Litecoin: The New Digital Silver?
Launched in October 2011, Litecoin (LTC) is a peer-to- peer decentralized cryptocurrency with very low transaction fees and is the second crypto currency to exist after Bitcoin (BTC). Because of this, Litecoin is often considered Bitcoin’s younger brother. However, the benefits of Litecoin are not just compared to Bitcoin, also to many other crypto currencies. The major difference is not only in its tech, but also its use as a storage of wealth. It being a more efficient and better alternative to Bitcoin in many respects. As the Bitcoin network gets slower and more expensive to use, Litecoin has become a faster and cheaper alternative.
Litecoin is a 100% proof -of- work (Pow) open source coin that utilizes the scrypt algorithm, Bitcoin uses the SHA-256 hashing algorithm. While the scrypt algorithm incorporates the SHA-256 algorithm its calculations are much more consecutive than that of Bitcoin (SHA-256 alone). This causes scrypt to prefer extensive amounts of high-speed
RAM versus large processing power like for Bitcoin.
One of the biggest advantages Litecoin has over Bitcoin is its ability to process more transactions per second, while also keeping transaction fees low, about $0.50, compared to Bitcoin which is well above $10 currently. This is important for any investor as the ability to move their wealth around efficiently without paying large fees or costs is very valuable. Litecoin is also extremely fast compared to its counterpart Bitcoin which has major problems with processing transactions in a timely manner. The slowness of Bitcoin’s transaction time has really hurt its feasibility of being a usable digital currency.
The vision Bitcoin has laid out, is one where transactions can be processed as fast as a debit or credit card transaction. But that vision becomes very problematic when you experience 10 minute transaction times. That isn’t to speak totally ill of Bitcoin as their future implementation of the lightning network could change that. However, Litecoin is not missing a step and is also planning to implement the lightning network as well, which will ultimately make Litecoin faster than Bitcoin. The lightning network is supposed to speed up transaction times and to increase the scalability of a crypto currency like Litecoin or Bitcoin. Ultimately Litecoin is filling the gap for many investors to have a quick and efficient digital storage of wealth.
Litecoin Speed Advantage
To understand exactly why Litecoin is so fast, you must look at its number of transactions per second or the number of Litecoin transactions the blockchain can perform per second. This is what ultimately determines how fast money invested in Litecoin can travel and be processed. This is a very valuable trait for any crypto currency, as the more widespread the use of the currency is the more transactions it must process. So, having a very fast blockchain is the key to having cheap and fast transactions.
Litecoin can currently process 56 transactions per second, Bitcoin can process 7 transactions per second and Ethereum can process 15 transactions per second. As you can see Litecoin can handle all the transactions of the two largest digital currencies out there and still have room left over. The speed of transactions is also aided by the fact that Litecoin operates with an average block time of 2.5 minutes which allows for faster confirmations of transactions. Litecoin has ¼ the block time of Bitcoin which has a block time of 10 minutes. So, for three confirmations that could take 30 minutes for Bitcoin (10 minute block time) would only take 7.5 minutes for Litecoin (2.5 minute block time).
Litecoin is the new Silver
Many have called Bitcoin the gold standard of crypto currencies, if Bitcoin is the digital gold then Litecoin is definitely the digital Silver. While being similar market wise to real silver Litecoin has grown exponentially this year. One of the biggest regrets for Bitcoin investors is not buying in soon enough. Most investors have gotten into Bitcoin when it was already several thousand dollars (about $16,000 currently).
Many have wished they could go back and get in early when Bitcoin was only worth a few hundred dollars. Well, here is your chance, Litecoin was worth about $4 at the beginning of this year and is now worth about $300 (7500% increase) as of writing this article. This is an insane 7500% increase in a year, the price before this climb had held steady at around $50 for a few months. Clearly the spike in the price of Bitcoin has caused a knock-on effect for many large market cap coins including currencies like Litecoin and Ethereum.
With Bitcoin going higher and higher Litecoin is definitely going to rise along with it. But with the much lower buy-in price of Litecoin the margin for profit is much larger than that of Bitcoin. The best projection right now would be a small increase in the short term (next 3 months) and a major increase in the long term (2018 and onward) as many predict Litecoin reaching over $1000 by the end of 2018. Overall Litecoin is cementing itself as a good alternative to Bitcoin for both use as a digital currency and storage of wealth.
Disclosure: This article is for information purposes only and should not be considered as investment or tax advice.
Connor Covello3 Posts
Cryptocurrency consultant from Canada with a passion for digital currencies and investing. Connor believes strongly in the future of cryptocurrencies and the financial opportunities they represent. Invested himself he strives to practice what he preaches and make sound and well thought out investment decisions.