Litecoin was created as a fork (copy/clone) of Bitcoin with some minor changes. Despite its unoriginality it has stood the test of time and remains one of the most robust/usable cryptocurrency "networks" in existence. But since its inception not much has changed; it is still just a slightly modified Bitcoin. But what are these differences? Do they allow Litecoin to stand on its own? Or is Litecoin just a garbage project that refuses to die? We'll take a look at a few different aspects to figure this out.
1. Technical/fundamental differences in its code/network
SUPPLY CAP – Bitcoin has a supply cap of 21 million whereas Litecoin has a cap of 84 million. Currently each coin is divisible to the hundred millionth place, ie 0.00000001, meaning that "only" a maximum of 2,100,000,000,000,000 units of Bitcoin and four times that of Litecoin can exist. Divisibility can be extended by modification of the protocol's code. The point is, there is certainly no need for a coin with a higher supply and this factor should only be considered in regard to its psychological ramifications. For example, a side effect from a higher supply is the increased ease to own more "whole" coins. Since Litecoin has a larger supply, it is generally going to be easier for people to own more whole Litecoins. A quick example of this is that a person is more psychologically inclined to be proud of saying they own 100 Litecoins than 0.5 Bitcoins, even though they are identical in market value (at the time of this writing). Ultimately, however, this means nothing outside of psychological nature since either coin is massively divisible.
BLOCKCHAIN EFFICIENCY – Bitcoin targets a block time of 10 minutes whereas Litecoin targets 2.5 minute blocks. While shorter block times does at surface mean faster and more total transactions, it brings with it some drawbacks. Effectively, a 2.5 minute block is going to be 4 times easier to mine than a 10 minute one due to its block difficulty. Due to the problem of orphaned blocks and possible temporary blockchain forks, users of both Bitcoin and Litecoin typically wait for more than 1 block confirmation before a transaction is trusted as final and "well confirmed". More on orphaned blocks here: https://www.investopedia.com/terms/o/orphan-block-cryptocurrency.asp
MINING ALGORITHM – Litecoin uses a different mining algorithm (scrypt) than Bitcoin (SHA-256) This basically just means the type of math problem mining units are racing to solve is different. Initially this was implemented to prevent the use of ASIC miners on its network, but this has since been overcome by ASIC manufacturers and now the only viable way to mine Litecoin is with ASIC miners. However, this isn't the end of the story because the difference in algorithm still matters. Since each network has a unique algorithm, Bitcoin ASICs cannot be used to mine Litecoin nor vice versa. This is good, because Bitcoin miners cannot "attack" Litecoin. This is worth consideration because Bitcoin has way more hashpower and miners on its network and as such it might not only be profitable but also feasible for a group of Bitcoin miners to collude to attack the Litecoin network. However, this difference is also somewhat unfortunate, because Bitcoin miners can never decide to switch to (honestly) mining Litecoin. Thus, if Litecoin gained a massive amount of market value and attracted more miner interest, it would not be able to benefit from the already existing Bitcoin miners. New ASICs would need to be produced to accommodate the increased demand for mining. There is one more consideration which is not strictly good or bad. Because Litecoin uses a more niche algorithm, it exists outside the main "game" of mining. If there are ever hash wars or in fighting between the mining communities, of say Bitcoin Cash and Bitcoin SV and Bitcoin, Litecoin would remain totally unaffected. Thus it doesn't have to worry about the downsides that might come from such conflict, nor the possible upsides.
