Litecoin vs Bitcoin: Key Differences and Which to Choose
Litecoin and Bitcoin are two of the oldest and most popular cryptocurrencies, often compared for their history and technical infrastructure.
The purpose of creating both cryptocurrencies was to enable seamless peer-to-peer transactions; however, they differ in certain aspects of their operations.
This article explores these key differences and provides a guide on which cryptocurrencies to choose for investment.
A Brief History of Bitcoin and Litecoin
Bitcoin
In 2008, Satoshi Nakamoto published a whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System”. The whitepaper introduced an online payment system that facilitates transactions between parties without the interference of a centralized authority.
The creation of a new currency was necessary to ensure transactional privacy within a completely decentralized system. On January 3rd, 2009, the first Bitcoin (BTC) was mined, marking the official birth of the Bitcoin blockchain.
Satoshi realized the possibility of double spending of BTC and developed a publicly verifiable and tamper-proof ledger, known as blockchain technology.
Litecoin
Litecoin was developed from a copy of Bitcoin's source code by Charlie Lee in 2011.
Charlie took an interest in Bitcoin and discovered that one of the major setbacks of the currency is scalability, which could hinder the widespread adoption of the technology.
He set out to build Litecoin, an alternative cryptocurrency, which he described as "the light version of Bitcoin" and potentially, “the silver to Bitcoin's gold. Litecoin preserved some of Bitcoin's features, such as Proof-of-Work (POW) and halving events, but uses Scrypt hashing function instead of Bitcoin's SHA-256, mining a new block at a rate four times faster than Bitcoin.
Key Differences Explained
Litecoin and Bitcoin differ in certain aspects of their technical architecture and operations.
Mining Algorithm
Bitcoin employs the SHA-256 mining algorithm, which requires specialised and resource-intensive hardware known as Application-Specific Integrated Circuits (ASICs). ASICs are specifically designed.
It is used for mining and offers high computing power.
Litecoin uses the Scrypt mining algorithm. It is less resource-intensive but more memory-intensive. Scrypt allows for mining using less specialised hardware like Graphics Processing Units (GPUs) and Central Processing Units (CPUs)
Transaction Speed & Block Time
Bitcoin takes an average of 8-10 minutes to create a new block and confirm a transaction. The block time can extend during periods of high demand and congestion on the network. Sometimes, miners also prioritise transactions that pay a higher transaction fee.
Bitcoin can store up to 2000 - 2500 transactions in a block, which is about 1MB in size. Due to the limited block size and lengthy block time, Bitcoin processes transactions at an estimated rate of 200 -250 transactions per minute.
Litecoin has a significantly faster block time. It takes approximately 2.5 minutes to create a new block on Litecoin. This could also extend during periods of network congestion and Hash rates. Although Litecoin also has a limited block size of 1MB, it can process transactions at a faster rate because of its shorter block time.
Litecoin processes transactions at a rate of 1 - 2 transactions per second. However, in recent times, Litecoin achieved a milestone of processing seven (7) transactions per second.
Security
Bitcoin is considered the most secure blockchain network. It secures the network through a Proof-of-Work mechanism using the SHA-256 hash function.
Bitcoin has a high computational power, measured by its hash rate of around 900 exahashes per second (900 EH/s). Moreover, there are over 20,000 Bitcoin miners, making it the most decentralized network and most resilient to attacks.
Litecoin has not experienced any emergency shutdowns or attacks and is also relatively considered very secure. It also utilises Proof-of-Work using the Scrypt hash function.
Litecoin has a smaller network of miners, consisting of about 900 miners and a computational power that measures up to 2.6 Petahashes per Second (2.6 PH/s). Due to its smaller hash power, it is considered relatively less secure and more susceptible to attacks in comparison to Bitcoin.
Passive Earning
Satoshi created Bitcoin to facilitate peer-to-peer payment. For most BTC investors, Bitcoin primarily serves as a store of value or a hedge against inflation. Therefore, investors only made a profit holding BTC when there was a positive price impact.
In recent times, there has been an emergence of Decentralized Finance (DeFi) operations on Bitcoin, leading to the development of infrastructures like Stacks and Babylon. The development of DeFi on BTC has unlocked smart-contract functionalities for Bitcoin, paving the way for passive earnings on BTC.
There have been attempts made to enable DeFi on Litecoin, one of which was the introduction of Wrapped Litecoin (WLTC). However, Litecoin lags behind Bitcoin and other alternative cryptocurrencies in the scope of DeFi use cases. As a result, investors have limited utility for holding LTC. However, the potential DeFi partnership between Cardano and Litecoin could revolutionize the DeFi landscape on Litecoin and enable broader DeFi participation on the network.
Adoption and Community Support
The Bitcoin community is one of the most enthusiastic crypto communities. Bitcoin has also been well-received by major institutions like BlackRock and Morgan Stanley as an investment option and a part of their operations.
The approval of the Bitcoin ETFs in 2024 marked a milestone in the institutional adoption of Bitcoin. It granted access to significant capital flow from Traditional Finance (TradFi), opening a new market for its adoption.
