
Bitcoin (BTC) remains by far the most popular cryptocurrency. Since its launch in 2009, the price of Bitcoin has gone up tremendously. Early investors that managed to hold their BTC coins for several years became rich. Yet, many crypto enthusiasts are now looking for an alternative to this cryptocurrency.
Why should one be interested in finding an alternative to the most popular cryptocurrency in the first place? The reason is somehow connected to BTC’s wide popularity. Satoshi Nakamoto, the creator (or creators) of Bitcoin, envisaged a functional peer-to-peer digital payment system. It had security features that prevented issues like the double-spending problem. As such, this digital currency system attracted large numbers of followers.
However, after some years, it was evident that the BTC network was not planned to handle so many transactions. As a result, this cryptocurrency system cannot compete with traditional payment methods like PayPal. Such systems can handle millions of transactions a day. Bitcoin can’t scale up and meet those numbers. That’s why other cryptocurrencies have emerged, some of them trying to improve the capabilities and features of the original coin created by Nakamoto.
Two of the most popular contenders as alternatives to Bitcoin are Litecoin (LTC) and Bitcoin Cash (BCH). The former was launched in 2011, which makes it one of the oldest cryptocurrencies in the market. It was somehow a clone of Bitcoin. But as it appeared two years later, Litecoin already uses a different Proof of Work (PoW) consensus mechanism. Transactions are performed faster on Litecoin in comparison to Bitcoin. These features have contributed to LTC becoming one of the top cryptocurrencies by market capitalization nowadays.
Bitcoin Cash was forked from the original Bitcoin’s blockchain to solve some of its scaling problems. For this sake, Bitcoin Cash uses a larger block size, which accommodates more transactions. Besides enabling larger capacity, this solution also reduces transaction fees on the BCH network. Since transactions don’t have to compete so hard to be validated, the fees are significantly lower. These features have contributed to BCH becoming another top cryptocurrency by market cap. It is practically at the same level as LTC.
We have briefly described how both Litecoin and Bitcoin Cash compare versus Bitcoin. But it is also important to compare Litecoin vs Bitcoin Cash. With such a comparison, a potential investor can decide which of these two cryptocurrencies to buy. What features should one consider for a good Bitcoin Cash vs Litecoin comparison? The following are some of the main LTC vs BCH differences that a potential investor should consider.
- Price and Other Market Metrics. The prices of both LTC and BCH are volatile. It is difficult to compare them in the long run. So is market capitalization. Currently, Litecoin has a market capitalization of over $9.1 billion. There are nearly 67 million LTC coins in circulation out of a total of 84 million. On May 10, 2021, LTC reached an all-time high value of $412.96. On the other hand, BCH has a market capitalization of over $9.5 billion with over 18.8 million BCH coins in circulation. The total supply of this cryptocurrency is 21 million coins. Its current all-time high was reached on December 20, 2017, when it was traded at $4,355.62;
- Maximum Block Size. Since Bitcoin Cash was created to make the original BTC blockchain scalable, its block size was originally set to 8MB. However, it was created so it could be expanded to 32MB, its current size. Litecoin has a smaller block size. Inherently, its maximum size is 1 MB. But after the adoption of SegWit into the LTC network, this size could be theoretically increased to 4MB;
- Average Block Time. This parameter is closely related to transaction speed. It refers to the time that the network takes to generate a new block of transactions. Each block is then added to the blockchain. So, for Litecoin, the average block time is 250 seconds, whereas for Bitcoin Cash is 600 seconds. This comparison indicates that Litecoin is faster. However, one must consider that the block sizes are not of the same size in both blockchains;
- Hashing Algorithm. Since Bitcoin Cash was forked from the original BTC blockchain, it uses the SHA-256 hashing algorithm. This algorithm provides good network security. For its part, Litecoin employs the Scrypt hashing algorithm. This algorithm is quicker and simpler in comparison to SHA-256;
- Average Transaction Fee. This parameter is also important for the adoption of a cryptocurrency as a payment method. Currently, the average transaction fee on the BCH network is 0.000014 BCH. For the LTC network, this average transaction fee is 0.00019 LTC. Considering the exchange rate of each cryptocurrency, the BCH transaction fees are generally lower.
