Bitcoin and Litecoin may already be in your investment watchlist. But which one has the better investment in 2021 and beyond?
Few people would contest that Bitcoin is by far the biggest and most well-known cryptocurrency in existence. It’s fair to say that the original cryptocurrency has well and truly transcended the world of blockchain and could rightly be described as a household name at this stage.
However, Bitcoin is not without its faults and since its launch in 2009, numerous altcoins have appeared on the market purporting to fix certain issues and provide an update to Satoshi Nakamoto’s original blueprint. One such token is Litecoin.
Often touted as the silver to Bitcoin’s gold, Litecoin sought to address certain scalability issues and promised a faster, cheaper block-creation rate than its predecessor. So is Litecoin better than Bitcoin? In the following article, we’ll explore the differences between the two cryptocurrencies and assess their potential as an opportunity for investment.
Bitcoin vs Litecoin: A Comparison Between Them
Litecoin was very much developed using the original Bitcoin blueprint, therefore there are plenty of similarities between the two cryptocurrencies. Of course, there are a few key technical variations that in theory make Litecoin an updated version of the original cryptocurrency. It’s fair to say that both tokens have also had a fairly different experience when it comes to market history and mainstream adoption.
Litecoin vs Bitcoin - The Key Differences
Here are the most important ways the two assets differ:
There are few people that remain unaware of Bitcoin at this stage. It is by far the most famous cryptocurrency in existence and is yet to be challenged as the most successful in terms of price growth and adoption by mainstream payment platforms. It was really Bitcoin that put the concept of blockchain technology on the map when the whitepaper appeared back in 2008.
The basic premise behind Bitcoin was for a new method of payment that removed the need for a central authority. By using blockchain for peer-to-peer transactions, secure payments could be made without needing a bank or financial institution. This was possible thanks to the unique way in which blockchain works - with each transaction recorded by a network all but impervious to corruption and/or manipulation.
Fast forward to 2021 and it's fair to say that Bitcoin is yet to realise its ambition as a truly viable retail payment option. Costly transactions and a lack of widespread adoption mean that BTC has yet to rival traditional payment methods. However, this hasn’t impeded Bitcoin’s growth as an asset for investment - at the time of writing, a single BTC token is trading at over $58,000.
As we’ve noted above, Litecoin was essentially created to fix perceived shortcomings in the original Bitcoin blueprint. Litecoin was very much modelled on Bitcoin, but when former Google engineer Charlie “Satoshi Lite” Lee founded the altcoin, he wanted it to be more viable as a digital currency for everyday retail transactions.
In the past, Litecoin has been dismissed as just a “testbed” for Bitcoin and critics have claimed LTC transactions are less secure than those of BTC. However, Litecoin continues to have its supporters and at the time of writing was still in the top ten largest cryptocurrencies by market capitalisation.
Transactions and Speed
One of the issues that many Bitcoin detractors often latch onto is the time and cost involved in processing transactions on the network. Of course, this has been an ongoing issue and might be of little interest to anyone looking to buy Bitcoin in 2021, but it’s an important factor to consider when comparing Bitcoin to Litecoin.
It takes roughly ten minutes for a new block to be created on the Bitcoin blockchain. Given the size of each block and the network capacity, Bitcoin can process around 5 transactions per second (TPS). To put this in context, Ethereum can process upwards of 15 TPS, the Ripple network can handle 1500 and Visa can process 1700 transactions per second.
Bitcoin’s transaction speed is dictated by the process in which new blocks are created. Put simply, powerful nodes on the network compete to solve complex equations to verify the blocks via a proof of work mechanism.
This process, better known as Bitcoin mining, relies on something called the SHA-256 algorithm, which, whilst highly secure, requires a great deal of time and resources. Hence Bitcoin has a sluggish processing time with costlier transactions than many rival cryptocurrencies.
A key difference between Bitcoin and Litecoin is how new blocks are created. Whilst both networks use the proof-of-work mechanism, Litecoin uses the Scrypt algorithm instead of SHA-256. Scrypt allows Litecoin to create blocks much faster, with an average time of around 2 and a half minutes.
This also keeps the cost of Litecoin transactions down and in theory makes LTC a much more viable means of payment for smaller retail transactions. However, it should be noted that Litecoin’s two-minute block creation time is still relatively slow compared to many of the smart networks out there, including Ethereum and Cardano.
Supply and Demand
Those new to the cryptocurrency scene often wonder how supply and demand of a digital asset is regulated - after all, effectively a Bitcoin token can be created out of thin air. The answer lies in Bitcoin’s in-built deflationary mechanism, which effectively constrains the supply of the coin and creates scarcity over time.
We have already discussed the concept of Bitcoin mining. When miners create new blocks they are rewarded with Bitcoin tokens for their trouble. The reward they are given is halved at regular intervals. Originally, miners received 50 BTC but this was reduced to 25 in 2013. In 2018 it was halved again to 12.5, and in May of 2020, it was halved again to 6.25. The next halving should take place sometime in 2024.
