Following the partial collapse of the bitcoin market, where more than $6,000 in coin value was lost in the span of a month, many have asked if there are better options available. In the last year, many of bitcoin's would-be competitors have stolen market share from bitcoin, with the trend unlikely to change in 2018.
As part of a continuing series, we will compare bitcoin with the coins that are seeking to displace bitcoin as king of the hill. In this article, we will be looking at Litecoin.
With a potential Litecoin/Monero merger closer to happening, Litecoin is preparing to make a significant move toward replacing bitcoin as the premier currency altcoin. One of the first "bitcoin clones" Litecoin sought to improve on the bitcoin framework by:
- Reducing the block mining time from ten minutes to 2.5.
- Changing the hashing algorithm from SHA-256 to Scrypt, making confirmation faster.
- Having four times as many coins.
Despite being almost the same coin, these changes are helping to keep Litecoin's transaction times low, making it an ideal substitute for the bottlenecked bitcoin.
Tales of the Tape (as of January 28, 2018)
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Bitcoin
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Litecoin
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| Purpose of coin
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Proof-of-concept for altcoin model; digital currency
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Digital currency
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| Governance
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Decentralized; overseen by not-for-profit foundation; decisions determined by a democratic vote among nodes and miners
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Decentralized; democratic decision-making via consensus of nodes/miners.
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| Number of coins
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21 million; 16.83 Â million mined
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84 million; 54,968,358 mined  (as of January 28, 2018)
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| Market capitalization (as of January 28, 2018)
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$198.37 billion
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$10.25 Â billion
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| Obstacles to success
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Changes notoriously difficult to achieve; slow transaction times; high transaction fees
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A bitcoin clone;  founder Charlie  Lee's dumping of Litecoin to separate himself from the Litecoin community read as a vote of no confidence
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| Transaction time (average)
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1,570 minutes (one day, two hours, and ten minutes); seven-days high: Â 11,453 minutes (seven days, 22 hours, 53 minutes); Â current transaction fee: $9.824;Â Â transactions expedited by paying miners
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2.5 minutes on a non-busy day; heavy traffic days leading to confirmation times of up to an hour; current transaction fee: $0.47
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| Reason for success
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As the first altcoin, there is a sense that bitcoin must succeed for the industry to succeed. With many of bitcoin's "imitator" coins being tied to bitcoin in an irrevocable way, there is a "we all succeed or we all fail" mentality currently in place.
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It is cheaper and faster to run transactions in Litecoin than in bitcoin. As the coins are more or less the same, many are finding the leap to the faster clone an easy one.
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Understanding Litecoin
While bitcoin had a good 2017, Litecoin had a better one. Starting the year at $3.84 per coin, it reached a height of $342.02 a coin, for a gain of 8,907 percent. This is more than four times better than bitcoin's 2,098 percent growth. While Litecoin is currently in a bear market, so is bitcoin; many suspect that the slow exodus from bitcoin may become a boon for Litecoin in the upcoming year.
Technically a hard fork off of the bitcoin blockchain, Litecoin is currently eighth by market capitalization and behind another bitcoin fork, Bitcoin Cash. With Litecoin inheriting bitcoin's one-megabyte block size, Bitcoin Cash, with its eight megabytes block, is in a strong position to be the best "bitcoin clone" by transmission speed.Â
Litecoin, however, is the only one of the bitcoin clones from 2011 to still be around today. This tenacity has developed a cult following for the coin, which may be enough to turn the scales toward Litecoin among those weighing out the two.Â
The high number of Litecoin coins will likely keep the coin price manageable, making it more suitable for retail use than a later bitcoin fork.
"The vision is always I wanted Litecoin to complement bitcoin - not compete", Charlie Lee said at a March Coinbase talk. "Bitcoin can be used for like moving millions of dollars between banks, buying houses, buying cars. It's really secure ... Litecoin can be used for cheaper things".
While Litecoin can be seen as a better long-term investment than bitcoin, Charlie Lee warned investors off of the coin in December 2017. In light of this, investment in Litecoin today should be seen as having a high-risk factor.
<p><em>Ok, sorry to spoil the party, but I need to reign in the excitement a bit...<br><br>Buying LTC is extremely risky. I expect us to have a multi-year bear market like the one we just had where LTC dropped 90% in value ($48 to $4). So if you can't handle LTC dropping to $20, don't buy! </em>😀</p> <p><em>- Charlie Lee [LTC] (@SatoshiLite) </em><a href="https://twitter.com/SatoshiLite/status/940353265585160192?ref_src=twsrc%5Etfw"><em>December 11, 2017</em></a></p>
As you can see, there are multiple ways to compare and contrast bitcoin and altcoins. We will be providing more head-to-head comparisons between bitcoin and other altcoins in the near future, so be sure to follow us here on Steemit.
If you want to know even more about investing in the world of New Finance, read Bitcoin Market Journal and learn to invest like a pro!