One fact that remains undisputed is that Bitcoin is the father of cryptocurrencies. It has established its roots so strongly that the other more than 1600 cryptos in existence today appear to be a joke.
The ones that are in close competition to this crypto are Ethereum and Ripple/XRP, which are an equally viable investment option. What of Bitcoin Cash and Litecoin? Can they really make a good investment? This article seeks to find that out.
If Bitcoin Cash and Litecoin were to stand a chance to replace, then BTC would have the best shot at that. However, the possibility of such an event is still a long way to come. But then, dynasties eventually fall. This one too can fall!
If you are considering investing in either Bitcoin Cash or Litecoin, which one would you go for? The following comparison should help you with that decision.
Bitcoin Cash is a fork of BTC. It is essentially a spin of the giant cryptocurrency and is sometimes referred to as Bcash. Both BTC and Bcash are able to inherit the Bitcoin POW mechanism. Whereas Bitcoin Cash still follows the SHA256 encryption algorithm that Bitcoin uses, Litecoin is modified in the algorithm based on Scrypt encryption algorithm.
SHA-256 is a highly complex algorithm. This means that it is very secure and accurate. At the same time, it is a bit slow. This explains why Bitcoin requires about 10 minutes to generate a single block on its blockchain.
The slow speed is quite an acceptable trade-off considering that the overall reason for the cryptocurrency is so that we transact securely than what fiat money is able to offer. To mine using SHA-256, crypto enthusiasts need a very high hash rate. As a result, dedicated hardware provides a better solution in comparison to a GPU.
To cater to the trade-offs that SHA-256 subjects to crypto people, the guys at Litecoin introduced Scrypt algorithm. This algorithm is less complex and does not need as much hash rate as SHA-256. It only takes 2 minutes and 30 seconds for a block to be generated on the blockchain. However, Scrypt has a serious demerit. It is memory intensive.
As we look at Bcash and Litecoin from the perspective of their mining algorithms, it is evident that Bitcoin Cash carries the day. The fact that BTC already uses this mining algorithm means that both do not out-do the chief crypto from this perspective.
As already pointed out above, Litecoin generates new blocks at a much faster rate than Bitcoin Cash. This has to do with the mining algorithms that both use. That is not the issue. The main area of concern is – is the block generation fast enough for payments in the real world?
If cryptocurrency is to be adopted by the general population just like fiat money is being used at the moment, then it must be possible to use it in real-world situations. It is a good feeling to be your own bank or ATM machine, but that makes no sense if you cannot buy a cup of coffee quickly and rush to work.
Speed has been a major roadblock in getting many merchants to start receiving cryptocurrency payments. The expectation of both consumers and vendors is always that a transaction will be completed almost instantly.
When it takes a couple of minutes longer, they become nervous and might think one is shortchanging the other. Whereas transactions are broadcasted to both parties instantly, the actual confirmation on the blockchain takes longer. In Litecoin, one needs about 2.5 minutes. Bitcoin Cash takes 10 minutes. No one can wait for that long to have their coffee issued to them after paying.
Trading Volume & Handling Fee
The volumes that a cryptocurrency trades go hand in hand in determining whether or not more people would be willing to accept it. The lower the volume, the less likely the crypto has a brighter future.
As of 2019, Bitcoin Cash had recorded a higher trading volume compared to Litecoin. This implies that the former has a higher chance of performing much better if it replaced Bitcoin compared to the former. Investors would not have a hard time going for it.
In line with trading volume is the idea of handling fees. The average handling fee for Bitcoin Cash is $0.0118. Litecoin has a handling fee of $0.0765, which is 7 times higher than Bitcoin Cash. This difference alone makes BCH the best option when one wants to trade in cryptos.
We can practically see the impact of such a difference. The social network Yours initially relied on Bitcoin as a means of payment. When Litecoin was introduced, Yours changed its medium of payment to LTC solely due to low fees. The social network once again went changed its primary crypto to BTC when it was born.
Authenticity of the Decentralization
Decentralization is important because it ensures that the true intent of cryptos is achieved. That is, getting rid of the central authority so that you can conduct transactions without other influential forces. The fact that a cryptocurrency says it is decentralized does not mean that it is really decentralized. One has to gauge it based on a set of parameters before they can accept this claim.
The parameters that one can look at before making the final conclusion are:
- Self-recovery ability of the network
- Censorship of a transaction
- Allowing free access to the network
When gauged based on these parameters, Bitcoin Cash and Litecoin were found to meet all the conditions. However, LTC was found to have a greater influence from its founder.
On the other hand, BTC prides itself as the only crypto that was created by numerous development teams. This means that there was a widespread consultation and brainstorming on the appropriate features to incorporate. In terms of decentralization, BCH wins over LTC.
In conclusion, Litecoin and Bitcoin Cash hold almost equal weight as Bitcoin. Both cryptocurrencies are a worthy investment. However, if you want to choose one over the other, Bitcoin Cash is the way to go.
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