Top Ten Cryptocurrencies – Litecoin (LTC)

 

Litecoin is currently the world’s seventh biggest cryptocurrency by total market capitalization.

 

Litecoin LTC Market Data

Current Price: $54.16
Market Cap: $3.1 bn

(Data as at 16 October 2018)

Litecoin was created in 2011 and was the first major altcoin to appear after Bitcoin.

Litecoin is sometimes referred to as “the silver to Bitcoin’s gold.”

The technology used by Litecoin is broadly the same as Bitcoin’s, but with some tweaks which give Litecoin an edge over Bitcoin in terms of processing speed and capacity.

For example, Bitcoin creates a new block or bundle of transactions every 10 minutes, whereas Litecoin requires just 2 and a half minutes to create a new block of transactions.

This means Litecoin’s transaction processing time is four times as fast as Bitcoin.

But other than these tweaks, there is so far not much that makes Litecoin as a technology more advanced than Bitcoin. Litecoin uses the same cumbersome proof of work mining system for processing transactions as Bitcoin, which is computer resource-intensive and wasteful of electricity.

The main advantage of Litecoin is that transaction times are faster than for Bitcoin and the processing fees charged by the Litecoin system are much lower than Bitcoin’s. This means Litecoin is more cost-effective as a currency for smaller value transactions.

However, the system as it currently exists means Litecoin is still not suitable for fast real-time transaction processing such as that offered by the major credit card and debit card operators. Real-time transaction processing in a few seconds, as is typically required for a retail purchase is also not possible with Litecoin.

And again Litecoin comes with the same drawbacks regarding lack of anonymity and privacy of transaction information that also beset Bitcoin.

A maximum total of 84 million coins can be issued on the Litecoin blockchain of which some 58.7 million have already been mined and issued into circulation.

The original founder of Litecoin, Charlie Lee, lost interest in the Litecoin project. However, this last few years Lee has since actively re-engaged himself for Litecoin and a number of improvements to Litecoin are ongoing and planned. This should improve Litecoin’s competitive position and attractiveness in the cryptocurrency space.

Litecoin implemented the SegWit system before Bitcoin and is now planning the introduction of two further major innovations: the Lightning Network, which allows for extremely fast transaction times, and atomic swaps, which enable conversion between different cryptocurrencies to occur without the need for an intermediary exchange.

Lee’s Litecoin Foundation have purchased an interest in a German bank which they plan to use to help adoption of Litecoin and provide for easier exchange and transfer of funds between fiat currencies and Litecoin.

There’s been a lot of criticism of Charlie Lee and his wavering involvement with Litecoin over the years. His selling of his entire LTC holding during the bear market of 2018 also attracted massive criticism and skepticism towards Litecoin.

Nonetheless, Litecoin has a large following and a substantial market cap, currently at over $3 billion Dollars.

My Assessment of Litecoin

Litecoin has always seemed like a static project, content to just exist and follow along behind Bitcoin, being “the silver to Bitcoin’s gold” to quote that well-worn phrase. The fact is, Litecoin doesn’t do anything that Bitcoin doesn’t or won’t.

Litecoin has some advantages over Bitcoin, but these are minor tweaks in what is basically the same old clunky Bitcoin technology template compared to the technological innovations offered by some other more recent altcoins.

And referring to Litecoin, as Charlie Lee continually does, as being “Litecoin’s silver to Bitcoin’s gold” does not constitute any real unique selling point in Litecoin’s favour, whatever Charlie Lee might think. That is 2011 era thinking which has no real meaning today nor in the future. Things move fast in the blockchain world and cryptocurrencies have moved on since 2011. Yet Lee persists in this belief that “Litecoin is the silver to Bitcoin’s Gold”.

There are now other cryptocurrencies which offer real innovative value to users and do not try to position themselves as “the silver to Bitcoin’s gold” and nor do they need to. They offer real features and real value.

In terms of market capitalization, Litecoin is most definitely not “the silver to Bitcoin’s gold”. It is now seventh in the cryptocurrency market cap ranking, not second. So it’s far from being even “silver”.

Finally, the announcement that Charlie Lee sold his entire LTC portfolio also does not inspire confidence. Would you have confidence in a CEO who sells his shareholding in the company he leads? I’m afraid I do not find Charlie Lee that convincing.

In conclusion I have to say I am skeptical about Litecoin and its future. Partly this is because I am mistrustful of Charlie Lee and his reliability, and partly because of the years this currency was left quasi-abandoned by him in the wilderness.

But I don’t either find that much on the innovation front to convince me that things for Litecoin will be all that different in the future to how they are now and how they have been in the past.

See Charlie Lee’s keynote presentation at the 2018 Litecoin Summit and form your own opinion:

 

Investment disclosure of author: The author holds investments in the asset or assets mentioned in this article.

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