After reviewing these differences, you may be wondering whether to buy Litecoin or Bitcoin Cash. As seen, some aspects like market capitalization are similar for both cryptocurrencies. Both cryptocurrencies seem to have what it takes to be adopted massively. Let’s discuss how these two digital assets compare in more detail. Then, we can proceed with a deeper analysis of each one.
History of Litecoin and Bitcoin Cash
Let’s briefly review the history of these two cryptocurrencies to understand some of their current developments. As we indicated in the beginning, Litecoin was launched in 2011. It shared many features with the original BTC blockchain. The creator of Litecoin did not intend to replace BTC but just to improve it. Hence, Litecoin was created as a “lite” version of Bitcoin, with a larger coin supply, and a different hashing algorithm. More importantly, the block confirmation took less time.
Later, in August 2017, Bitcoin Cash was created. This new cryptocurrency was a fork aimed at solving the scalability problems of the original BTC blockchain. With a maximum block size of 1MB, Bitcoin functioned well during its first years of existence. As more and more people started using this cryptocurrency, the BTC network could not handle the increasing number of transactions. As a result, the network was often congested, thereby increasing the transaction fees.
It was clear that the BTC network needed to be scaled up to meet the increasing service demand. The BTC community started to look for a solution. Some users proposed a SegWit upgrade to increase the maximum block size. Others thought that a hard fork was a better solution. The community was divided and, in the end, the BTC blockchain split and Bitcoin Cash was born. The new cryptocurrency was backed by several high-profile personages in the BTC community.
Later on, the BCH community had disagreements that led to a hard fork in this cryptocurrency. A new cryptocurrency by the name of Bitcoin SV was born. Since their respective dates of creation, these cryptocurrencies have been growing their value and popularity. However, there have been some issues and controversies along the way. For example, one of the biggest controversies of Litecoin took place in December 2017.
During the bull run of cryptocurrencies in 2017, one of the major developers of Litecoin offloaded all his LTC coins. This move was seen by many as an attempt to get personal benefit through price manipulation. The controversy damaged somehow the image of this cryptocurrency. In fact, Litecoin did not get much attention from investors in its early years.
It was during the bull run of 2017 that the LTC price skyrocketed. And even though its price fell eventually, it did not crash like other cryptocurrencies. It has managed to keep its value. In the last five years, the price of Litecoin has increased approximately 1000%. Contrastingly, Bitcoin Cash appeared just before the bull run of 2017. This coin reached its all-time high during that bullish event. However, like almost all other digital coins, the price of BCH dropped in the following years.
Litecoin vs. Bitcoin Cash: Speed Comparison
Bitcoin Cash takes the same time to generate a block as Bitcoin (600 seconds or 10 minutes). Hence, it takes 10 minutes for any transaction to be verified and added to the BCH blockchain. Depending on the number of confirmations required by the receiving party (merchant or retailer, for example), a full BCH confirmation can take 20-60 minutes. So, how come Bitcoin Cash is often touted as being faster than Bitcoin? Generally, Bitcoin Cash is faster when people use zero-confirmation transactions. This type of transaction doesn’t need any confirmation to be accepted as valid. If the receiving party accepts zero-confirmation transactions, payment can be cleared in less than a minute (usually 5-10 seconds).
For its part, the LTC network takes 2-3 minutes to add a new block. Likewise, the total time to confirm a transaction depends on the number of confirmations required by the receiving party (merchant). Some exchanges can request up to 12 confirmations, which means approximately 30 minutes. Other merchants can require one or two confirmations only, which will take 3-6 minutes. Usually, merchants require 6 confirmations on the LTC network. It takes between 15 to 20 minutes to perform all the required confirmations.
Now, if your transaction is fully confirmed, the waiting time is about the same on either network. The difference between Bitcoin Cash and Litecoin is evident when one uses zero-confirmation transactions. However, such quick transactions come at a cost. Zero-confirmation transactions are not fully secure. They’re vulnerable to double-spend attacks. However, a growing number of merchants are accepting this type of transaction. Litecoin, for the moment, hasn’t implemented this technology.
Bitcoin Cash vs. Litecoin: Mining
An important aspect of comparison is the mining Bitcoin Cash vs Litecoin. Mining consists of the verification of transactions that will be added to the blockchain ledger. Miners are important for a cryptocurrency blockchain as they verify transactions and secure the network. For these services, miners are rewarded with digital tokens and a part of the transaction fees. If you become a miner, you can have some passive earning. Which of these two cryptocurrencies should you mine? Which one is more profitable? Let’s take a look at this issue.
