The Case for Litecoin: Is There Still a Place for Digital Silver?

Litecoin (LTC), one of the earliest Bitcoin spinoffs, has suffered from comparisons to its technical forefather. Released in 2011 by Charlie Lee, a computer scientist who now works at Coinbase, it was intended as a sort of “digital silver” counterpart to the “digital gold” that is Bitcoin.

However, Litecoin has languished over the past few years. In the crypto bull run of 2017, it peaked as the fifth largest cryptocurrency by market capitalization. That was when the founder sold out of his entire position in Litecoin. Since then, it has fallen to twelfth place, directly behind Bitcoin Cash (undoing the Flappening that had come and gone).

While Bitcoin and Ethereum have each grown over fourfold in the past three years, Litecoin has grown less than 50%. This is comparable to the recent average return of the S&P 500 index — a healthy profit, but hardly exciting. With LTC losing market share and underperforming compared to the two biggest cryptocurrencies, its relevance seems to have waned over the years.

It still might be much too soon to write off Litecoin, though. It still stands as the most direct competitor to Bitcoin, as both are decentralized limited-supply cryptocurrencies with no frills and no active founder. And luckily for Litecoin, it compares favorably to Bitcoin on many of their strengths. Its faster block processing speed (2.5 minutes compared to BTC’s 10 minutes) makes it easier to use for transcations. Its transaction fees are super low, even in an era with cryptocurrencies centered around payment processing. Its scrypt algorithm also democratized security by making mining accessible to those without specialized equipment, though that time has long passed.

Moreover, there are currently plans in the works to improve the confidentiality of Litecoin transactions, which would add fungibility to the older “dirty” tokens that have existed since the dark web days. Bitcoin’s fungibility problems, on the other hand, seem like they might be here to stay for a while; Taproots, the most recently approved update to Bitcoin, comes four years after the previous update.

One last thought: Bitcoin and Litecoin do not have to be directly at odds. Just as both gold and silver can be in the precious metals space, their digital counterparts can also serve different purposes and capture different audiences. The crypto space has enough room for different competitors to innovate side by side. Even Charlie Lee himself (who goes by @SatoshiLite on Twitter) acknowledges this.

As always, do your own research! At the very least, learning about the technology behind Litecoin is bound to equip any investor with more accurate knowledge and expectations for future developments in the crypto space.

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