Litecoin (LTC): what value proposition against Bitcoin (BTC)?

At the time of writing, Litecoin (LTC) ranks 20th in the market by market capitalization. The asset that found in second place in the market in 2013 faces many competitors and many feel that its last modest update on Bitcoin (BTC) is less interesting in comparison.

Source: Adobe/Sergey

However, Litecoin remains an important altcoin, with a market capitalization of around $3.3 billion. But as the current “winter” seems to herald a new phase for the crypto sector, some commentators are beginning to question whether the ecosystem really “needs” Litecoin.

Opinions on this issue are, unsurprisingly, mixed, with Bitcoin developers and proponents arguing that Litecoin is more or less obsolete now that the market’s premier cryptocurrency has a scaling mechanism (via Lightning network). On the other hand, the Litecoin community maintains that the altcoin serves as a useful test bed for scaling technologies, and its growing adoption by payment and investment platforms should guarantee its survival for investors. years to come.

Is Litecoin redundant?

First released as a fork of the Bitcoin source code in 2011, Litecoin stood out for its faster block creation time (in addition to a higher supply cap and the use of an algorithm of hash different). While Bitcoin processes a block every ten minutes on average, Litecoin achieves the same feat in 2.5 minutes.

However, given the progress Bitcoin has made over the past few years, the scalability argument would no longer make sense.

“Litecoin and others presented themselves as scalable alternatives or complements to Bitcoin, at a time when Bitcoin’s block space was seen as the factor limiting its growth. Bitcoiners sued the Lightning Network and other scaling solutions such as the Liquid sidechain and Statechains“, said Ben “Empac” Woosleya developer of BitcoinCore.

He claims that with the enduring success of the Lightning Network, the market has seen a wave of capitulation among many crypto-assets that were being touted as faster, cheaper or higher-throughput alternatives to Bitcoin. For example, Litecoin is down 88% from the all-time high of $410 it hit in May 2021, while Bitcoin is down “only” 69% from its all-time high in November. approximately $69,000.

Woosley believes that the demise of altcoins could continue for years to come, with the development of layer one (the base protocol) and layer two (the Lightning Network) of Bitcoin steadily undermining the case for various altcoins.

“The future of bitcoin is to follow the same process with other competing chains, removing their existence by enabling the features that draw people to them, through technologies such as Taro of Lightning LabsFederated Chaumian mints and Web5 of TBD“, he told Cryptonews.com.

Another argument in favor of Litecoin in its early years was that it was “the money compared to the gold of Bitcoin”. This meant that, with a larger supply cap of 84 million (as opposed to 21 million), it would be a rare commodity, but not quite as rare as Bitcoin.

Even this reasoning does not hold water for many observers: the author Stephen Chow tweeted in May this year that it was inapplicable in 2017. The reason for this is that since Bitcoin was already a scarce and easily transferable source of value, Litecoin was hardly needed.

However, many in the Litecoin camp would argue that its lower fees and greater scalability have allowed it to carve out a niche as a medium of exchange.

“[L’analogie avec l’argent et l’or] makes a lot of sense when looking at the most used tokens for payments. Bitcoin still holds market share, but Litecoin is the second most used digital currency for payments,” said Jay Milladirector of the Litecoin Foundation.

Looking at Litecoin’s daily transactions, the average numbers are significantly lower than those of Bitcoin.

Litecoin LTC what value proposition against Bitcoin BTC

Moving average over 7 days. Source: bitinfocharts.com

On June 15, Litecoin recorded just over 100,000 transactions, while Bitcoin processed 296,000. that other similar altcoins – for example Bitcoin Cash (BCH), Dogecoin (DOGE) and Dash (DASH) – saw around 80,000, 30,000 and 20,000 transactions per day respectively.

Litecoin still has a use

While Bitcoin developers and holders may argue that Litecoin isn’t really necessary, it’s still faring better than many similar cryptocurrencies. Many members of its community claim that regardless of the extent of its use, Litecoin still functions as a kind of useful testnet for Bitcoin.

“The development of a truly decentralized currency can be slow. The Litecoin ecosystem is lucky because its creator is still involved. Charlie Lee and the Litecoin development team have brought a number of necessary innovations to Litecoin that have already been adopted by Bitcoin,” Milla said.

Milla refers to the deployment of SegWit by Litecoin in 2017 as a prime example of altcoin’s value to the broader cryptocurrency ecosystem.

“This allowed transaction signatures to be recorded outside of the block, which in turn was a need for Lightning,” he added.

Even recently, Litecoin continues to serve as a testnet for promising new crypto technologies and solutions. This includes the arrival of MWEBs (Mimblewimble Extension Blocks) which, for Milla, make Litecoin “the most accessible cryptocurrency” with improved fungibility and privacy features.

“It’s the easiest cryptocurrency to get for someone who just doesn’t want to tell the world how much money they’re sending. Best of all, it’s optional: exchanges and wallets can choose to put it on. implemented or not,” he told Cryptonews.com.

It is for these reasons that Milla and the Litecoin Foundation are convinced that the altcoin has a bright future ahead of it. Its prospects are also favored by the increasing integration of Litecoin in various platforms and portals.

“With the addition of major payment systems like PayPal and Venmoto trading companies like Interactive Brokers and robinhood, access to Litecoin for new users has increased. LTC transactions have seen a staggering 352% increase in activity from 2019 to 2021, while Bitcoin has experienced negative growth “Milla said.

However, according to data from BitInfoCharts, this year BTC performed a bit better.

1656324485 660 Litecoin LTC what value proposition against Bitcoin BTC

Moving average over 30 days. Source: bitinfocharts.com

And with luxury brands like Gucci who accept LTC (among other cryptocurrencies) and BitPay which makes available to more traders, Litecoin might still survive in the cryptosphere for quite some time.

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