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Comparing Litecoin vs. Ethereum Investments

Owen PhillipsOwen Phillips in Strategy·Fri Jun 14 2019
Comparing Litecoin vs. Ethereum Investments

Introduction

When comparing Litecoin vs. Ethereum, you will want to understand how they started, the problems they solve, and how active their development is. Each is an extremely popular and established crypto asset, but how do they fit into a diversified portfolio?

How they Started

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Litecoin and Ethereum were both founded by highly intelligent and motivated cryptocurrency enthusiasts who had their own motivations and underlying beliefs for what a crypto asset should be.

  • Litecoin was created on October 7th, 2011 by a former Google employee named Charlie Lee to complement Bitcoin. He believes Bitcoin works better as digital gold, due to its expensive and slow transactions. Litecoin's source code is a copy of Bitcoin's with changes made to allow for quicker transaction speeds and near-zero fees.

  • Ethereum was proposed in 2013 by a 19-year-old Russian-Canadian programmer and co-founder of Bitcoin magazine named Vitalik Buterin. Vitalik felt that bitcoin needed a programming language to develop decentralized applications on the blockchain. When he couldn’t get the Bitcoin community to agree, he proposed Ethereum as a solution and later launched it in July of 2015.

Problems they Solve

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While there is some overlap, Litecoin and Ethereum focus on solving two very different problems in the world.

  • Litecoin's focal point is on being a peer-to-peer internet currency. Compared to Bitcoin it has fast transaction times (2.5 minutes instead of 10 minutes), low transaction fees ($0.04 instead of $0.70) and a greater max supply (84 million instead of 21 million total coins), making it excellent for making payments over the internet.

  • Ethereum is a computing platform and operating system allowing developers to run decentralized applications on the blockchain. And although Ethereum doesn't attempt to be a peer-to-peer internet currency it works quite well as one due to low fees and fast transaction times. In fact, a large majority of the world's cryptocurrency transactions are made using Ethereum.

Development Activity

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A crypto asset with active developers is a strong crypto asset. It means quick bug fixes, new features, and engagement with the community. To understand how active a crypto's development is, look no further than where it's code is maintained and updated (It's repository) Both Litecoin and Ethereum are hosted on Github where their code is open for anyone to look through. Here we can see how frequently updates are made and how many bugs are waiting to be fixed.

  • Litecoin is not updated very often. A quick look at their main repository shows updates happen every 2 to 6 months. Now, this could be taken as a sign that interest in the project is stale, or it could indicate a more mature and stable project (It has been around since 2011) that just doesn't need to be updated as often anymore. Currently, there are no open bugs, which indicates issues are being addressed quickly.

  • Ethereum is updated frequently. A look at their main repository shows updates happen every 2 or 3 days. This would indicate that developers are extremely passionate and involved in the project with bugs being addressed as they arise and new features being developed all the time. The scope of the Ethereum project is quite large so you might expect this amount of activity.

How do they fit into your portfolio

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Depending on your goals as a crypto investor, diversifying your portfolio across different asset types can help you manage risk. Cryptocurrencies can be classified in 4 different ways:

  • Digital currencies
  • Platform Tokens
  • Utility Tokens
  • Security Tokens

Let's see how they fall into these categories and what features might make them a good choice as part of your portfolio.

  • Litecoin is clearly geared as a peer-to-peer digital currency. And with low fees and quick transaction times it works great as one. It has a fixed supply, so there will never be a surprise flood of coins dropped on to the market to drive down its price and is the oldest of the two cryptos.

  • Ethereum is focused on being a blockchain based development platform and operating system. Because of this, it falls neatly into the platform category. It doubles as a digital currency and with over 1000 projects running on the Ethereum network, it's viability as a project is obvious.

Portfolio Tracking

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Conclusion

Litecoin and Ethereum are both top crypto projects with strong foundations, solving real problems in the world. With proven staying power they could equally be considered as stable and long term investments (compared to other cryptos). Although with Ethereum being the platform for other cryptos while working great as a digital currency gives it the clear advantage, when it comes to Litecoin vs. Ethereum, it's up to you to decide how each crypto fits best into your portfolio.

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