Litecoin and Bitcoin Cash are both Bitcoin forks. How exactly do they differ?
Bitcoin is the original cryptocurrency that jumpstarted an entire industry. From cryptocurrencies to smart contracts — everything pans out from Satoshi’s Nakamoto vision of a decentralized financial monetary system.
However, Bitcoin’s tech has been considered by some to be lacking. This is especially true from a scalability point of view as BTC transactions are quite slow and transaction costs are high. Consequently, it’s not surprising to see the hundreds of code forks that reused portions of Bitcoin’s code to provide improvements in this regard.
Litecoin and Bitcoin Cash are two of the most famous Bitcoin forks ever to hit the market. Both have a goal to make transactions faster and allow users to use crypto as daily payments. But how do they fare against each other? Should you convert BTC to LTC or BCH?
This article will provide you with some detailed information about their protocols, so you can decide which one you might want to consider for your portfolio. Let’s begin.
Litecoin is the first alternative cryptocurrency to ever exist. It was forked from the Bitcoin code in 2011 to provide users with a lighter and faster blockchain.
A Bit of History
Charlie Lee created Litecoin in 2011 with the goal to provide a faster alternative to Bitcoin. As such, LTC was never meant to compete with Bitcoin but complement it as a secondary payment currency. At the time, Bitcoin has already considered a solid store of value, so Litecoin came out as a currency that people would want to spend for online goods and services.
Litecoin uses the Scrypt algorithm instead of Bitcoin’s SHA-256. This was supposed to allow commercial-grade computers to mine LTC and participate in the network validation. However, LTC-specific ASICs have been developed over time, so mining Litecoin isn’t as democratic as it once was. Worth noting is that mining LTC provides Dogecoin coins as a by-product.
The supply of Litecoin is 4x larger than bitcoin, with 84 million coins to be mined by the year 2140. Demand is determined by the number of people willing to use it as a currency. Many merchants accept LTC because of its cheap transactions and speed, thus increasing demand.
Transaction Speed and Fees
Since LTC is supposed to be 4 times faster than Bitcoin, it confirms a block every 2.5 minutes, in contrast to Bitcoin’s 10 minutes. This allows it to reach 56 transactions per second vs Bitcoin’s 7.
Bitcoin Cash is a fork of Bitcoin that aims to bring scalability by increasing the block size and allowing users to utilize it as a payment instrument.
A Bit of History
BCH was created during the block wars of 2017, where 2 factions of miners and Bitcoin proponents came to a disagreement on how the network should be handled. The BCH faction believed that Bitcoin should increase the block size to treat more transactions with each block. As a result, they forked the code and airdropped BCH to all Bitcoin wallet holders.
Just like Bitcoin, BCH uses the SHA-256 algorithm. This means that it can be mined with the same ASICs as Bitcoin. However, since then, only a small portion of miners have joined the network. The hashing power was greatly reduced, leaving the network vulnerable. As such, BCH requires 15 block confirmations for transactions to pass.
Same as Bitcoin, BCH has a limited max supply of 21 million coins. However, more than 15 million were premined and airdropped to all BTC wallet holders. This allowed the chain to continue from the fork onwards and respect the same distribution mechanism as the original Bitcoin core blockchain.
Transaction Speed and Fees
Bitcoin Cash processes 116 transactions per second, making it one of the fastest BTC forks available today. Transaction fees also remain relatively low, establishing it as a daily currency.
Bitcoin Cash vs Litecoin: Which One Is More Technically Advanced?
Clearly, Bitcoin Cash is the faster cryptocurrency of the two and provides even cheaper fees than Litecoin. However, before converting BCH to BTC or vice versa, consider that Litecoin has advanced privacy features that were recently implemented through the Mimblewimble protocol. So, BCH is faster, but LTC is more private. Consequently, both cryptos have their use cases.