An introduction to Litecoin: The digital silver to Bitcoin’s gold

Dubbed the “digital silver” to Bitcoin’s gold, Litecoin (LTC), serves as a faster and more lightweight alternative to Bitcoin, focusing on simpler transactions and aiming to be a viable option for everyday payments.

The origin story of Litecoin

When former Google engineer Charlie Lee envisioned Litecoin in 2011 as a complement to Bitcoin, he wanted a cryptocurrency that put speed and accessibility first, rather than focussing primarily on becoming a long-term store of value. He did not want to move away from the foundational code and principles of Bitcoin though — which are decentralisation and security.

What’s special about Litecoin?

While sharing its roots with Bitcoin, Litecoin sets itself apart through several strategic differences, which are viewed in the industry as buildups on the Bitcoin token. So, what distinguishes Litecoin from Bitcoin and other crypto coins you may want to buy

It offers faster transactions

Litecoin’s average block generation time is about 2.5 minutes — four times faster than Bitcoin’s 10-minute average. This accelerated block generation enables significantly quicker transaction confirmation times, making Litecoin more suitable for point-of-sale usage.

There’s an increased coin supply

In contrast to Bitcoin’s 21 million coin limit, Litecoin has a total supply cap of 84 million coins. This more abundant supply contributes to price stability and makes the coin more accessible to a broader user base. There is a bit of a twist here though – Bitcoin’s lower coin limit makes it more desirable because of basic forces of supply and demand, which creates a positive effect on price. There is also a gulf in value with Bitcoin’s market cap at USD 1.24 trillion compared to Litecoin’s USD 6 billion.

It works on a lighter mining algorithm

Litecoin employs Scrypt as its proof-of-work algorithm, while Bitcoin relies on SHA-256. Scrypt was initially designed to discourage the use of specialised mining hardware (ASICs), promoting a more decentralised mining landscape where everyday users could participate using regular computer equipment. This makes the network more accessible and easier to interact with.

Presents a sandbox for new upgrades

Litecoin’s close resemblance to Bitcoin’s core structure has made it a viable testing ground for launching upgrades and new features — before their potential rollout on the Bitcoin network. Experimenting on Litecoin allows developers to experience the real-world impact of updates in a lower-risk environment. Its faster block generation time also allows for a quicker validation of new protocols.

Everyday use cases of Litecoin

Beyond its role as a testbed, Litecoin has carved out a space for itself as a valuable cryptocurrency for everyday use.

Merchant payments

With its faster confirmations and low fees, Litecoin is an attractive option for merchants. Several businesses worldwide, both online and offline accept Litecoin as payment now.

Micropayments

The Lightning Network integrated with Litecoin makes it ideal for tiny, high-frequency transactions that would otherwise be impractical on Bitcoin’s main network due to fees and time constraints.

Cross-border remittances

Litecoin’s borderless and decentralised nature offers a cheaper and potentially faster alternative to traditional remittance channels, especially for smaller transactions.

Litecoin price trend in 2024 so far

The price of Litecoin has been dropping lately after a rally that started in late February 2024 and lasted throughout early March.

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Analysts note a gradual but upward movement in the price of Litecoin, with the 50 SMA currently edging up, albeit at a slow pace, with the 200 SMA looking flat below it. The RSI is below the 60 mark in a neutral region suggesting balanced market sentiment.

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An important note

The cryptocurrency landscape is constantly evolving. While Litecoin currently excels in the use cases mentioned, innovations and competitors could reshape its role and value in the future.

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