Mining Bitcoin Cash
If you are familiar with Bitcoin mining, then you won’t have any problem with Bitcoin Cash mining. These cryptocurrencies are mined the same way. To mine Bitcoin Cash you need the following:
- An application-specific integrated circuit (ASIC) miner compliant with the SHA-256 hashing algorithm. You must make sure that the miner is specific for BCH mining, otherwise, it won’t work;
- A stable Internet connection with at least 1Mbps speed and 24/hour availability;
- A BCH wallet.
Depending on the type of ASIC miner you get, expect to pay between $1,000 and $2,000 for the hardware. Once you have the necessary equipment, you can start mining. However, if you mine alone, you may not get many rewards. If you join a mining pool, the profitability of your mining activities will increase. A mining pool is formed by several miners that contribute their computing power towards finding blocks. Then, they share the mining rewards proportionally to the computing power each miner contributed. There are many BCH mining pools that you can join, among them BTC top, Antpool, F2pool, and others.
The hashrate of the BCH network varies greatly. This value corresponds to the network processing power. It is the result of the combined computing powers of miners. In other words, the hashrate is the number of hash operations performed in a time unit. Usually, for Bitcoin Cash, this value is given in Exahash per second (EH/s). Currently, the BCH hashrate is in the order of 1.789 EH/s. The higher the value, the more secure the network is from a 51% attack.
Mining Litecoin
To mine Litecoin, you will need an ASIC miner also. Like Bitcoin, it was possible to mine Litecoin using a CPU or GPU in the first years of existence of this crypto. Nowadays, it is no longer profitable because of high competition. In this case, you will need an ASIC miner compliant with the Scrypt hashing algorithm. Also, you need a fast Internet connection and an LTC wallet.
Likewise, if you join a mining pool, your chances to make a profit are higher. Some popular LTC mining pools are LitecoinPool.org, ProHashing, and F2pool. The Litecoin hashrate is usually given in Terahash per second (TH/s). Currently, the LTC hashrate is in the order of 217.916 TH/s. As such, Litecoin can be vulnerable to a 51% attack. However, it is unlikely that such an attack will ever occur.
Like Bitcoin, Litecoin mining rewards halve every four years. The next halving will take place in 2024. If one considers price only, mining Bitcoin Cash is more profitable than mining Litecoin.
Litecoin Fees vs. Bitcoin Cash Fees
We’ve already compared Litecoin vs Bitcoin Cash fees early in this article. In monetary terms, the transaction fee for Bitcoin Cash is $0.005 on average. For Litecoin, it is $0.018 on average. While in both cases the transaction fee is not high, Bitcoin Cash charges significantly lower fees.
Where to Buy and Store Bitcoin Cash and Litecoin
Being some of the most successful and popular cryptocurrencies, you won’t have any problem buying Bitcoin Cash or Litecoin. Some exchanges will allow you to buy BCH and LTC using fiat money. Others may trade these coins for other cryptocurrencies only, usually Ether (ETH) or BTC. On LetsExchange.io, you can easily and safely swap nearly 2000 cryptocurrencies for BCH or LTC.
Likewise, there are many different options to store these cryptocurrencies. There are hardware, desktop, mobile, and paper wallets for these two cryptocurrencies. Each type of wallet has its pros and cons. You should choose one according to the way you use your digital coins. For example, for day-to-day use, a mobile wallet will be the best option. For long-term investment, a hardware wallet offers higher security in the long run.
Conclusion
Bitcoin was meant to become “a decentralized electronic cash system.” Unfortunately, it seems that Bitcoin won’t be able to fulfill this vision. However, Bitcoin Cash and Litecoin are two cryptocurrencies with the potential to do it. We have compared both cryptos thoroughly. From our analysis, we conclude that Bitcoin Cash has some advantages over Litecoin. Bitcoin Cash has a better market position. Its liquidity, usability, and zero-confirmation transactions feature will likely facilitate its mass adoption.
Also, in terms of security, the BCH network has the upper hand. Moreover, mining Bitcoin Cash is more profitable. It seems that Bitcoin Cash will continue to outperform Litecoin in the coming years. However, Litecoin has had sharper price hikes. As such, it’s up to you to decide which of these two cryptocurrencies is better to invest in.
Disclaimer
Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn’t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.