The Litecoin community is equally one of the most passionate crypto communities. Litecoin (LTC) has experienced adoption by payment platforms and merchants, primarily as a payment option.
Also, three Litecoin ETFs have been filed and acknowledged by the SEC and are currently awaiting approval. This approval could unlock new demand and market for LTC amongst investors and potentially lead to a rise in the price of LTC.
| Bitcoin | Litecoin | |
| Year Launched | 2009 | 2011 |
| Transaction speed | Transactions are confirmed every 8-10 minutes | Transactions are confirmed every 2,5 minutes |
| Transaction fee | Transaction fees are an average of $1 | Transaction fees are less than $0.1 |
| Mining Algorithm | SHA-256 | Scrypt |
| Market Capitalization | ||
| Total Supply in Circulation | 21 Million tokens | 84 Million tokens |
| Primary Use Case | Store of Value | Everyday payments |
When to Choose Litecoin or Bitcoin
Although Litecoin and Bitcoin have certain similarities, investors use both currencies for different purposes due to their distinct features.
Bitcoin
- Digital Gold: Investors often liken Bitcoin to gold due to its limited supply in circulation. Many investors hold Bitcoin as a store of value and a hedge against inflation, like gold.
- Digital Transactions: Bitcoin is used to facilitate online, direct, peer-to-peer transactions, especially across different borders. Bitcoin is a suitable online payment option, particularly for large transactions that require security.
- Trading: Some investors hold BTC as one of the assets in their portfolio to trade it with other crypto assets.
- DeFi: DeFi applications have now been deployed on Bitcoin, allowing BTC holders to access utilities such as wrapping, borrowing, lending, and yield generation.
Litecoin
- Everyday payments: LTC holders use LTC to settle everyday payments and transactions. Litecoin's speed and low transaction fees make it ideal for daily payments and microtransactions.
- Digital Currency: Many merchants and payment platforms, such as Bitgate and Travala, accept LTC as a payment option. Litecoin has continued to gain acceptance amongst various payment platforms due to its speed, affordable transaction fees, and its seamless compatibility with existing traditional payment systems.
Litecoin vs Bitcoin in 2025: What has Changed?
Bitcoin hit its $100,000 hallmark following the election of President Donald Trump. The price of Bitcoin has since appreciated by more than 15%, hitting its all-time high of $121,000 at the time of writing this article, on the 14th of July, 2024.
Earlier that week, specifically on the 10th and 11th, Bitcoin ETFs recorded over a billion dollars in inflows on two consecutive days for the first time.
Other significant occurrences that have positively impacted the price of BTC in 2025 include pro-crypto regulatory stances, more institutional adoption, favorable macroeconomic conditions, and global liquidity.
Analysts have predicted $180,000- $250,000 as Bitcoin's year-end price.
On the other hand, Litecoin currently trades for around $97, which is over 75% down from its all-time high of $410 in 2021.
One of the most bullish Litecoin news in 2025 was the official acknowledgement of the three Litecoin Spot ETFs filed by the SEC. The news sparked some level of excitement amongst the community, leading to a short-lived rise in price.
Most experts are optimistic about the approval of the ETFs, predicting a 90% chance of success.
However, many analysts are not confident that this will lead to a bull run on Litecoin. Most price predictions for the end of the year have remained neutral, projecting a price between $130- $200
Investment Outlook: Which has more potential?
Bitcoin has more potential as an investment asset in 2025, considering the current market trends, growing institutional adoption of BTC, and the appreciation rate of BTC in the current year.
Litecoin has gained wide acceptance by payment platforms and merchants as a suitable payment option. Thus, Litecoin is considered a very valuable asset with room for growth, even in 2025. Other catalysts include the approval of ETFs and more institutional adoption.
While Bitcoin may be considered a more profitable investment option, Litecoin has more potential for higher returns on investment due to its lower price value.
Conclusion: Bitcoin or Litecoin
Both cryptocurrencies are among the longest-standing digital currencies, establishing a reputation for security and reliability over the years.
Bitcoin has gained more traction over the years beyond being a payment option and a store of value. It has evolved and become recognised as a full macro asset by major institutions. This, coupled with its dominance as the leading cryptocurrency in the market, Bitcoin promises more value and utility to holders and investors.
Litecoin has continued to be in use by many traders, particularly for everyday payments, due to its speed and low transaction fees. It has even shown unprecedented on-chain activity in recent years, surpassing Bitcoin's daily addresses on some occasions.
Unlike Bitcoin, Litecoin lacks market dominance. It faces stiff competition from other alternative currencies like Ripple (XRP), which has also been widely adopted as a payment option by many merchants. Thus, the growth potential of Litecoin is more limited in comparison to Bitcoin.
Bitcoin has more potential for broader adoption and long-term growth and may be considered a more profitable investment than Litecoin.
Please be advised, that this article or any information on this site is not an investment advice, you shall act at your own risk and, if necessary, receive a professional advice before making any investment decisions.
Roman Klochko