Up until just recently, Litecoin was second to Bitcoin until it was firmly displaced by Ethereum. Comparing the two is like comparing a carrot with a beetroot. They may both be vegetables but that is where the similarity ends. Litecoin was originally released in 2011, as a way of overcoming challenges in Bitcoin mining. Litecoin mining times were shorter and where Bitcoin has a limit of 21 million coins, Litecoin went above and beyond this, aiming for a cap at 84 million tokens.
In terms of similarity, Ethereum and Litecoin are miles apart. Where Litecoin attempted to take over from Bitcoin, so Ethereum was slated to topple Litecoin, being released for a much bigger purpose than just mining and creating coins for transactions. Ether, the Ethereum currency, is created mainly to facilitate an exchange of value for services that are carried out on the platform. This platform is an immense decentralized computer powered by millions of other computers like the Bitcoin blockchain is. The core development team behind Ethereum have taken the necessary steps to stop the platform from being misused, purely for creating currency hand over fist, like they do on Litecoin and Bitcoin.
Litecoin also uses the Proof-of Work mining system that Bitcoin uses, again, different to the Proof-of-Stake algorithm used by Ethereum miners. It is this system that stops monopolization of the platform, as has happened with other cryptocurrencies – we have seen occurrences of both Litecoin and Bitcoin mining being taken over by large organizations with the money to purchase the most expensive equipment and fill up entire warehouses with it, effectively stopping the at-home miner from being able to compete. Proof-of-Stake makes it possible for everyone to be equal and it places a limit on what functions may be performed on the Ethereum platform, simply through how much Ether each user possesses.
Ethereum is a computational platform where Bitcoin and Litecoin are transactional systems
In short, Ethereum is a computational platform where Bitcoin and Litecoin are transactional systems. The currency is Ether and this is required for users to use any of the memory and processing power provided by the Ethereum protocol. Those who contribute get a reward of Ether and they can use this to build and host applications or trade it in for another type of cryptocurrency.
Litecoin, like Bitcoin, is a monetary platform, faster than Bitcoin and a good deal more efficient but, like Bitcoin, it has become a platform for those with the ability to invest serious money in mining, locking out the average user. It is highly unlikely that Litecoin will ever take back its crown as the second cryptocurrency and may even end up falling further as Ethereum continues to rise through the ranks.