Litecoin basics

In October 2011, Charlie Lee launched Litecoin. He wanted to make a peer-to-peer decentralized cryptocurrency that was both faster and more cost-effective than Bitcoin which, at the time, was nearly 2 years old and gaining a larger following for the first time. Lee has always described Litecoin as a complement—not a competitor—to Bitcoin: as “silver to Bitcoin’s gold.” It is meant to be “Bitcoin Lite”, which is why it is named Litecoin. Not very novel or creative by today’s standards, but keep in mind these were the days of the industry’s infancy.

Compared to Bitcoin, Litecoin’s block time is 4x shorter; instead of each block taking an average time of 10 minutes, each Litecoin block is 2.5 minutes. This allows transactions to execute more quickly than on-chain Bitcoin transactions.

Whereas Bitcoin’s max supply is 21,000,000, Litecoin’s is 4x higher, 84,000,000.

Other than these changes, BTC and LTC are nearly the same, functionally speaking. (I should add that they do also use different cryptographic algorithms.) Charlie Lee copied Bitcoin’s halving cycle (approx. every 4 years) and Proof of Work consensus mechanism. The next Litecoin halving will be August 2023, when the block reward will decrease from 12.5 down to 6.25. Currently, 7,200 LTC are created daily, making current inflation rate 3.72% and always trending toward zero.

Transaction fees are usually under $0.01USD, over 100x cheaper than a BTC on-chain transaction. historical transaction fee data. Litecoin also has a Lightning Network, though demand is admittedly quite low compared to BTC LN. Low transaction fees are one of Litecoin’s greatest strengths.

Litecoin is the first cryptocurrency that could ever boast of 100% network uptime for 10 years. The Litecoin network has still never gone offline even once, giving it a perfect history of reliability.

The most active Reddit communities are r/Litecoin, r/LitecoinMarkets, and r/litecoinmining.

Price, marketcap, and transaction metrics

Litecoin currently ranks 16th in marketcap according to Coingecko. It spent a lot of time in the top 5 from 2012-2017.

LTC/USD price is currently around $69, down 83% from ATH in May 2021.

LTC/BTC price is currently 0.004, down 92% from ATH in November 2013. This price has been in a long-term downtrend and poor long-term LTC/BTC price action is the most convincing bearish argument for Litecoin.

Number of transactions: LTC has a very steady daily transaction count of about 100,000. Despite poor price performance, it appears that the number of transactions are going up long-term. I think my favorite dataset I discovered while researching for this post is these visualizations of all-time activity on various cryptocurrencies. We can see here that Litecoin usage is accelerating long-term more than lots of other cryptocurrencies. I was personally surprised to see how much Litecoin stands out here.

All-time, Litecoin network has processed over 137,000,000 transactions have been processed (compare to 790M for BTC).

LTC is one of the most widely accepted cryptocurrencies. If you find a merchant that accepts cryptocurrency payments, chances are Litecoin is probably one of them.

Hashrate: currently at an all-time high. And, fun fact, because of merged mining with Dogecoin, LTC and DOGE have the same hashrate. In my opinion, Dogecoiners owe Charlie a big thank you because at the time Dogecoin was extremely vulnerable.

In 2017, Charlie Lee infamously sold all his LTC. He seems to have had good intentions, but the announcement had a massive negative impact on Litecoin’s price. He didn’t feel it was good for the health of the cryptocurrency for him to be holding any. Many investors however saw this as a sign to sell.

Future of Litecoin

In May, a major development for Litecoin was the rollout of MWEB (Mimblewimble Extension Block. MWEB is an opt-in feature for more anonymous transactions in which explicit transaction info is obfuscated. It’s currently only supported by Litecoin Core Wallet, and as such most users are not yet able to opt in. Because of this major privacy upgrade, some have strong opinions either for or against this upgrade. If using the optional privacy features, it is impossible to comply with monetary laws in some regions, leading to removal of LTC trading or threat of removal of LTC trading, in some jurisdictions such as Thailand and South Korea.

Perhaps more than any other cryptocurrency, Litecoin’s relevance likely depends on Bitcoin. If more people become comfortable sending, receiving, and storing BTC, then many people might gravitate toward the alternative that is almost the same except 4x faster and about 100x lower transaction fees (at least by today’s prices). However, Bitcoin Lightning Network offers promising solutions to these concerns over bitcoin being too slow or expensive to transact. It is my opinion that, after (or in addition to) BTC and ETH, LTC has the best chance of becoming a global digital currency adopted by the masses. But I’m well aware that most people disagree.

If you believe that Proof of Stake will win out and Proof of Work will die away, then Litecoin isn’t an investment you’re likely to consider or a currency you will want to use and support. Many will completely disregard LTC as soon to be irrelevant, and you may be right.

Speculating on the long-term value of Litecoin is something I think about often but I find it hard to predict. On one hand, I see adoption on the rise (bullish), but I also see long-term poor price performance versus Bitcoin (bearish). I’m currently buying and holding LTC monthly, and it comprises about 5% of my total crypto holdings.

I personally use Litecoin more than any other cryptocurrency because transactions are so cheap, it’s pretty widely accepted, and because I believe it’s undervalued and worth holding long-term.