Updated: Sep 10, 2022
When buying a cryptocurrency for the first time no one looks at the actual network capabilities for capacity, scaling, and speed. Many people buy Bitcoin because their friends told them to. Which is good, but actually understanding the limitations of Bitcoin and how Litecoin provides a perfect substitution should be understood.
Let's first understand the basics.
Bitcoin has a 1MB block ever 10 minutes, inside this block transactions are added, and sometimes if there are enough transactions in that period the block gets full. When this happens fees rise to accommodate transactions that are willing to pay a little more to get into the block or the transaction will get pushed to the next block or stuck in the mem pool (waiting for validation). A great place to visualize this is with a website called txstreet.com
Litecoin also has a 1MB block but these blocks are every 2.5 minutes which means in the same time one Bitcoin block is created there are 4 Litecoin blocks. This means Litecoin can handle 4x as many transactions in the same 10-minute interval. This is powerful because Litecoin will always offer more capacity than Bitcoin and the settlement is 4x faster, which enables more on-chain transactions instead of pushing folks to use layer-2, layer-3, etc.
Bitcoin first maxed out its block capacity in 2017, which led to high fees, long meme pool waitlists, and two significant outcomes. The first was Litecoin adding Segwit, and many Bitcoiners were opposed to the upgrade in fear of bugs or other issues. But after SegWit went live on Litecoin, the FUD was disproved and Bitcoin ended up adding SegWit. Segwit increased the block size up to another 1MB. Essentially, double the capacity of each block.
The other outcome was the block size wars and hard-fork of Bitcoin splitting the chains into Bitcoin and Bitcoin Cash in an effort to increase the 1MB blocksize. Which resulted in Bitcoin winning out in the long run and Bitcoin Cash becoming a minority less-secure minority chain.
Real-time data from Bitinfocharts shows Bitcoin has continued to max out its on-chain capacity with limitations on about 350-450k transactions per day.
Litecoin is limited to about 1.4M-1.8M transactions per day. Litecoin has never reached its maximum on-chain capacity and provides a consistent, reliable, network that can scale even more.
But it gets better, just like with the SegWit addition in 2017 on Litecoin and eventually onto Bitcoin, Litecoin is adding something called MWEB. With this new upgrade, the block size will be variable up to another 3-4MB, this extra capacity is designed to handle the new confidential transactions using ltcmweb1 addresses that don't record the transaction amount or publicly show the sending or receiving wallet balances. In discussion with the developers, it wouldn't be a simple 4x in capacity due to the data requirements of this new process but there is an expected increase.
MWEB on Litecoin will launch on May 19th, and it will be exciting to see how much extra capacity and throughput MWEB will add. The MWEB technique uses a process called cut-through. This causes MWEB blocks to be much smaller than normal litecoin blocks, as the cut-through transactions the ones in the middle aren't fully recorded in the block. If you want to learn more about this technology here is a mimble wimble playlist.
Perhaps, bitcoin users and developers will start to see the privacy, scaling and usability features that MWEB brings to Litecoin and will look into adding MWEB to Bitcoin also.
Until then Litecoin continues to offer the best network and monetary digital asset in the world.