Energy efficiency has become an essential consideration for all cryptocurrencies. If a crypto coin uses too much energy to mine new blocks or validate transactions, it affects the environment by increasing carbon emissions.
Most investors prefer crypto projects that are carbon neutral and carbon negative.
Is Litecoin one of them?
Is Litecoin Eco-Friendly?
From a general outlook, Litecoin isn’t eco-friendly. But the answer isn’t that simple. It may appear extravagant in its energy use, but the situation changes when you compare it to other coins.
To make more sense of how Litecoin uses energy, you’d have to compare it to another cryptocurrency.
Compared to its main rivals, Bitcoin and Ethereum, you can make a case for eco-friendliness. Compared to newer coins like Algorand, Cardano, Solana, and Polkadot, Litecoin falls short of energy efficiency by a mile.
Let’s explore these two examples.
Energy Efficiency: Litecoin vs. Bitcoin
It takes about 18.522 kWh for you to complete a transaction on the Litecoin network. That’s enough energy to power you through eight cloth dryer loads.
On the other hand, Bitcoin uses up to 2300 kWh per transaction. That’s at least 125 times more energy than Litecoin.
Litecoin vs. Cardano/Algorand/Solana
It takes much less than 0.01 kWh of energy per transaction across these three coins, making them the most carbon-neutral coins in the crypto market.
Unlike Litecoin, they save tons of energy. In this case, Litecoin isn’t as energy efficient and these alternatives win here.
Also read: Is Algorand Eco Friendly?
What is Litecoin Used For?
Litecoin’s primary purpose is to make transactions cheaper and provide a more straightforward cryptocurrency for everyday use.
Since it uses a similar source code to bitcoin, you can hold it and expect its price to go up in the future. However, that isn’t the only thing you can do with Litecoin.
Here are a few more applications of this crypto coin:
Trading on Crypto Exchanges
If you’re looking to trade cryptocurrencies on any Crypto Exchange, then the ideal place to start would be Litecoin. LTC is a highly liquid cryptocurrency. You’ll find it on many prominent cryptocurrency exchanges, including Coinbase and Binance.
Transactions on the LTC network are pretty cheap. You can use it to move funds between different CEXes or lending platforms at much lower transaction fees than on the BTC and ETH networks.
Sales and Purchases
Like most cryptocurrencies, Some companies use Litecoin to help businesses accept money directly to their banks.
For example, services like Coingate allow merchants to integrate Litecoin into the Point Of Sale systems. Part of the benefits they enjoy include:
- A flat fee of 1% on their transactions
- Savings on exchange rates
- API tools for their eCommerce or stores websites
You can capture more customers by integrating LTC payment buttons on your checkout pages in your eCommerce store. One excellent way to do this is using Coinbase Commerce, which will host your store and still give you complete control.
Learn more: Is Litecoin A Stablecoin?
What is the Impact of Litecoin on the Environment?
Litecoin isn’t the most environmentally friendly crypto coin. Litecoin was forked from Bitcoin, which makes their mining mechanisms similar and inherently problematic in terms of energy efficiency.
Litecoin uses the Proof of Work mechanism, and it uses plenty of computational power, which increases carbon emissions and causes climate change.
What are the Pros of Litecoin?
Here are some benefits you can enjoy from investing in Litecoin:
Fast and Secure
Speed and efficiency are some of Litecoin’s most significant advantages. For example, Litecoin is four times faster compared to Bitcoin.
Litecoin takes about 2.5 minutes to process and complete a transaction, compared to BTC’s 10 minutes. At the same time, its Proof of Work mining mechanism makes it secure from hackers attempting to attack the LTC network.
Today, Litecoin has one of the highest limits of total coin supply in the crypto market. It caps at 84 million, higher than Bitcoin. A higher cap helps reduce inflation and boosts investors’ uptake.
Although Litecoin uses PoW like Bitcoin, Litecoin employs the Scrypt algorithm, which is more energy-efficient.
Easy to Trade
Litecoin is a great entry point for beginners looking to start and grow in their crypto investments. It has a lower price than other top coins, lower fees, and lower volatility.
At the same time, Litecoin is easy to trade. You can use LTC’s liquidity to purchase other crypto assets or move your investment from one crypto exchange to another.
What are the Cons of Litecoin?
Litecoin is not without some downsides. Here they are:
Lack of Uniqueness
Litecoin exists as a fork of Bitcoin. Although it has some advantages over Bitcoin, especially in efficiency and speed, LTC has no unique value proposition that sets it apart from BTC.
It’s just a cheaper version of BTC. Most times, investors confuse LTC with BTC because of their similarity in operations and design.
When Charles Lee abandoned and sold his share of LTC holdings in 2017, the coin lost its credibility. For this reason, Litecoin took a hit on its reputation, and that led to a sudden drop in investor uptake, LTC pricing, and value.
Another mistake that almost cost Litecoin its market share was a premature partnership with LitePay. This failed project sunk Litecoin’s value and led to investors losing massive amounts of capital.
Use in the Dark Web
In 2018, Litecoin was named as a notorious coin used in the Dark Web. With around 30% of traders in the Dark Web accepting Litecoin transactions, LTC was used for illegal dealings and transactions.
Ordinary investors linked this financing to other harmful activities after the Silk Road and Bitcoin saga.
Loss of Interest
As I write this, Litecoin and other cryptocurrencies based on PoW have a reducing uptake. Most crypto coins and platforms now support layer two solutions that many investors prefer.
Most PoS driven coins are gaining ground and value faster as they offer more functionality.
Is Litecoin a Good Eco-friendly Alternative to Bitcoin?
Compared to Bitcoin, Litecoin is more environmentally friendly.
Charles Lee created Litecoin to give users a better version of Bitcoin. Although it wasn’t a consideration at the time, Litecoin’s design made it less energy-hungry than BTC. That meant it became more eco-friendly.
Also read: Is Chainlink Eco Friendly?
Is Litecoin More Eco-friendly than XRP?
Ripple (XRP) is more eco-friendly than Litecoin and is one of the most efficient cryptocurrencies in the market currently.
Unlike Litecoin that mines blocks, Ripple uses bank-owned servers to achieve consensus and produce new blocks into the XRP blockchain network. That means XRP requires about 0.0079kWh per transaction, compared to LTC’s 18.522kWh.
Compared to older coins like Bitcoin, Litecoin is energy efficient. However, it can’t hold a candle to the efficiency of Ripple or coins like Cardano.
That doesn’t take away from the usefulness of Litecoin, which is an excellent alternative for investors looking for liquidity or cheaper transaction fees. Litecoin is similar to Bitcoin in many ways but it has its own advantages and disadvantages.