Litecoin (CCC:LTC-USD) has been one of the most successful cryptocurrencies in the past year. In the last 12 months, the value of Litecoin has nearly quadrupled. With so many cryptos to select from, though, investors may find it difficult to know where to begin.
Advantages of Litecoin
Litecoin is now one of the ten most valued cryptos, with a market valuation of $11.6 billion. Because of its size, Litecoin has a high level of visibility and liquidity. Its daily trading volume averages more than 2 million coins.
Given the tremendous volatility in the crypto market, liquidity is critical. A single selling might possibly wreck the price of a cryptocurrency if there isn’t enough liquidity. LTC investors, on the other hand, will never have to worry about liquidating their holdings.
Is it Reliable?
Litecoin investors should rest comfortable knowing that the underlying software is one of the oldest cryptos, having originated as a fork in the Bitcoin (CCC:BTC-USD) network. LTC is an open-source and decentralized cryptocurrency, similar to Bitcoin.
Charlie Lee, a computer scientist created it. Lee was formerly a worker at Alphabet’s Google (NASDAQ:GOOG, NASDAQ:GOOGL) and working currently for Coinbase (NASDAQ:COIN). He isn’t a slacker in any way. Lee set out to make Litecoin the silver to Bitcoin’s gold.
It’s Performance
Litecoin offers various advantages over Bitcoin because Lee sought to improve on it. The average time it takes to validate a Bitcoin transaction is a little over nine minutes. The verification time for LTC transactions is around 2.5 minutes. Because of its faster transaction times, Litecoin may be simpler to grow in the long run.
Furthermore, transactions using Litecoin are less expensive than those with Bitcoin. A Bitcoin transaction costs around $4.38 on average. LTC transaction fees are often only 2.6 cents on average.
Litecoin’s Drawbacks
Bitcoin is the king of the cryptocurrency world. While Litecoin creates to be a Bitcoin alternative, most investors consider Ethereum (CCC:BTC-USD) to be the dominant Bitcoin alternative. Whether it’s fair or not, the fact that Litecoin is a fork of Bitcoin tarnishes its image as a genuine alternative. Litecoin lumped in with the other eight cryptos that are among the top ten in terms of value but are not Bitcoin or Ethereum.
Another aspect that is worrying Litecoin investors is that the cryptocurrency is losing market share rather than gaining it. Litecoin finished 2017 as the sixth most valuable cryptocurrency by market capitalization. It ranks tenth now.
Litecoin’s price has risen by 44.9 percent during the last three years. Bitcoin’s price has risen 365.4 percent in the same time frame. The price of Ethereum has risen 348.6%.
The Creator’s Incident
In 2017, Lee disclosed that he had sold all of his Litecoin, which was one of the most upsetting news for Litecoin investors in recent years. Lee announced the sale in December 2017, only weeks after the market peaked, and it was almost perfect timing.
Lee said he sold his interest to avoid accusations of Litecoin market manipulation. He said that tweeting about Litecoin while he hold such a substantial investment in the cryptocurrency and was such a powerful voice constituted a conflict of interest. Even if his motivations for selling were laudable, when the founder of a cryptocurrency sells all of his interests, it does not inspire trust in the cryptocurrency.
How Do You Play It?
Cryptocurrencies as a whole do not excite me. I believe that in the next years, global regulators will exert pressure on all cryptocurrencies. They’re still a little tricky to utilize for day-to-day transactions. They’re also far too volatile to be used as a reliable store of value by anyone.
Other than Bitcoin and Ethereum, I’m very pessimistic about cryptos. Bitcoin has a real first-mover advantage in terms of brand recognition and value. Ethereum is the most popular Bitcoin alternative and has considerably superior technology.
Bitcoin and Ethereum will have a difficult time gaining popular acceptance in the next years. I’m not sure if cryptocurrencies are the money of the future or just another Wall Street craze. In any case, I don’t see why Litecoin should outperform Bitcoin or Ethereum over time.
