Rover Jones, Negosentro | Litecoin, one of the top 10 Cryptocurrencies by market cap at press time, was designed with the goal of becoming the “Silver” to “Bitcoin’s” Gold.
Before we look into the details, it is important to keep in mind that Litecoin was never designed to compete with Bitcoin, but more like a solution to the challenges Charlie Lee, the creator of Litecoin, identified in the Cryptocurrency market. Hence the popular reference to Litecoin as the Silver to Bitcoin’s Gold.
The Differences between Litecoin and Bitcoin
There are multiple differences between Bitcoin and Litecoin. The coin limit on Bitcoin is 21 Million whereas the limit on LTC is 84 Million. The mining algorithms vary as well, Bitcoin relies on SHA-256 while Litecoin uses Scrypt. The mean Block time is 10 minutes for Bitcoin and 2.5 minutes for Litecoin.
What all of that means for investors and Cryptocurrency traders is that Bitcoin, because of its limited supply, is moving towards becoming a store of value (the Gold of Cryptocurrency) while Litecoin, with its larger supply and very fast processing, is an excellent alternative to process transactions. The difference in Algorithms used by each Cryptocurrency makes mining Litecoin faster and cheaper than mining Bitcoin because the need for resources is much less than what’s required to mine Bitcoin.
Litecoin, Bitcoin, SegWit and the Lightning Network.
Bitcoin and for a while now, has been struggling with scalability. As the demand for Bitcoin is growing exponentially, the speed of transactions is not following and the resources required to mine a single Bitcoin are continuously growing.
One of the proposed scaling solution is the deployment of the Lightening Network on Bitcoin. The Lightening Network itself is an off-chain protocol being developed and tested to provide a second payment layer and solve Bitcoin’s slow transaction time.
The Lightening Network can be deployed on any cryptocurrency that shares Bitcoin’s codebase such as Litecoin but requires the cryptocurrency to activate the SegWit upgrade. In other words, to be able to deploy the Lightening Network, Bitcoin needed to activate SegWit first. The SegWit activation finally took place in 2017, the process was long and was followed very closely by Cryptocurrency traders and enthusiasts around the world.
Now since it took a very long time for the Bitcoin community to reach a consensus on upgrading to SegWit, developers ended up turning to the Silver to Bitcoin: Litecoin in order to run and test the upgrade.
In early 2017, Litecoin successfully activated SegWit. Since Litecoin ended up the first to activate SegWit, the Lightning Labs (behind the Lightening Network) added Litecoin support to their lightning network implementation and started the testing and developing with Litecoin.
With Bitcoin finally upgrading to run SegWit in the second half of 2017, the lightening network is now compatible with both chains and the two Cryptocurrencies are interoperable. November 2017 was when the first atomic swap happened between Bitcoin and Litecoin with the potential for enabling future atomic swaps with other compatible cryptocurrencies (LN enabled) for Litecoin. Further testing of the Lightening Network is still ongoing at press time.
This was in a nutshell the story of Litecoin, Bitcoin and what’s happening with SegWit and the Lightening Network implementation. If successful, both Cryptocurrencies will drastically improve their scalability, the challenge though is that making these upgrades to Bitcoin is a long process given the structure of the community. Something Charlie Lee is capitalizing on by speeding up the implementation of these upgrades and the development on Litecoin.
With Lightning enabling people to swap to Litecoin and quickly, and the future potential of cross-chain swaping, Litecoin’s value and adoption increased drastically since 2017. So far, the effects of the SegWit and Lightening Network has benefited Litecoin the most making it a favourite for trading, transferring funds across exchanges, and settling transactions fast and at a very low cost.
To conclude, while Bitcoin remains the Gold standard of Cryptocurrency, Litecoin earned its spot as the Silver to Bitcoin by providing different but complementary solutions to the ones Bitcoin offers Cryptocurrency users. Litecoin even raised to become an attractive alternative to Bitcoin when it comes to speculative trading thanks to its low cost, smoother price trends and the fast transfer between exchanges. There’s an ever-growing list of sites where you can trade Litecoin, signaling that Litecoin’s popularity is only growing.