Editor’s Note: We originally released this piece on November 25th. Since then, the price of Litecoin has increased roughly 400% to over $ 25. We have updated it to reflect price changes.
At over $ 900, the price of Bitcoin is now so high that it threatens to shut out some mainstream users.
You may be wondering if there were any mainstream users at all. But Charlie Lee, a former Googler and MIT graduate, realized there was such an audience. In 2011, two years after Bitcoin was born, the former Googler and MIT graduate decided to create a version of Bitcoin that would be easier to access.
He called it Litecoin.
“I think Satoshi [Nakamoto, Bitcoin’s pseudonymous creator] is great and Bitcoin is great, “Lee said in a recent interview with BI.” I didn’t fix bitcoin. I only made minor changes that were made [Litecoin] a bit better.”
Litecoin is not the only digital currency in which Bitcoin’s virtual coattails are installed. Coinmarketcap Lists About two dozen of those whose prices have risen in the past few months. But Litecoin appears to be the first among those secondary equals, which is reflected in its market cap of $ 670 million – nearly 8 times higher than the next largest currency, peercoin.
If you’re at all familiar with Litecoin, you’ve probably heard it described as “silver to Bitcoin’s gold” by Lee or others. But if you don’t think Bitcoin is worth much at all, it may not mean anything to you. So we asked Lee to elaborate on this, and he has been convincing in showing where Litecoin will fit into the growing digital currency space for now.
“It’s more common and easier” than Bitcoin, he says.
What that means is this: only 21 million bitcoin will ever be created, and it is predicted that it won’t happen until 2040. While this has no practical impact on its value in theory, if the Bitcoin economy really gets going thanks to steady demand, this fixed amount will help Keep prices high.
Lee designed Litecoin to create 84 million units. And if the Litecoin economy scales to where Bitcoin evangelists insist Bitcoin should be, the same pseudo-scarcity effect could one day be seen in Litecoin prices.
In addition, Litecoin is not subject to this “Arms race” Currently among Bitcoin miners trying to enter the market by acquiring large quantities of Bitcoin. Bitcoin is built all around Hash cryptography This is supposed to get more complex – and therefore require more expensive computing power – as the Bitcoin economy expands and gains in value. However, this has allowed those with more efficient computer chips – in other words, those who need less power to mine a certain amount of Bitcoin – to make the leap to more conventional miners. Litecoin eliminates this advantage by using an entirely different cryptography program called Scrypt, where the limiting factor is storage rather than processing efficiency. This means that in order to outperform the program, you will need to buy a greater amount of computer hardware, not just design a better chip.
“There will be less of a miners cartel,” says Lee.
Finally, Lee says, Litecoin transactions enjoy faster “confirmation times”. In order for a Bitcoin transaction to be fully processed, it must receive a series of confirmations from other users who have found the transfer in the Bitcoin ledger. the blockchain. This usually takes about 10 minutes. That doesn’t mean you have to wait at a cash register when paying for groceries with Bitcoin. as we have documented. However, these transactions depend on temporary confirmations.
With Litecoin, Lee says, confirmations only take two and a half minutes. Although the likelihood that a temporary confirmation on the blockchain will not be confirmed is slim, Litecoin completely eliminates the problem.
Perhaps it is better to understand Litecoin as “silver” in the medieval sense of the word: designed to be carried around in your virtual pocket for daily transactions. “If Litecoin is really successful, people will use it for that everyday purchases and bitcoin for big causes, “says Lee.
Digital currency users seem to have understood Litecoin’s utility relatively quickly. It’s now worth more than $ 25, a 400% gain in just one week.
Lee estimates that Litecoin is about two years behind in both price and acceptance. Right now, online retail stores are taking Litecoin are somewhat limited, but will surely grow with the price of Litecoin. However, Bitcoin itself is still decades away from reaching its full potential.
“It’s still in an inflationary state,” he says. “As soon as that stops, in 2040, things will get interesting.”