Is Litecoin still considered the Silver to Bitcoin’s Gold?

Litecoin is a decentralized, open-source cryptocurrency created in 2011 by Charlie Lee, a former Google employee, with the goal of being “the silver to Bitcoin’s gold.”

Bitcoin was the only really significant cryptocurrency since it launched in 2009, and it controlled a significant portion of the market share. It still does obviously. Despite its domination, Bitcoin had a number of known flaws, including how quickly it processed and added new blocks to its blockchain. 

Litecoin was created to be more practical for daily use and to offer low cost transactions. 

Bitcoin continues to be utilized more as a long-term value store. Litecoin has lost market share in the past few years but it still has a lot of supporters.

Compared to Bitcoin, Litecoin has a substantially greater coin limit market cap and a much faster mining process. This results in cheaper, faster, smaller-sized transactions.  

Lee wanted to develop a more user-friendly version of Bitcoin. Compared to the “gold” that Bitcoin was (a store of value for the long term), Lee’s coin would be the “silver”, a method of transaction for less expensive and daily needs.

Key Takeaways
  • Litecoin is based on a copy of Bitcoin. 
  • LTC was created by Charlie Lee in 2011
  • Litecoin is essentially a copy of the Bitcoin source (with minor edits and improvements). Both coins operate on an open-source decentralized Proof-of-work (PoW) blockchain.
  • LTC’s success pioneered the era of “Altcoins”, and it has since become the longest-lasting crypto from the first generation of Altcoins released in 2011. 
  • Litecoin continues to be counted among the top 20 cryptocurrencies by market cap 
  • Litecoin verifies transactions on its blockchain using a Proof-of-work (PoW) algorithm.

A Brief History of Litecoin

Origin and Development

Charlie Lee, a former Google software engineer, is credited with the creation of Litecoin, and is quite active on social media and his blog. 

According to Lee,
“I guess the short of it was that I was just trying to create … a fork of Bitcoin. It was mainly a fun side project.”

LTC was made available on GitHub as an open-source client on October 7, 2011. On October 13, 2011, Litecoin Network became operational, fundamentally a fork of the Bitcoin Core client. 

 

The First Altcoin?

No, Litecoin was not the first altcoin, but it was one of the and most successful altcoins to be created.

An altcoin is a cryptocurrency that is an “alternative to Bitcoin”, and there have been thousands of altcoins created since the inception of Bitcoin.

Other cryptocurrencies that appeared on the market before LTC included: Namecoin, Solidcoin, and Tenebrix,. 

The first altcoin: Namecoin, was created in 2011 as a decentralized DNS (Domain Name System) and a means of registering and transferring domain names. Since then, many other altcoins have been created, each with their own unique features and goals. Some of the more well-known altcoins include Ethereum, Ripple, and Monero.

Altcoins can be used for a variety of purposes, including serving as a medium of exchange, a store of value, or a platform for decentralized applications.

Growth after Launch

Following its launch, growing exchange availability and liquidity on early exchanges helped Litecoin develop quickly. The overall value of Litecoin increased dramatically throughout the month of November 2013, growing by 100% in just one day.

Lee, who served as managing director of the Litecoin Foundation, which aims to improve Litecoin and create blockchain technologies for the common benefit, sold all of his Litecoin holdings in 2017.

The first Lightning Network transaction using Litecoin took place in May of the same year and transferred 0.00000001 from Zürich to San Francisco in less than one second.

 

Key Innovations and Milestones

Founder Charlie Lee made the suggestion to the larger Dogecoin community to combine mining Dogecoin and Litecoin at the beginning of 2014.

Dogecoin started merging mining with Litecoin in September 2014, giving Dogecoin more security and a permanent block subsidy that wasn’t previously possible with Litecoin mining.

The Mimblewimble Extension Blocks (MWEB) update was made active on the Litecoin network via a soft fork in May 2022. Users now have the ability to send private Litecoin transactions, in which the recipient and sender are the only ones who are aware of the transaction’s value.

PayPal introduced the ability for users to send Litecoin, together with Bitcoin, Ethereum, and Bitcoin Cash, to other wallets and exchanges in June 2022.

