While cryptocurrency has only recently become a popular term in finance, it has been around for a long time. Before names like Bitcoin, Ethereum, and Litecoin even existed, there were attempts to create a decentralized currency.
David Chaum, a respected cryptographer, launched ECash, an anonymous system in the 1990s but it failed. Chaum built the system on currently existing government financial principles and infrastructure like credit cards. RPOW, BitGold, B-Money were also created but failed.
Cryptographers could not get past specific challenges that they faced at the time. The first challenge was how to achieve true decentralization and the second was the issue of double spending. The prevention of double spending meant the use of a third-party clearing house. This wasn’t acceptable because to achieve the type of innovative digital finance you needed the system to be independent of any institution.
In 2008, cryptographers finally stumbled on the information they had been searching for when an anonymous contender released the blueprint for a digital currency known as Bitcoin. It showed the technical specifications of the blockchain — a decentralized technology that creates a trustless, permissionless system and eliminates the problem of double spending. This new technology took the world by storm, later leading to changes in the financial industry as well as other industries such as real estate. With the cryptocurrency revolution, came many coins, tokens, and altcoins. Here, we take a deep dive into the similarities and differences between some of the most popular and valued ones: Bitcoin, Ethereum, and Litecoin.
Bitcoin vs. Ethereum vs. Litecoin: Pricing
Whether a user is new to cryptocurrency or not, the whole exchange process can be very confusing. There are a lot of questions, such as Ethereum pass Bitcoin? Is Ethereum better than Bitcoin? How do you even go about exchanges? And, can you exchange one cryptocurrency for another like maybe Bitcoin for Litecoin and vice versa? Apart from questions like these, there are other technicalities like market analysis and coin-watching.
The best way to go about unbundling blockchain is by studying the facts and taking little steps. For pricing, the facts are simple when comparing Bitcoin vs Ethereum. The former had a price growth of about 1,000% while the latter grew by about 10,000%. Despite having a higher overall price, the figures show that Bitcoin may not be as good for investment as Ethereum. As for Bitcoin vs Litecoin, the same trend appears where the smaller cryptocurrency had a better price growth than Bitcoin.
Figuring out which of the cryptocurrencies is better will depend on the user’s preference. All three coins have shown potential to revolutionize investing in their different ways. However, one thing is clear: they all seem to yield better results from long-term investment. These days, anyone can make a Litecoin, Bitcoin or Ethereum price prediction. It’s important to weed out the ones that don’t show any true logic behind them before using them as an investment guideline.
Price-monitoring can be done on sites like Coinmarketcap to see the rise and fall of both the prices and a market cap of different coins. Exchanges like Binance also show current prices and allow users to exchange one cryptocurrency for another. It’s possible to exchange Bitcoin for Ethereum, Bitcoin for Litecoin and so on.
Bitcoin vs. Ethereum vs. Litecoin: Wallets
All three cryptocurrencies use similar wallets. Mobile, desktop, web and hardware wallets are acceptable on their platforms. The safest option is hardware wallets because they’re offline and can’t be hacked. Such wallets can be stored in a safety deposit box or even a vault at home depending on the value of their contents.
Bitcoin VS. Ethereum VS. Litecoin: Mining
For those looking to understand and perform cryptocurrency mining, there are significant differences between the way Bitcoin, Ether and Litecoin are mined. Bitcoin mining uses the SHA-256 hashing method to ensure that miners solve a challenging puzzle. They show a solution known as the proof-of-work and add new blocks to the blockchain after. The current block reward is about 12.5 BTC valued at almost $83,000.
Ethereum, on the other hand, switched from the proof-of-work to the proof-of-stake method in which new blocks are minted, not mined. In proof-of-stake, a node puts up an amount of its personal Ether as a stake. The node with the highest stake is chosen to validate the next block. Validators bet on blocks to show that they don’t have any malicious transactions on them. If a malicious block is validated, the validators lose their stake. However, if the block isn’t malicious, then the validator gets a reward proportional to their bet.
Litecoin mining also involves the proof-of-work protocol like Bitcoin. However, Scrypt is used in place of SHA-256 to mitigate the problems associated with mining centralization and energy use. Scrypt allows any user with access to extra memory to become a miner without buying expensive ASIC devices like Bitcoin miners. The current Litecoin block reward is 25 LTC valued at about $2,500 at the time of writing.
Cryptocurrency is relatively new and is still being studied and continuously improved upon. Market experiments are still occurring, and businesses continue to find new ways to accept blockchain technology. This is evident in the fast growth of platforms like Ethereum, the Enterprise Ethereum Alliance and recent partnerships like that of sites like Pornhub and Verge cryptocurrency.
While this may sound exciting, investors should not get too carried away as there are many ways to lose money in crypto investing. Research the market and how it constantly changes while leaving room for unpredictable outcomes. Although the field of cryptocurrency is still quite young, Bitcoin, Ethereum, and Litecoin have earned their places as giants that continue to drive innovation in one way or the other.
This article is an excerpt from MintDice, BITCOIN VS. ETHEREUM VS. LITECOIN.
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