Digital currencies remain a mystery to most people, but little by little, trust is building. The three main cryptocurrencies to date are Bitcoin, Litecoin and Ethereum. Although they each have their points in common, they still have particularities.
Which cryptocurrency to start buying?
Bitcoin and Ethereum
Bitcoin (BTC) and Ethereum (ETH) are similar but have some major differences:
– The main difference between BTC and ETH is the time it takes to create a block. Indeed, it takes 10 minutes for Bitcoin and only 12 seconds for Ethereum.
– The two cryptocurrencies have different algorithms.
– ETH is more flexible and leaves more options for its users.
– Bitcoin is more intended to be a stable currency and competes with existing currency as well as gold. It is used to carry out transactions while Ethereum is more oriented towards technology (smart contract, decentralized blockchain). It is therefore more of a “token” than a currency since what Bitcoin does for money, Ethereum does for contracts.
– BTC is deflationary (a number of tokens is set and not expandable) while ETH is inflationary (like fiat money and tokens can be created over time).
Note that currently, version 2.0 of Ethereum should be released soon. This version comes from an idea that dates back almost to its creation. Since this is a fundamental change, it will take place through different phases over several years. What is certain so far is that phase 0 will begin in 2020.
Litecoin and Ethereum
If we compare Litecoin and Ethereum, we see that the differences are similar to those seen between Bitcoin and Ethereum:
– The generation of a block is faster for ETH but the difference is smaller than with BTC (it takes 2 minutes and 30 seconds to generate a block of LTC).
– Litcoin was one of the most profitable digital currencies for miners, but Ethereum came out ahead.
Bitcoin and Litcoin
These two digital currencies look very similar as Litecoin is inspired by BTC technology. There are only three factors that differentiate them:
– The time required to generate a block (10 minutes for BTC and 2:30 minutes for LTC).
– The number of tokens available in the long term: 21 million BTC tokens will be placed on the market against 84 million LTC.
– The price reinforces the difference between the two digital currencies. Indeed, Bitcoin is much more expensive than Litecoin, but it remains more stable in the market. So LTC is more affordable but BTC is more attractive.
To conclude, it should be remembered that each of these cryptocurrencies has its advantages and limitations. However, Bitcoin remains the most popular digital currency, despite the attractiveness of Litecoin and the versatility of Ethereum. We owe its success to the fact that it is stable. To optimize your investments, it is always preferable to vary your investments, hence the importance of knowing the characteristics of each asset.