The halving means that fewer coins are being released into the Bitcoin ecosystem as time goes on. The total supply of Bitcoin is also capped at 21 million. Meanwhile, demand for Bitcoin is constantly increasing. Effectively, this creates a kind of deflationary effect and potentially increases the value of each Bitcoin token as time goes on.
Just as with Bitcoin, Litecoin is a deflationary coin and undergoes a similar halving process. The first one took place in August 2015, where the reward for Litecoin miners was cut from 50 LTC to 25. The last halving, in August 2019 say the reward reduced to 12.5 LTC.
Inevitably, this mechanism creates scarcity much in the same way as Bitcoin halving does. The total number of LTC is also capped - though with a much higher limit of 84 million. In theory, as fewer Litecoin are released into the network and they become harder to come by, their value should increase just as it would with any other scarce resource.
Litecoin vs Bitcoin: Which Is The Better Investment?
Looking at the investment profiles of Bitcoin vs Litecoin yields a fairly one-sided result.
There isn’t a huge amount of difference when you look at the technical particulars of Bitcoin vs Litecoin. They are both built around the same blueprint and both have very similar mechanisms with regard to supply and demand. Litecoin does generate blocks in much less time, but if you are an investor then asking “is Litecoin better than Bitcoin?” becomes somewhat irrelevant.
There are many altcoins that can claim to be more technically advanced than Bitcoin, but that doesn’t change the fact that token for token, Bitcoin is by far the most valuable cryptocurrency on the market. So the question should be: is Litecoin a better investment? To answer this, we first need to consider each token’s previous price movement, irrespective of any technical specs.
Bitcoin Vs Litecoin: Price History
Looking at the price history of Bitcoin and Litecoin not only helps us to identify which coin is the most valuable, but we can also use past data to inform our future predictions.
It could be argued that one of the reasons Bitcoin is so well-known outside of the crypto community is largely down to its spectacular price movement. Despite trading at pennies in the first few months of its existence, BTC exploded in 2013 and prices soared to $1,242 per token - creating the first wave of crypto millionaires.
However, one thing that marks cryptocurrency out from other financial assets, such as stocks, is how volatile prices can be - after the 2013 price surge, BTC dropped as low as $340 in 2014. A similar pattern can be seen following the famous 2017/2018 boom, wherein Bitcoin reached a record $19,783.06 before sinking back to $3,300 before 2018 was out.
However, fast-forward to 2021 and Bitcoin’s price growth has been nothing short of phenomenal. Prices had soared past the $20,000 mark by the beginning of the year and at the time of writing Bitcoin was closing in on an all-time high of $58,000 for a single token.
It’s fair to say that Litecoin cannot compete with Bitcoin when it comes to price growth. Despite being an offshoot of Bitcoin, Litecoin was worth very little for the first 18 months of its existence. It wasn’t until 2013 that things started to change and in the winter of that year, prices started to accelerate until reaching $38 in November.
The success proved to be short-lived however and Litecoin quickly went into decline, sinking as low as $3 by the end of 2014. There was little movement over the next couple of years and LTC was still trading below $5 going into 2017. However, by summer there had been another price run and Litecoin reached an all-time high of $72 in August. By December, prices had surged as high as $237, on the back of the Bitcoin rally that was going on at the same time.
However, this also proved to be temporary and LTC dropped to around $12 by March 2018. Litecoin peaked again in the summer of 2019, hitting around $135 before going into a fairly steady decline for the rest of the year.
After a disappointing start to 2020, fortunes changed for LTC and it very much benefitted from the market surge at the end of the year, continuing its growth well into 2021. At the time of writing, LTC was trading at $223.98.
Bitcoin Vs Litecoin: Future Predictions
If you are considering investing in either Bitcoin or Litecoin, then ultimately future price movement is going to be your biggest concern. We can look at previous price data to build an idea of how market forces affect each token and what follows are price predictions from some of the top analysts in the industry.
The majority of forecasters are predicting continued growth for Bitcoin in the coming months. DigitalCoinPrice has BTC on an upward trend until the summer, where having topped out at around $99,099.50 in May, prices will dip slightly to $78,178.15, before rallying again at the end of the year and reaching $97,187.24 by the end of December.
Elsewhere, Prime XBT is also extremely bullish on Bitcoin. According to its technical analysis, BTC is “slightly ahead of schedule indicating some corrective patterns are ahead” and prices could reach $100,000 to $325,000 before the end of 2021.
Similarly, the Economy Forecast Agency is predicting big things for Bitcoin throughout the rest of the year. It has BTC on an upward climb throughout the year, hitting the $100k mark in August and continuing that trajectory until reaching over $154,000 by the end of the year.
Litecoin price predictions are more conservative than those for Bitcoin, but they are nonetheless mostly positive. Digital Coin Price has LTC flatlining for much of May, before a bull in June sends prices up to $363.16. Things will then dip slightly, before rallying again at the end of the year and closing December at around $357.01 per token.
