Litecoin (LTC) is by far one of the most established networks in the cryptospace. It is already being used by many as a store of value and means of exchange and so can be considered as money. Furthermore, the groundbreaking partnerships that are being formed by the Litecoin Foundation position this crypto for long term success.
- Crypto-asset type: Money Coin
- Max. Supply: 84,000,000 LTC
- Current Circulating Supply: 57,634,057 LTC
- Market Capitalization: $4.80 billion
- Token Economics: Defationary asset o Similar to Bitcoin, Litecoin block reward is halved periodically (every four years), reaching the asymptotic value of 84 million LTC, thus making it efectively defationary.
- Protocol: Proof-of-Work - Scrypt
Litecoin was created in late 2011 as a fork of Bitcoin, by then Google employee Charlie Lee. He forked the Bitcoin repository and introduced some diferences with respect to Bitcoin, like a larger currency supply and a shorter block confirmation time. However, unlike all other BTC forks, he created his own genesis block, efectively starting a new cryptocurrency with no previous transactional history.
Litecoin, frequently referred to as “digital silver”, quickly became one of the most important cryptocurrencies after Bitcoin and has remained a solid alternative or complement to the king of the crypto sphere.
In addition, some of the most important developments that have considered for implementation on Bitcoin, have also been introduced on Litecoin, sometimes first like it is the case for Segregated Witness (Segwit). Lightning Network, which should make transactions faster and cheaper, has also been implemented on Litecoin.
Litecoin was launched by Charlie Lee, who is certainly the main figure behind the project.
Charlie Lee is a computer scientist who worked at Google for several years after graduating from MIT. He came across Bitcoin soon after its creation and decided to create his own version of the currency, named Fairbix, introducing a series of changes. Fairbix was not successful, but it was the basis of his next project, Litecoin, which was set to become one of the most important cryptocurrencies to date.
After leaving Google and working for popular crypto exchange Coinbase for a few years, he now devotes all his time to the Litecoin Foundation. However, he is said to have sold virtually all his Litecoin holdings in order to prevent any confict of interest, and has also stated he will eventually leave the development of the project to favour a greater degree of decentralization.
Xinxi Wang is a computer scientist who now acts as Board Director of the Litecoin Foundation. After completing a PhD in Computing Sciences at the National University of Singapore, he focused on trading and cryptocurrencies. Besides his work with Litecoin, he founded and acts as CEO of the cryptocurrency exchange platform Coinut.
Adrian Gallagher, known as “Thrasher”, is an Australian developer who works as a full time developer maintaining Litecoin Core. He also has extensive development experience in several other crypto-related projects.
The conception of Litecoin makes it very similar to Bitcoin, and its main use cases will consequently be equivalent. As a currency, it can act as a store of value, unit of account and medium of exchange, which are the three use cases that define a currency.
Although Bitcoin was originally conceived mainly to enable secure and censorship resistant transactions over the Internet, it has undoubtedly transitioned towards a store of value as its main use case, with many people nicknaming it as “digital gold”. Slow transactions and significantly large fees with respect to other cryptocurrencies are arguably the main reasons for this tendency.
In that sense, Litecoin ofers cheaper and faster transactions, although still inferior to several newer digital currencies. Litecoin however combines these advantages with respect to Bitcoin with the fact that it has traditionally been considered the greatest contender to Bitcoin, as well as its large market capitalization. It is one of the most liquid coins and one of the main gateways from crypto to fiat currencies and vice versa.
Recent & Future Developments
Litecoin has traditionally made use of its software similarities with Bitcoin, along with a more scalable and smaller network, to facilitate the implementation of new developments for Bitcoin and cryptocurrency in general. This way, some of the most important developments in the space have taken place in Litecoin sooner than on any other alt-coin.
For instance, Litecoin joined Bitcoin in the implementation of the Lightning Network. This is basically a second layer that works on top of the blockchain itself and permits extremely fast transactions.
