What Is Litecoin? Introduction To LTCMarch 16, 2018
What is Litecoin, and why can you find it on almost every exchange? Litecoin is a cryptocurrency like Bitcoin. It can do virtually anything Bitcoin can and has 400% faster transactions. In fact, when Litecoin was launched, creator Charlie Lee wrote that “We wanted the best innovations of Bitcoin and these other currencies to create a coin with all of their benefits, but nearly none of their problems.”
One of the top trading coins with a daily volume exceeding a quarter-billion dollars, Litecoin can fairly be described as the “silver” if Bitcoin is the “gold.” Litecoin thrives when Bitcoin thrives, and sees the most use when the Bitcoin network is congested and therefore more expensive.
A “Personality Coin” Founded By Charlie Lee
A former Google employee, Lee took a job as an engineering manager at Coinbase in 2013, long before Coinbase supported buying or selling Litecoin. Four years later he decided to focus full-time on Litecoin, but six months after that, incidentally at the all-time-high of more than $300, Lee sold the remainder of his litecoins, irritating some community members.
As a thought leader of the Litecoin community, Lee has not shied away from contentious discussions, often taking a side or position. He has consistently supported the Lightning Network/Segregated Witness scaling solution for Bitcoin and is a frequent detractor of Bitcoin Cash [link to Bitcoin Cash educational]. He opposed the Segwit2x proposal so staunchly that he placed a very public bet with Bitcoin Cash proponent Roger Ver.
What Is Litecoin Known For? Silver to Bitcoin’s Gold
Litecoin’s branding and its proponents often tout it as the “silver” to Bitcoin’s gold. Its value is normally a fraction of that of Bitcoin, and it can be viewed as a good way for someone to get their feet wet in cryptocurrency, being less expensive to acquire and less expensive to transact. It can be argued, as well, that due to the lower hashrate on the Litecoin network, it also costs less to mine Litecoin.
Litecoin’s Sizable And Devoted Community
Litecoin has its own foundation, similar to the Bitcoin Foundation, which promotes Litecoin as a stable digital payment solution for merchants and other purposes. The Litecoin Foundation has notably asked for Litecoin to be unlisted from questionable cryptocurrency exchanges.
Litecoin also has an active sub-reddit and a dedicated forum.
Already integrated by several payment providers including Coinbase, Litecoin also has its own native LitePay, a provider which exclusively helps merchants transact in Litecoin.
Litecoin Is Accepted (Almost) Everywhere
It’s rare to find a merchant or exchange that doesn’t list or accept Litecoin in addition to Bitcoin, and for those that are this way, easy-to-use tools like ShapeShift enable Litecoin holders to quickly convert to Bitcoin. Many exchanges also use Litecoin as a denominating currency, with indexes for lesser altcoins paired with Litecoin instead of or in addition to Bitcoin.
One of the earliest “altcoins,” or alternative coins, Litecoin is a mostly a clone of Bitcoin created by Charlie Lee with only three major differences in design:
Over the years, Litecoin has played testbed to new Bitcoin technologies, such as Segregated Witness and Lightning Network, both of which were activated on Litecoin before they were officially running on Bitcoin.
Other alternative cryptocurrencies were launched before Litecoin, but they all had problems. In the case of Tenebrix and Fairbrix, which were first to implement Scrypt, there were no caps on supply, which creates a long-term problem with the devaluation of a currency. Litecoin differentiated itself by having a maximum cap at all.
Benefits of Litecoin
Lower Transaction Fees
It costs less to transact in Litecoin and the price is often at least as stable as Bitcoin, therefore a sensible method of avoiding large transaction fees on the Bitcoin network is to move from exchange to exchange in litecoins as opposed to bitcoins.
Faster, More Spacious Blocks
Litecoin blocks happen every 2.5 minutes, so to get a transaction confirmed on the network is a less daunting prospect than on Bitcoin. Here in the first decade of Litecoin, too, there is far more space available in Litecoin blocks. Eventually it can be assumed this will not be the case, and still other cryptocurrencies will play a similar role for Litecoin as well as Bitcoin.
As a trader, it’s relatively inexpensive to get hold of Litecoin and find yourself in the black a short time later. Unlike Bitcoin, where buying a full unit can now be considered a reasonably-sized investment, it remains possible in 2018 to purchase several Litecoins for the purpose of speculating or getting your feet wet in cryptocurrency trading. Litecoin has a strong, stable network and plenty of acceptance at merchants, as well, so unlike a whole range of tokens, it is unlikely to ever be entirely useless in one’s portfolio.
Problems with Litecoin
“Too Many Speculators, Not Enough Real Users”
Charlie Lee hit the nail on the head on Twitter not long ago, pointing out that there are too many speculators at this late date and not yet enough “real users.” Litecoin’s long-term success is tied to the breadth of the community which generates demand for it, in terms of merchant acceptance and other metrics that matter, like number of people receiving part or all of their paychecks in litecoins.
Too Much Like Bitcoin
Perhaps the biggest problem with Litecoin to date has been its inability to fully distinguish itself from Bitcoin. Strictly from a trader’s perspective, there are a number of advantages to having and holding Litecoin, but from a usefulness standpoint later innovations like Ethereum make a lot more sense. At the end of the day, however, with no further differentiation from Bitcoin, Litecoin can play the role of entrypoint to cryptocurrency as well as the first choice for overflow transactions when Bitcoin blocks are too full and expensive to get into.
Long Price Depressions
Due to the still-maturing market and community around Litecoin, while it sees price surges roughly on par with Bitcoin and the rest, it then sees long-term price depressions or stagnation. From a trader’s perspective, this makes it less attractive, since daily volatility would be preferable. Nevertheless, Litecoin does see plenty of volume, and its price performance has not been far behind other cryptos in recent times.
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