TradingBeasts is a little less optimistic with its Litecoin price prediction. It actually has the average price of LTC declining in value from its current price. As of the end of May, it has LTC dropping back below $200 and continuing to decline into July, before things change direction. LTC is then expected to recover to an average of $205 by December.
Finally, The Economy Forecast Agency has Litecoin going through some pretty impressive periods of growth. According to its technical analysis, LTC will reach as high as $732 by November 2021.
Litecoin Vs Bitcoin: What the Experts Say
It’s always worth keeping an ear to the ground for expert comments on the cryptocurrency market. Of course, there are far more opinions on Bitcoin than Litecoin, but this does not equate to its being a better investment - it is simply the more talked about token. So who thinks its a good idea to buy Bitcoin in 2021?
"The technical outlook for Bitcoin in 2021 remains strongly upward, if past patterns repeat," comments Mike McGlone, a senior commodity strategist at Bloomberg Intelligence. In his April market report, he argued that Bitcoin is "on similar ground as the roughly 55x gain in 2013 and 15x in 2017."
Meanwhile, Nickel Digital Asset Management chief executive Anatoly Crachilov points out that "A growing number of corporations, including car manufacturer Tesla, business intelligence firm MicroStrategy, and mobile payments processor Square have recently made non-trivial, multi-billion allocations to bitcoin as part of their treasury reserve strategies."
This all bodes well for BTC, but what about Litecoin? Well, according to Crypto Capital Venture founder Dan Gambardello Litecoin’s current price action can be compared to that of 2016, when Litecoin rallied to $300 after consolidating around $4 for some time. He believes that LTC will have a “massive run to $1,000+” in the long-term. Meanwhile, cryptocurrency analyst George Tung has previously predicted that Litecoin has a very real chance of reaching $1500 in 2021.
Litecoin Vs Bitcoin: Conclusion
There is no doubt that Bitcoin is a much bigger cryptocurrency than Litecoin - both in terms of market capitalisation and general notoriety. However, it should be noted that Litecoin founder Charlie Lee has always maintained that his coin was never intended to be a rival with Bitcoin, but instead was geared towards the everyday retail spender.
As such, there should be plenty of room for both Litecoin and Bitcoin in any diversified cryptocurrency investment portfolio. It’s fair to say that the former carries more risk, but ultimately most analysts are predicting future growth for both tokens.
Of course, whether you choose to invest in Litecoin or Bitcoin, it should always be remembered that the cryptocurrency market is notoriously volatile - many crypto novices believe that Bitcoin is a safe bet, simply because it is the bigger name, but as we have seen, the price of BTC has undergone plenty of price dives in its time.
If you’re only going to choose one coin, then it is probably better to invest in Bitcoin than it is to invest in Litecoin. However, as analyses reveal, both coins can potentially yield impressive returns in 2021 so both potentially have their place in a diversified investment portfolio.
Bitcoin may be the clear winner, but Litecoin’s resilience and continued popularity against the odds are certainly worthy of note and could well see the Litecoin asset emerge as a solid investment for 2021.
How to Invest in Cryptocurrency in 2021
If you intend to buy Bitcoin or Litecoin in 2021 but are unsure of how to actually go about it, then the first thing you’ll need to do is find a reliable broker to give you access to the market. For new and experienced investors alike, we recommend eToro. Not only is it one of the most trusted names in the industry, but eToro also has plenty of educational resources to help you get started.
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Bitcoin Vs Litecoin - FAQ
Should I invest in Litecoin in 2021?
It's an exciting time for the cryptocurrency market, with many coins exhibiting exponential growth. Litecoin is an interesting alternative to Bitcoin and has the potential for some serious returns. However, anyone planning to invest in Litecoin in 2021 should be aware that it is a comparatively risky move, as Litecoin does not have the same hold on the market as its predecessor.
Is Litecoin better than Bitcoin?
On paper, Litecoin has a few advantages over Bitcoin - not least its faster, cheaper transaction processing. However, this often counts for very little when it comes to investing. Only time will tell if LTC ever rivals BTC as a viable payment option, but at the time of writing Bitcoin is a more popular investment option.
Where can I buy Bitcoin in 2021?
The best place to buy Bitcoin - or any cryptocurrency for that matter - is via a reputable exchange or broker. We recommend eToro, as it is one of the most trusted names in the industry and offers plenty of information for those new to the cryptocurrency market.
Which cryptocurrency should I buy in 2021?
The recent price surges that have swept across the cryptocurrency market have led to a spate of casual investors turning their attention to digital currency. There is plenty of opportunity in the cryptocurrency market, but the best token to invest in will depend on both your investment goals and your appetite for risk. The best way to choose the right cryptocurrency is by conducting plenty of research and learning about what each coin has to offer, as well as its potential for the rest of 2021.