Litecoin and Bitcoin Cash: What’s the difference?

Bitcoin (BTC) has become the harbinger of a new era in the economy and firmly holds the #1 position in the digital asset market. However, just a few years after the launch, it became clear that the new revolutionary technology was also not flawless. The bottleneck of the blockchain turned out to be its throughput.

To become a serious competitor to existing payment systems, you need to have the technical ability to process millions of transactions per day. Early blockchains were not ready for such loads. The search for solutions began.

Forks Bitcoin

Technology could be improved in many ways. In 2011, Litecoin (LTC) was launched, which was initially positioned as digital silver. Technically, the coin is a hard fork of Bitcoin.

It differs from the original in several key ways, in particular, it uses an improved modification of the Proof of Work consensus mechanism. Litecoin transactions are completed faster, although this is not enough to get close to the Bitcoin market positions.

Another fairly well-known and successful fork of Bitcoin is Bitcoin Cash (BCH). The BCH network uses a larger block size than the original. This solution provides greater network bandwidth and helps reduce fees.

Despite the common roots, LTC and BCH are independent cryptocurrencies and the LTC to BCN exchange rate is far from parity.

Similarities between LTC and BCH

Both coins are based on the Bitcoin blockchain and inherit a number of common features from it.

First of all, these coins are created as an alternative means of payment, and this goal is becoming more and more achievable. The relatively low price of LTC and BCH greatly simplifies their practical application.

Coins operate on the basis of the Proof of Work consensus mechanism. New coins are mined in the process of mining.

LTC and BCH are deflationary in nature. Their maximum offer is initially limited. In addition, halving is regularly held in the networks – the reward for the mined block is halved.

Litecoin and Bitcoin Cash occupy quite high positions in the ranking of the largest cryptocurrencies by market capitalization.

Similar but not identical: Differences between LTC and BCH

Market indicators

To date, the capitalization of Litecoin exceeds $3.6 billion. The coin occupies the 18th line of the ranking of the largest cryptocurrencies and is trading slightly above $51. There are over 70 million LTC in circulation (about 84% of the maximum supply). The historical maximum price was recorded in the first decade of May 2021 at $412.

The current capitalization of Bitcoin Cash is estimated at approximately $2.3 billion. Now it is the 26th line of the rating. The coin is trading at $119. There are already more than 19 million coins in circulation out of a total supply of 21 million (more than 90%). The coin reached its historical maximum in December 2017, when the price of the coin exceeded $4,300.

Block size

To increase the scalability of the blockchain, Bitcoin Cash took the path of increasing the block to 8MB with the ability to increase to 32MB if the need arises.

During the development of Litecoin, the block was reduced to 1 MB. After the implementation of the SegWit update, it can be increased to 4 MB.

Average block creation time

This parameter characterizes the speed of the system. In the Litecoin network, new blocks are created at intervals of 250 seconds. The Bitcoin Cash network is slower, taking about 600 seconds to create a block, similar to the Bitcoin network. That is, purely technically, the conversion of LTC to ETN will be completed faster than a similar operation with BCH.

Hashing algorithm

Bitcoin Cash has retained the original SHA-256 hashing algorithm, which provides strong network security. The Litecoin network has implemented a faster Scrypt algorithm.

Average transaction fee

The size of the commission matters for the acceptance of cryptocurrencies as a means of payment. By this parameter, BCH wins. Network fees average 0.000014 BCH. In the Litecoin network, the commission is higher and reaches 0.00019 LTC.

This general information is most likely not enough to make a decision about investing in one of these coins. You can draw the final conclusion after your own research, which will take into account factors that are personally significant to you.