A little history lesson with a chart at the end!
With the rise of cryptocurrencies, it’s important to remember the original crypto and how it trail-blazed the way for its counterparts. Bitcoin (BTC), a name synonymous with cryptocurrency as a whole, is the first crypto thought of when it comes to being the first and largest blockchain out there. From its shadow emerged another crypto, Litecoin (LTC), who itself would go about carving out a place in the industry. In this piece, we discuss the differences (and similarities) of Bitcoin (BTC) & Litecoin (LTC).
Let’s go back to November 2008, a mysterious coder named Satoshi Nakamoto wrote a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. The paper laid out the principles: an electronic payment system that would inevitably eliminate any central authority while simultaneously ensuring users safe & secure transactions. Just like that, the world was introduced to cryptocurrency. Thus began a revolution in currency, one that would have ripple effects. In its infancy, Bitcoin (BTC) was just a fool's dream; the world's first digital currency that would eliminate the need for banks. A future where people can safely, securely and quickly send money to one another. In the years following, hundreds of other cryptocurrencies would enter the market. A blessing and a curse. While there were much more options available for blockchain technology, it was difficult to stand out amongst the trees. With Bitcoin (BTC), it's important to learn the differences about how it's phrased. There is Bitcoin tokens, or BTC, which refers to the unit of digital currency for which users can own and trade freely. A Bitcoin (BTC) token is held in a Bitcoin wallet. When a user wants to send a Bitcoin (BTC), they send it to a particular wallet address, and you can access the coin via your private key. As Bitcoin grew in size and market cap, it left users wanting to create their own versions in such a vast and thriving market. And one man, former Google engineer Charles Lee, saw an opportunity.
Fast-forward to 2011, Charles Lee felt that Bitcoin (BTC), while being the big dog in the industry, could work better. Not everyone was happy with how Bitcoin (BTC) worked, and Lee wanted to make Bitcoin (BTC) faster, much cheaper and while he was respected within the cryptocurrency community, many loyalists disagreed with the idea. It caused a hard fork within the community and on November 7th, 2011, Bitcoin split in two. And Litecoin was the result. The hard fork created a brand-new coin called Litecoin (LTC). To the natural observer, Litecoin and Bitcoin have a lot in common. At its basic level, they are both decentralized cryptocurrencies. They operate on blockchain, which is a huge digital record of secure trades. Many refer to Litecoin as the “silver” to Bitcoin’s “gold” and many saw Litecoin’s initial creation as a reaction to Bitcoin. One of the differences Lee wanted to change was the speed of such transactions. Both transactions take time to be confirmed. With Litecoin, the goal was prioritizing transaction speed. Bitcoin’s network average transaction is currently just under nine minutes per transaction, while Litecoin’s figure is roughly 2.5 minutes. This alone could make Litecoin much more attractive to users. A merchant would need to wait nearly four times as long to confirm payment on Bitcoin than if the product were to be sold in Litecoin.