Similarly, Segregated Witness (Segwit), an important update for the Bitcoin protocol that improves its security and scalability, was implemented on Litecoin before any other major cryptocurrency. Due to the similarities between the two networks, SegWit working on Litecoin greatly facilitated its implementation on Bitcoin.
Several businesses, retailers and exchanges are increasingly ofering Litecoin-based payments both in person and online. Some examples are Alza.cz, one of the most important e-commerce retailers in the Czech Republic, and Wirex, a company specializing in cryptocurrencybased debit cards. eGifter, CheapAir or TapJets are other such examples.
On July 10 2018, the Litecoin Foundation made crypto history by partnering with TokenPay to buy a 9.9% stake in German WEG Bank. TokenPay even has the possibility of purchasing up to 90% of the bank, pending regulatory approval. This strategic partnership is designed to allow Litecoin to gain more adoption, which may include cryptocurrency debit cards, online payments and retail implementation. This bold and groundbreaking move marks the first major public acquisition from a crypto company in the traditional finance world.
The Litecoin Foundation regularly updates the extensive number of businesses that accept and support Litecoin.
Besides, Litecoin is known for having one of the most vibrant and loyal communities of the whole crypto sphere, which has become famous for inside jokes, one of the most popular of which is Litecoin’s common nickname chikun.
Given its origin and main purpose, the technology behind Litecoin is indeed very similar to that of Bitcoin. In fact, the same code released by Satoshi Nakamoto that provided the basis for the Bitcoin blockchain was adopted by Charlie Lee to build the Litecoin network. He introduced a series of technical diferences to solve some of the problems of Bitcoin, in particular its slow transactions and the specialization of mining hardware.
Bitcoin miners typically use highly specialized equipment that is specifically designed to solve Bitcoin’s algorithm, named SHA256. Litecoin’s consensus algorithm, scrypt, is also a Proof-of-Work algorithm but is designed to make specialization of hardware more complex. Because Scrypt mining requires using RAM, specialized hardware for mining SHA256 do not work with Litecoin. This is important because it can help decentralize the network further allowing more users to be competitive in the mining process.
It is also very important that Litecoin is scrypt dominant. This means that it is by far the network using scrypt with a larger hashing power. So even if all the miners from those other coins joined to attack Litecoin, they would not be close to threaten the security of the network.
Other obvious diference is the coin supply. While the theoretical maximum supply of Bitcoin is around 21 million coins, that of Litecoin will reach approximately 84 million. This, and the subsequent lower value of Litecoin, are one of the reasons why many people consider Litecoin to be the “silver” to Bitcoin’s “gold”.
Litecoin also ofers a shorter block time of 2.5 minutes as opposed to Bitcoin’s 10. This can make transactions on the Litecoin network considerably faster and more practical for real world usage.
Silver to Bitcoin’s Gold
Since inception, Litecoin has been referred to as “digital silver”, to compare with Bitcoin’s “gold”. The comparison (and its depiction as a silver-colored coin) refects in fact the main intention of founder Charlie Lee of becoming not a competitor to Bitcoin but rather a complement, in the same way silver and gold are two similar assets with slightly diferent properties and applications.
Litecoin, being cheaper, more numerous and permitting faster and quicker transactions, aims to become a standard for smaller transactions, while Bitcoin can remain as the coin of choice for very large payments and store of value.
Meanwhile, both see the majority of its use as a store of value, similar to their precious metal counterparts. With the relative price to each other being highly correlated, Litecoin can ofer some diversification for investors as well as room for growth with a much more afordable coin than Bitcoin.
The ratio between Bitcoin and Litecoin is also rather similar to that of Silver and Gold. In this graph we can see the Gold/Silver ratio. At the moment, one ounce of gold buys approximately 80 ounces of silver.
At the time of this writing, one BTC is worth about 85 LTC. The current circulating supply of Litecoin is 3.35 times that of Bitcoin and the total final one will be four times larger. As the rate of new Litecoins produced is faster than that of Bitcoin, should the above ratio remain within a stable range, the price per Litecoin would need to rise faster than the price of bitcoin.
Source: eToro LTC Market research.