Bitcoin has taken the world by storm, setting the bar for all cryptocurrencies to follow. Inspiring a legion of new currencies, many have begun to note what these altcoins have to offer. Two of the most common being Ether, which provides features that extend far beyond the capabilities of Bitcoin and Litecoin, a compliment of the original cryptocurrency.
Below, we'll examine these two critical digital currencies and why they might be worthwhile investments. To start, let's look at this guide to Ethereum.
Introduction to Ethereum
Ethereum, like Bitcoin, is based on a distributed public ledger. But that is where the similarities end. Bitcoin offers one application of blockchain technology, a peer-to-peer cash system known as Bitcoin. The Bitcoin network tracks its digital currency ownership, whereas Ethereum has become known for its smart contracts innovation. A smart contract is a computer code that can help facilitate the exchange of any asset such as money, content or property. When placed on the blockchain, the smart contract becomes a self-operating program that automatically executes when parties meet the code's specified conditions. Other use cases are evident on the "Ethereum Virtual Machine" (EVM), a platform capable of running smart contracts that can execute bets, wagers and even employment contracts.
Ethereum's ability to facilitate these transactions is genuinely unique since while all blockchains can process code, their functions don't extend much farther. Developers can use this platform to create whatever operations they want, including decentralized autonomous organizations (DAO's) and decentralized applications (dApps). dApps are standalone applications that utilize smart contracts and run on the EVM. Common examples include micro-payment platforms, online gambling apps and entire peer-to-peer marketplaces. Like smart contracts, dApps run without the need of a central authority or overseer.
Ether is one of many new assets that are available on the Ethereum platform. More blockchain enthusiasts have created tokens that represent assets such as real estate, art or fiat currencies. These uses prove that Ethereum is on its way to becoming a fully developed distributed computing platform that is home to future innovations and new markets.
The crypto community holds Ethereum in high regard for its platform uses. However, another altcoin has recently taken the world by storm for its ability to conduct peer-to-peer transactions more efficiently than Bitcoin. Consider another valuable cryptocurrency in this brief guide to Litecoin.
Introduction to Litecoin
Litecoin was one of the first altcoins. Although very similar to Bitcoin, the coin doesn't offer the same building platform as Ethereum but is still seen by many as valuable. Here's why.
Litecoin is peer-to-peer, facilitating transactions for no cost anywhere around the world but in a way that is "faster and lighter" than Bitcoin. Hence the term. The public knows the coin as the silver to Bitcoin's gold. It also shares another similarity with Bitcoin. The creators of Litecoin built the coin on Bitcoin's open-source codebase only with minor technological differences including:
- Using the same Proof of Work (PoW) concept as Bitcoin but with an SHA-256 algorithm called Scrypt.
- Being among the first cryptocurrencies to implement Lightning and SegWit.
The other significant difference isn't technological. It involves each cryptocurrency's creator. While Bitcoin's creator Satoshi Nakamoto is still anonymous, the creator of Litecoin is still well-known in the cryptocurrency community and continues to participate actively in it. Charlie Lee continues to guide future iterations of Litecoin in alignment with the original vision. Lee is currently helping to lead the upgrade for Segregated Witness (SegWit), a foundation that will allow transaction data to be stored more efficiently. With SegWit, Litecoin can also scale future innovations through Lightning Networks.
Although the liquidity is less than Bitcoin, the coin can still be easily exchanged into fiat currency or used on cryptocurrency marketplaces for exchange.
Looking to the Crypto Community
Blockchain scratches the surface with Bitcoin. Therefore, this could be the year that many altcoins hit the mainstream crowd. As people begin exploring altcoins and the problems they are hoping to solve, it will only be a matter of time before these currencies skyrocket in value. Many investors who missed the Bitcoin bandwagon believe it might not be too late to invest in these other tokens. Consider that Amazon, Tesla or any other large organizations all typically follow each other in pricing. Could it be so unreasonable that the crypto industry would do the same?