 

What are the Benefits of Litecoin?

LTC has a Relatively Long History

Due to its high market cap and relative age in the cryptocurrency space, Litecoin has a highly active community that is dispersed across a variety of social media platforms.

Litecoin has over 250,000 subscribers on Reddit, compared to Bitcoin’s 2.8 million. 

LTC is accessible on 175 exchanges in 400 trading pairings.

Popular brands like Coinbase, Binance, and Kraken are just a few examples of top exchanges that support LTC. Litecoin can also be purchased or exchanged for products and services on exchanges and over-the-counter markets all over the world.

Convenient Daily Payments

Litecoin aims to be a less expensive, more “spendable” currency than Bitcoin for everyday transactions. Users are encouraged to spend LTC rather than hold the coin for investment objectives, portfolio diversification, or safeguarding seizure-resistant funds. 

LTC is also great for cross-border transactions because of its speed, security, and affordability compared to conventional international transfers. 

Lightning Fast Transactions

Litecoin is intended to generate four times as many blocks as Bitcoin (10 blocks for Bitcoin, compared to 1 for Litecoin), and it also permits a four-fold increase in the coin cap, so speed and accessibility are Litecoin’s key advantages over Bitcoin.

The confirmation time for a Bitcoin transaction is typically between 40 and 60 minutes. This takes just 10 minutes with Litecoin, which is four times faster. This implies that purchases can be made much more quickly.

 

Secure Transactions

Litecoin is currently the largest Scrypt-based blockchain network. This consensus mechanism improves the security of the Litecoin blockchain while simultaneously speeding up block generation. In contrast to networks like Bitcoin, whose ledgers are open to the public, Litecoin maintains private ledgers to allow users to conduct private transactions. 

 

Low Fees

Because it would provide the same services as bitcoin but with lower fees and faster transaction times, Charlie Lee envisioned Litecoin as “Bitcoin lite”.

No matter how big a transaction is, users only pay 1/1000 LTC in fees.

 

Incentivized Mining 

The first miner to correctly verify a block receives 12.5 Litecoins as payment. This is one of the incentives for mining Litecoin.

The number of Litecoins granted for such a task decreases with time, just like Bitcoin. It was cut in half in August 2019, and it will keep getting smaller until the 84,000,000th Litecoin is mined.

The maximum of 84 million Litecoins is anticipated to be reached in or around 2142, according to the Litecoin Foundation.

Users of Litecoin can buy more RAM instead of needing to buy prohibitively expensive, highly specialized application-specific integrated circuits (ASICs) to mine. Theoretically, this was meant to increase network mining accessibility and promote decentralization.

However, since Litecoin’s proof-of-work algorithm employs Scrypt (as opposed to Bitcoin’s SHA-256), using mining equipment like ASIC miners or a GPU mining rig requires a lot more computing power.

Is LTC a Good Investment?

Litecoin is an OG in the cryptoverse and 2011 was a long time ago.

It has a long and solid track record as a blockchain but not a lot of momentum.

Litecoin has a supply of 84 million coins, of which around 70 million have been produced and are actively in use, compared to bitcoin’s supply of 21 million. For investors looking for stable crypto investments, the high token pool does offer the potential for growth. 

Also, Litecoin distinguishes itself with an added emphasis on merchant and retailer adoption. It has become more popular among merchants over time. In the future, its market capitalization could increase if adoption increases.

It is not possible for me to predict with certainty whether Litecoin (LTC) will be a good investment in 2023 or any other specific time period. The value of cryptocurrencies, including Litecoin, is highly volatile and can fluctuate significantly over short periods of time.

All that being said, cryptocurrencies including LTC, are still a relatively new and highly speculative asset class, and their long-term value is difficult to predict. There are many factors that can affect the price of Litecoin, including market demand, regulatory developments, and technological advancements.

It is important to carefully consider these and other factors before making any investment decisions. It is also crucial to remember that investing in cryptocurrencies, or any other asset, carries inherent risks and it is possible to lose some or all of your investment.

It is always a good idea to do your own research and consult with a financial advisor before making any investment decisions.

How Does Litecoin Work?