Another massive difference is the cryptographic algorithms each respective coin is run on. Bitcoin (BTC) uses the longstanding SHA-256 algorithm, whereas Litecoin (LTC) makes use of the comparatively new algorithm known as Scrypt. The significance of the different algorithms are their impact on the process of mining new coins. For both Litecoin (LTC) and Bitcoin (BTC), the process of confirming transactions requires a substantial amount of computing power. Members of the currency network, also referred to as “miners”, go about allocating their computing resources toward the confirmation of such transactions. In doing so, the miners earn units of the current which they mined. SHA-256 is often considered to be a much more complex algorithm than its counterpart Scrypt, while simultaneously allowing a greater degree of parallel processing. Since its inception, Bitcoin miners have gone about developing and utilizing increasingly sophisticated methods for mining Bitcoins. Today, the most common method for mining Bitcoin consists of using Application-Specific Integrated Circuits, or ASICs. Previously, miners were only left to use the simple CPUs and GPUs of their computers. Now, ASICs are hardware systems that are tailor-made for mining Bitcoin (BTC). But the practical consequence of this advancement has been the limitation for everyday users. Regular joes do not have access to such special computers, and as the value of Bitcoin grew and grew, Bitcoin mining grew into its own industry, meaning Bitcoin is available to fewer people. With Litecoin (LTC), it is easier for users to get into and that difference alone could sway potential new users to choose Litecoin (LTC) over Bitcoin (BTC). Charles Lee foreshadowed all of this. When creating Litecoin (LTC), it can be mined using normal computers. ASIC miners cannot be used to mine Litecoin (LTC), allowing new coins to be available to a wider group of users. Scrypt, by contrast, was designed to be less susceptible to the kind of issues related to ASIC-based mining. Scrypt had been optimized to be friendly to CPUs and GPUs, and the more available option was another large draw for Litecoin (LTC).## BTC vs LTC: As “good” as gold While cryptocurrencies are still relatively new, there is no denying the immense value behind crypto as a whole. Gold was often the benchmark for value. Gold has been valuable for hundreds of years in every country. It is precious and there is a limited amount available in the world. Gold is inflation proof, meaning its value is predictable and reliable. In discussing Bitcoin (BTC) and Litecoin (LTC), this also rings true. They both have a limited supply, with there only ever being 21 million Bitcoin (BTC) while there will only ever be 84 million Litecoin (LTC). And while Bitcoin is the most trusted cryptocurrency in the world, it will also reach its supply limit first. Remember, three-quarters of all Bitcoin has already been mined, also lending to the value and scarcity of the coin. When comparing potential long-term value, Litecoin (LTC) does seem more appealing.
As we discuss this today, Litecoin (LTC) is the 6th largest digital currency by market cap, with Bitcoin standing alone at the top. As of March 2021, Bitcoin’s (BTC) market cap is $1 trillion, while Litecoin (LTC) sits at $13.7 billion. Bitcoin (BTC) is 70 times larger than Litecoin (LTC), but the growth for crypto as a whole has been quick and staggering. Just over 10 years ago, in July 2010, Bitcoin’s market cap was barely $42,000 so while we are still learning about cryptocurrencies, it's important to note the boom in usage. The next closest competitor to Bitcoin (BTC) is Ethereum (ETH), the second largest cryptocurrency that has a market cap of nearly $212 billion. It is not surprising to see Bitcoin (BTC) enjoy a significantly higher value than that of Litecoin (LTC) itself, being the original digital currency. And while there may be more Litecoin (LTC) available, its real-world effects may prove negligible ultimately. With Bitcoin and Litecoin, the transaction speed of Litecoin may be more appealing, and to take it from Sean Williams who wrote a 2018 article for The Motley Fool, adding “it (Litecoin) most definitely has the tools to push aside bitcoin and become the go-to medium of exchange for digital currency users.” Ultimately, time will tell whether Litecoin can surpass Bitcoin. In discussing the similarities and differences, the future looks bright for both cryptocurrencies and their immense potential.
Friends we have been though some fantastic times together since the inception of Killer Whale Crypto. Some of the originals that are hanging around have seen amazing things from both Bitcoin (BTC) and Litecoin (LTC). In the image below you will see a chart of LTC/BTC, comparing Litecoin's (LTC) price action to that of Bitcoin (BTC) on the Daily Timescale. You will notice the price action now using the Gold Line or the 3rd Point of Supply (3PS) as the new 3rd Point of Demand (3PD). This means the area of control that was seen by Bitcoin (BTC) is now being seen by Litecoin (LTC)
Litecoin has been in sideways consolidation with bearish undertones for well over a year always managing to keep up relatively to Bitcoin... Until just within the last 2-3 months there has been an awakening of Litecoin in comparison. We can speculate the reasons why being huge changes in sentiment from large players and institutions regarding cryptocurrencies. While adoption vehicles like Square, PayPal and Grayscale may just be in this for the business... I find it doubtful. This chart to me looks like Litecoin is just getting going and due to outpace BTC for quite some time on the macro level. The victor of this battle will not come easy as it will likely take years to truly develop. We are happy to have the opportunity to see the excitement unfold with you. Cheers!!