Ask a casual trader from any prominent exchange if they have Litecoin (LTC) in their portfolio, and they will most likely tell you that they do. This coin is often referred to as the “silver to Bitcoin’s gold” and is beloved by many for regular technical upgrades, the overall mission and the personality of its creator, Charlie Lee.
Just as with Bitcoin, Litecoin is scarce, divisible, portable, fungible and it can be mined, like gold or silver. In this piece, we want to go a bit deeper, however, and understand more what Litecoin is all about.
The silver to Bitcoin’s gold
Take a look at the top dogs running the race, and you’ll notice quite a few projects with a significant market cap and high trading volume over the past 24 hours.
Ethereum (ETH), Ripple (XRP), EOS (EOS), Tether (USDT), and Bitcoin Cash (BCH) are pretty much always in the public limelight and high up in CoinMarketCap’s ranking; they occupy higher positions than Litecoin (LTC) does.
So why is this particular coin referred to as crypto silver? At first glance, the other projects also have many reasons to compete for the right to be designated as such.
There are dozens of apps on top of the Ethereum blockchain. It has been the second biggest crypto in terms of market cap for some time now. Bitcoin Cash (BCH) is the most popular Bitcoin fork with regard to publicity. EOS has raised a record-breaking $4 billion during their year-long ICO.
And yet, only Litecoin (LTC) has obtained its silver status over the last decade. The project was created as “Bitcoin’s younger brother” initially and became one of the first crypto forks ever. As for the other coins, not only were they developed later but they also had a different development approach to that of Bitcoin’s.
As good as Bitcoin and a little bit better
Back in 2011, an MIT graduate and a Google engineer, Charlie Lee was entertaining the idea of creating a peer-to-peer blockchain-based network that could generate more than one block per 10 minutes, which is the case with Bitcoin. This subsequently could result in more frequent mining rewards and faster transactions.
Also, the developer was considering ways of increasing profitability for those users who wanted to mine on basic machines, instead of having to invest in expensive hardware.
While experimenting with the Bitcoin codebase, Lee found solutions to both problems.
He came up with a way to make the block generation rate 4 times faster, and now a new block in the chain of data could be created every 2.5 minutes. Not only has this greatly reduced network congestion and improved the transaction speed, but it also made the blockchain user-friendly and cheaper to use.
As for mining without ASIC rigs, into his proof-of-work mechanism, Lee inserted a memory-intensive hash function. In other words, with Litecoin’s Scrypt hash, miners now started to store data in the processor’s Random Access Memory (RAM) as opposed to SHA-256 tied to GPU or ASICs.
Litecoin’s breakthrough advancements
For Litecoin, everything began as logical under-the-hood improvements to Bitcoin (BTC).
For example, on the Litecoin blockchain, no more than 84 million coins can ever be created. This contrasts to Bitcoin’s 21 million coins. Also, the halvening event takes place every 840,000 blocks compared with Bitcoin’s 210,000 blocks.
But all these advancements were just the beginning of the Litecoin’s long journey. After some time, constant improvements became very natural for Charlie Lee’s project.
In April 2017, Litecoin was on the list of the first top-five cryptocurrencies to adopt Segregated Witness (SegWit), the technology to help alter the block size limit on a blockchain by removing signature data from the transaction.
In the next month of the same year, the project added to its codebase the Lightning Network mechanism to allow for instant low-cost transactions and cross-platform atomic swaps.
In the meantime, Ethereum had already been presented to the general public, and its blockchain, well-adjusted for creating dApps, was something completely fresh to the industry.
EOS, with its newly-invented Delegated Proof-of-Stake, was to see the light of day soon after, in 2018.
These projects seemed revolutionary and quite bold, which especially contrasted with Bitcoin and, by virtue of their shared source code… Litecoin!
In 2017, the latter still looked very much like Bitcoin’s younger brother, even with all these technological enhancements, and after 6 years in the market had already established its “silver to Bitcoin’s gold” status. In December 2017, the price of the asset reached the peak of $308 whereas in 2013 you could buy it for $3.
Up to now, this altcoin looks like Bitcoin’s better version, and apparently, people like it for this reason. Also, investors sympathize with the project’s goals.
The website of the Litecoin project states that its mission is to advance the coin “for the good of society by developing and promoting state-of-the-art blockchain technologies”, a motive Charlie Lee made credible by selling all of his Litecoins in 2017, to simply exclude any conflict of interests.