Litecoin is a decentralized cryptocurrency that enables digital payments through the use of open-source blockchain technology, independent of centralized financial institutions. It processes batches of transactions as blocks and maintains a public ledger of these transactions on the Litecoin blockchain.

Litecoin shares several similarities with Bitcoin in terms of working and outcomes, but also has some notable differences, highlighted below:

Scrypt Proof of Work or Scrypt Algorithm

Like Bitcoin, Litecoin (LTC) uses Nakamoto Consensus in conjunction with Proof of Work (PoW), the most popular sybil resistance scheme, to ensure that all participants concur on the state of the public ledger (blockchain). 

However, Litecoin branched from the original Bitcoin Core client with key modifications like using the Scrypt Algorithm instead of Bitcoin’s SHA-256. 

Lee created Scrypt primarily to make sophisticated hardware attacks more challenging. Unlike SHA-256, the Scrypt algorithm used in Litecoin requires a significant amount of random access memory (RAM), which is a barrier to parallel processing. This was meant to be more ASIC-resistant and easier for regular people to mine. However, this also makes Litecoin mining more resource-intensive and centralized. 

Mining

To ensure that new transactions do not contradict the blockchain’s transaction history, each Litecoin node operator has a copy of each blockchain, and miners assist in processing recent transactions by adding them to recently mined blocks.

Miners used to receive 50 LTC for creating a block in the early stages of Litecoin’s existence. This reward’s value was reduced to 25 LTC as of 2015 and is presently 12.5 LTC. The payout will gradually reduce by half until the 84 million LTC hard cap for Litecoin is reached.

Governance

Charlie Lee, the project’s founder is the most prominent figure associated with Litecoin. He no longer owns any of the cryptocurrency, though after infamously liquidating all of his holdings during the height of the 2017 bull run.

Since it uses an off-chain consensus approach like Bitcoin, Litecoin does not have a formal governance structure. The Litecoin Core Development Team, a division of the Litecoin Foundation led by creator Lee and funded by donations, implements updates to the protocol for Litecoin. 

Only 8 people, including 4 members of the Board of Directors and 4 alternate “Directors,” are responsible for allocating donations, whether for protocol revisions or strategic marketing plans.

Tokenomics

Litecoin’s maximum supply is 84 million (as opposed to Bitcoin’s 21 million), and as of December 2022, there are approximately 71.2 million of those coins in circulation. Like bitcoin, Litecoin was launched in a “fair launch” fashion without an initial coin offering or subsequent pre-mine. 

It began with only 150 pre-mined coins, which were made up of the genesis block and the two blocks after it for confirmation.

The remaining 84 million LTC can be mined by anybody who decides to do so.

For every 840,000 blocks, Litecoin’s block reward is decreased in half. Litecoin’s total supply has already been mined to almost 80% of its capacity. Nearly all (99.98%) of the LTC will have been mined by 2050.

The wealth distribution of Litecoin is substantially skewed toward the highest end of the range. Over 40% of the coins are held in about 100 wallets alone. 

Developments and Upgrades

Peer-to-peer transactions are possible on the Litecoin network, as was already mentioned. In addition, the Lightning protocol, an algorithm that permits instantaneous worldwide transaction settlement, was developed by the Litecoin team. Atomic Swaps is another innovation that Litecoin pioneered, which makes trading possible in a trustless environment.

The Future of Litecoin

Since its introduction, Litecoin has added a number of features aimed at increasing transaction speeds without compromising the network’s security and integrity. These advancements suggest that Litecoin is amenable to technological advancements in the quickly evolving cryptocurrency environment.

Segwit

In order to solve the scalability problem with Bitcoin, SegWit, or Segregated Witness, was first proposed. The way it operates in the blockchain is by “segregating” the digital signal data (the “witness”) outside the basic block. Due to its resemblance to Bitcoin, Litecoin adopted SegWit in 2017 and served as a testnet to determine SegWit’s viability on the larger Bitcoin network.

Lightning Network

Launched in 2011, Litecoin only started supporting the Lightning Network in August 2017.  The Lightning Network is a second-layer bitcoin technology that scales the blockchain’s transactional capacity using micropayment channels. 

