Litecoin is called “cryptocurrency silver”, and Ethereum is the “blockchain for blockchains”. These are perhaps the two most popular cryptocurrencies after Bitcoin. We will briefly describe these two projects and prospects awaiting them in 2021.
Criticism regarding Ethereum
Ethereum was one of the most criticized projects in 2019-2020. The price of ETH dropped more than 90% after its previous historical high. The situation was worsened by the project’s internal shortcomings in terms of speed and scalability. Right now Ethereum’s price has somewhat increased, but it never returned to its all-time maximum.
However, prices rarely reflect real value. Investors tend to overestimate projects during bullish cycles and underestimate them when the market is bearish.
The strength of Ethereum
At the same time, ETH is fundamentally stronger than ever. Despite all the criticism, it remains the number one project in terms of development activity. The Ethereum Foundation is still the largest community of developers in the crypto market. None of the “Ethereum Killers” (EOS, Stellar, TRON, and others) have come close to what the project has achieved since launch.
Its ecosystem is constantly growing. The DeFi space has grown huge over the past two years. Given the recent positive news about Ethereum 2.0, the project appears to be heading towards a definitive solution to the network capacity issues. This should help further strengthen its position in the market. With that said, Ethereum is far ahead of its closest competitors and has every chance to succeed in the coming years.
The project is approaching the release of its major system update, Ethereum 2.0. Phase 0 has already been launched, and Phase 1 is awaited by the end of 2021.
The launch of Phase 0 was a major milestone for the Ethereum community. It released a completely new blockchain — Beacon Chain, which operates on the basis of Proof of Stake consensus (PoS) and creates a basis for future communication between all transaction segments (shards).
Now, after the deployment of Phase 0, there are two Ethereum blockchains: the old Proof of Work network and the new PoS. Users can transfer their ETH to the new blockchain and take part in the network validation. To become a validator, one needs to own 32 ETH.
Following the launch of Phase 0, the network prepares for Phase 1. It will include 64 chains of shards, which will significantly increase the scalability of the network as well as the throughput of concurrent transactions. Phase 1,5 will merge the two existing versions and completely move from PoW to PoS.
Phase 2 will introduce additional functionality on the network with eWASM, where each shard will manage a virtual machine.
What’s important to note is that in Phases 0, 1, 1,5, and 2, the main PoW blockchain will remain active while the developers test the resilience of the new network.
All of these factors demonstrate that Ethereum is technologically well positioned to meet current market needs. With further progress in the release of Ethereum 2.0, the project can significantly increase its market dominance.
Now let’s review the Litecoin project so that you can choose whether you want to use ETH or LTC in your trading and investing activity.
As a Bitcoin fork, Litecoin has a lot in common with the first cryptocurrency:
- Blockchain technology
- open-source, available for public viewing on GitHub.
Let’s take a look at the innovative technologies that were first introduced to Litecoin.
- SegWit protocol (Segregated Witness).
- Lightning Network “layer 2” protocol.
To understand how the SegWit technology, integrated into Litecoin in the spring of 2017, works, it is necessary to understand the block structure. It consists of two parts:
- the first one contains information about the amount of the transfer and the participants of the transaction;
- the second one has the code confirming the financial transaction.
SegWit aims to eliminate the second half of the block, reducing the transaction size by 48%. This made it possible to place several transactions in one block without increasing its volume.
Litecoin developers have also solved the problem of high fees. They achieved it with the implementation of the innovative development of the Lightning Network. This is an additional crosschain on top of the main network.
Features of Litecoin
- Limited issue volume.
- Experimental use of innovative technologies with the subsequent integration of successful developments into the ecosystem.
- Popularity among users.
- High complexity of mining.
- Listing on all major cryptocurrency exchanges
Which is better: Ethereum or Litecoin?
If you read our review carefully, then you probably realized they are two totally different cryptocurrencies, and it is hard to compare them and tell which is better. They perform different functions and focus on different areas of application. They are both interesting from the point of view of investment.
However, if you are not an ardent fan of one particular cryptocurrency, it is better to diversify your investment portfolio. Ideally, it should contain ETH, LTC, and several more promising cryptocurrencies. Only then you will get the maximum result while minimizing your risks.