2. Network Security
Both Litecoin and Bitcoin utilize Proof of Work (PoW) in order to secure their networks. The major vulnerability mining has is in the possibility of a 51% attack. It is difficult to calculate the exact cost of such an attack as it would most likely need to be sustained for at least a few blocks before serious harm could be done and just because you have 51% of the hash power on a network doesn't guarantee you will mine two blocks in a row. However, we can at least gauge how different a base "starting" cost might be between Bitcoin and Litecoin. https://www.crypto51.app/ offers a pretty good look at the base cost of beginning a single block attack on many PoW networks (a real attack would cost a lot more than this). Information on how these figures are reached as well as an overview of what a 51% attack is can be found here: https://www.crypto51.app/about.html
The main reason it is so much more expensive to attack Bitcoin than Litecoin is because there is a great deal more miners and total hashpower securing its network. However, there is another aspect that increases its resilience. All other factors aside, the base difficulty to solve a Bitcoin block is four times that of Litecoin (thus its four times larger block time). As such, it would require four times the base "work" to attack the Bitcoin network for a single block. The primary target of interest during a 51% attack would be exchanges. Most, if not all exchanges, do require more than a single block confirmation before considering a transaction "settled" or "well confirmed" and treating it as final. For example, CoinBase requires 3 blocks for Bitcoin and 12 blocks for Litecoin (source). However, should an exchange, an individual, or any other user of either network be willing to trust fewer confirmations, it becomes increasingly easy to perform an attack. If say a user is willing to trust a transaction after a single block confirmation, using Litecoin would be 1/4 as secure as using Bitcoin. Ultimately, few people base trust purely on number of confirmed blocks, but rather, total work put into producing blocks. That's why you will often see exchanges requiring exactly four times as many blocks for Litecoin than as for Bitcoin. So this is generally not a concern on the whole.
There is also the issue outside of 51% attacks that exists in orphaned blocks where a transaction may appear confirmed by the blockchain but it ultimately gets abandoned in the orphan chain and possibly not included in the real chain. Again, this is why users should always wait for more than a single confirmation. Orphaned blocks will always occur on any PoW blockchain regardless of if all miners are acting honestly or maliciously.
3. The DOGE Factor
One of the greatest boons to Litecoin is the fact that it has engaged in merged mining with Dogecoin. Without getting into the details of how merged mining works and its greater implications, it means that Litecoin gains additional security and that miners can also be rewarded in DOGE in addition to LTC for producing blocks. This is primarily great because DOGE, at least for now, is quite popular and highly valued. Not only does DOGE have a higher market capitalization than LTC, in the past month or so it has actually been more profitable to mine DOGE than LTC. Because of DOGE's popularity it means greater incentivization to mine on Litecoin (hence better security). An often overlooked perk, though, is that while Litecoin has a hard cap on its supply, Dogecoin is forever inflationary. This means that with every block reward there will always be a base level of DOGE awarded to miners regardless of baked in block rewards. So when all LTC ultimately becomes completely mined, miners will not have to subsist solely on transaction fees as they can always count on the small reward of DOGE as extra incentive. While there are some merge mined coins with Bitcoin, none of them are nearly as popular/valuable as DOGE.
4. Public Interest / Popularity
There is no question that in the public eye Bitcoin is vastly more popular than Litecoin. 100% of people who know about cryptocurrency know what Bitcoin is. Heck, even your grandma might have heard of Bitcoin. The same cannot be said of Litecoin. Additionally, while virtually 100% of exchanges trade Bitcoin, Litecoin (while common) is not as ubiquitous. We can also observe that there is far less total trading volume/value of Litecoin than of Bitcoin on exchanges.
We can check on chain activity to see that again, Litecoin is dwarfed by Bitcoin. Despite being capable of processing 4 times the transactions of Bitcoin in the same time period, there have been twice as many transactions recorded on Bitcoin than on Litecoin. There is simply far less use of the Litecoin network. There are also nearly 4 times as many active addresses on Bitcoin than on Litecoin. Below is that data.
Bottom line: Bitcoin is far more popular than Litecoin. An interesting note is that a common critique of Bitcoin is that it would be more usable if it could process faster/more transactions. Despite Litecoin being capable of 4 times the transaction throughput of Bitcoin it simply isn't filling up its blocks because there isn't enough usage/users of its network. If users were concerned about throughput they could easily use Litecoin instead of Bitcoin, but we see that the majority do not, despite its underutilized block space.