The Lightning Network’s implementation on Litecoin also served as a testnet to demonstrate that Bitcoin can support innovations.

MimbleWimble

The privacy system called MimbleWimble is based on private transactions that mask or encrypt data like transaction amounts. Through a soft fork in May 2022, the Mimblewimble Extension Blocks (MWEB) version became operational on the Litecoin network. 

Users can now send private Litecoin transactions, in which the value of the transaction is only known to the sender and recipient.

Future Roadmap

LTC can be utilized in a portfolio to give investors exposure to the movements of the cryptocurrency market without any unpleasant surprises because of its dependability. Due to its strong liquidity and availability on the most significant cryptocurrency exchanges, Litecoin is the perfect cryptocurrency for traders. 

Some people even use it to transfer money between loan platforms or exchanges in order to avoid paying hefty transaction fees on networks like Bitcoin or Ethereum because transactions on its network are reasonably inexpensive.

The Litecoin Foundation published a brief blog post providing a loose strategy for Litecoin in 2019. The list emphasized atomic swaps, institutional acceptance, and fungibility, all of which it has worked upon. 

However, despite often presenting ideas on social media, the Litecoin Foundation normally keeps its ambitions for Litecoin under wraps. Both supporters and detractors of Litecoin are concentrating on privacy improvements to gauge its future viability in the rapidly growing cryptocurrency market.

The Global Payment Network

The global payment network for Litecoin works in a similar way to the payment network for Bitcoin. It is a decentralized network that uses cryptography to secure and verify transactions, and it relies on a distributed ledger called a blockchain to record and confirm these transactions.

Here’s how the payment process works:

  1. A user initiates a transaction by sending a request to transfer a specific amount of Litecoin from their digital wallet to another wallet.
  2. The transaction is broadcast to the Litecoin network, where it is verified by nodes (computers that are connected to the network and help to maintain the blockchain).
  3. Once the transaction has been verified, it is added to a block of transactions and is broadcast to the network again.
  4. Miners on the network then compete to solve a mathematical problem and add the block to the blockchain. The first miner to solve the problem is rewarded with a small amount of Litecoin.
  5. Once the block is added to the blockchain, the transaction is considered to be complete and the Litecoin is transferred to the recipient’s wallet.

This process ensures the security and integrity of the Litecoin network, as well as the scarcity of Litecoin. It also allows users to send and receive Litecoin anywhere in the world, as long as they have an internet connection.

Conclusion

The global payments network of Litecoin functions with the primary goal of making possible instant, almost-free payments to anyone in the world through open-source blockchain technology. It was created to provide a quicker, more affordable, and more effective Bitcoin substitute, right from the start. 

Litecoin has stood out from many other altcoins consistently over the past decade due to a series of innovations, combined with features like quicker block propagation speeds and the use of the Scrypt hashing algorithm. 

Litecoin has in fact proven simpler to use when dealing with transactions involving lesser amounts. Due to its portability, simplicity of storage, and the impossibility of forging, many people believe that Litecoin is a superior alternative to Bitcoin as a means of daily payment.

Although Litecoin is not the most popular or valuable cryptocurrency, it has consistently demonstrated substantial technological breakthroughs, lending it potential for investment.

 

Is LTC a Good Investment?

Litecoin has a supply of 84 million coins, of which around 70 million have been produced and are actively in use, compared to bitcoin’s supply of 21 million. For investors looking for stable crypto investments, the high token pool continues to offer the potential for promising growth. 

Besides, Litecoin distinguishes itself with an added emphasis on merchant and retailer adoption. It has become more and more popular among merchants over time, making it a good choice for those wishing to invest in cryptocurrencies with practical applications. In the future, its market capitalization will increase if this pattern persists.

Official Links:

https://litecoin.com/

Twitter:  https://twitter.com/litecoin

Currency Information

CoinGecko https://www.coingecko.com/en/coins/litecoin

Sources

What is Litecoin? – Coinme

Litecoin (LTC): A beginner’s guide to the peer-to-peer cryptocurrency – CoinTelegraph

What is Litecoin? How Does It Work? – Forbes

What is Litecoin? The Most Comprehensive Step-by-Step Guide! – BlockGeeks