5. Development Progress
Neither Litecoin or Bitcoin is perfect and further development of either core protocol is not only welcome but necessary for a stronger network and greater usability. It is very unfortunate then, for Litecoin, that development activity has nearly ceased for the project. Setting aside the fact that most changes to Litecoin over time were mostly copies of changes made to Bitcoin, even if we look at the raw numbers in regard to project development, Litecoin is virtually dead whereas Bitcoin is not only alive and well but trending upward over time. Pictured below is basically a convenient way to gauge development interest in each project.
6. Adaptability and future vision
For starters, since Litecoin is so similar to Bitcoin it is very easy for Bitcoin upgrades to be merged into Litecoin, meaning that nobody really "needs" to work on Litecoin, since they can just copy Bitcoin code. But perhaps more interestingly, because Litecoin is not Bitcoin, it means that the opportunity exists to do something entirely different. This may be happening for the first time ever as it seems there is an increasing interest in the utilization of Mimblewimble technology with Litecoin. Solid overview of Mimblewimble here: https://academy.bit2me.com/en/what-is-the-mimblewimble-protocol/
The tl;dr is that it possible perks include not only increasing Litecoin's privacy but also decreasing blockchain size while simultaneously increasing transaction throughput. Of course, Mimblewimble isn't without its own set of drawbacks, but that is beyond the scope of this article. The general consensus across the greater Litecoin community is that the pros that come with implementing some form of Mimblewimble into Litecoin do not yet outweigh the cons. That said, further research and experimentation is being done by curious individuals and perhaps at some point it will make sense to implement some form of it into Litecoin. Should this happen, Litecoin may actually offer something truly unique that isn't brought to the table by Bitcoin.
Some talk about its usage on Litecoin's GitHub: https://github.com/litecoin-project/lips/issues/10
A very long video that goes in depth about the underlying mechanics of Mimblewimble and its possible use within Litecoin: https://www.youtube.com/watch?v=x5vJzp1ehaI
Litecoin is outclassed by Bitcoin in a multitude of ways. Many of Litecoin's supposed benefits such as its decreased block times may appear as advantages at first glance, but upon closer inspection ultimately mean very little. Litecoin's security is dwarfed by the Bitcoin mining network as the mining power of Bitcoin towers over that of Litecoin as well as any other pure PoW protocol. While Litecoin does have the capability of producing four times as many transactions as Bitcoin, we see that due to its lack of usage it currently only processes half as many transactions as Bitcoin. Additionally, even if it were processing four times as many transactions, we must consider the potential issue of blockchain growth and the sustainability of its decentralization. It is far less popular than Bitcoin in the public eye, has far less network activity, far less total active address, and far less trading activity. On top of all of this, development of the core Litecoin protocol has come to a near standstill.
Litecoin does have two standout traits. Its merge mining with Dogecoin means that miners will always have a base incentive in DOGE to continue mining regardless of LTC transaction fees (as long as DOGE remains somewhat valuable). And of course, because Litecoin isn't Bitcoin, it could potentially try something different that Bitcoin is unwilling to do. So far it hasn't, but it could. And it looks like the most probable route may be to include aspects of Mimblewimble. While this change is not certain and brings with it some challenges along with its benefits, it is certainly a possibility that we could look forward to.
Ultimately as things currently stand it is my opinion that there is very little reason to use Litecoin over Bitcoin. Currently its only real benefit is in that trusting individuals who may be willing to wait fewer confirmations can enjoy faster transaction times, but were that a person's primary concern one could just as easily use Dogecoin which is even faster than Litecoin. While the base emissions of DOGE for Litecoin miners is a nice bonus, I don't see it ever being the deciding factor between deciding between mining Bitcoin or Litecoin. The addition of Mimblewimble technology into Litecoin is attractive but is merely an idea and we have no timeline for its inclusion nor do we know if it would ever even end up being worthwhile to implement at all. For now I have no interest in using Litecoin, but perhaps it will end up doing something interesting in the future.
I wrote this because I have explained Litecoin to people multiple times and I decided it might save me time in the future to have it in a more coherent written format. I am open to criticisms of my points and any corrections of false information. The more accurate information we have out there the better.