As Bitcoin Scales With Lightning Network, What Role Does Litecoin Have to Play?

The market has seen a wave of capitulation amongst most of the cash that have been put ahead as quicker, decrease price, or greater throughput alternate options to Bitcoin.
“Bitcoin nonetheless has market share, however Litecoin is the second most transacted digital forex for funds.”
Litecoin nonetheless operates as a type of helpful testnet for Bitcoin.

On the time of writing, Litecoin (LTC) is the twentieth largest cryptoasset by market capitalization. Again in 2013, it used to be the second-biggest, however the next 9 years have seen 1000’s of latest altcoins seem on the scene, with many of those making its modest replace on Bitcoin (BTC) appear less-than attention-grabbing by comparability.

Nonetheless, even with the beginning of 1000’s of latest cash, Litecoin stays a major altcoin, with a market capitalization of round USD 3.3 bn. However as the continuing ‘crypto winter’ seems to herald a brand new section within the historical past of cryptocurrency, no less than some commentators are beginning to query whether or not the ecosystem actually ‘wants’ Litecoin.

Opinions on this query are unsurprisingly blended, with Bitcoin builders and supporters arguing that Litecoin is kind of out of date now that the unique cryptocurrency has realized how you can scale (i.e. by way of the Lightning Network). Then again, the Litecoin group maintains that the altcoin serves as a helpful testbed for scaling applied sciences, and that its rising adoption by fee and funding platforms ought to assure its survival for years to return.

Is Litecoin redundant?

When it was first launched as a supply code fork of Bitcoin in 2011, Litecoin distinguished itself by advantage of its quicker block time (along with the next provide cap and the usage of a unique hashing algorithm). Whereas Bitcoin processed a block each ten minutes on common, Litecoin managed the identical feat inside 2.5 minutes.

In different phrases, considered one of its major boasts was that it was extra scalable than Bitcoin. Nevertheless, many individuals inside the Bitcoin group argue this boast not actually applies, given the advances the unique cryptocurrency has made lately.

“Litecoin and others billed themselves as scaling alternate options or enhances to Bitcoin, at a time that Bitcoin’s block area was seen because the limiting issue on its development. Whereas others have been spinning up new chains, Bitcoiners pursued the Lightning Community and different scaling options such because the Liquid sidechain and Statechains,” stated Ben “Empact” Woosley, a Bitcoin Core developer.

He argues that, with the sustained success of the Lightning Community, the market has seen a wave of capitulation amongst most of the cash that have been put ahead as quicker, decrease price, or greater throughput alternate options to Bitcoin. For example, Litecoin is 88% down from the all-time excessive of USD 410 it set in Might 2021, whereas bitcoin is ‘solely’ 69% down from its November all-time excessive of round USD 69,000.

In truth, Woosley says he expects this capitulation of altcoins to proceed within the coming years, with layer-one (the bottom protocol) and layer-two (the Lightning Community) Bitcoin improvement steadily undermining the case for varied altcoins.

“The way forward for Bitcoin is to observe this similar course of with different competing chains, by obviating their existence by enabling the options that draw individuals to them, by the applied sciences resembling Lightning Labs’ Taro, Federated Chaumian mints, and TBD’s Web5,” he informed Cryptonews.com.

One other promoting level for Litecoin, no less than in its earlier years, was that it was ‘silver to Bitcoin’s gold.’ What this meant was that, with a bigger provide cap of 84 million (versus 21 million), it could be a scarce commodity, however not fairly as scarce as bitcoin.

Even this line of reasoning holds little water for a lot of observers, with cryptocurrency writer Stephen Chow tweeting in Might of this 12 months that it was “useless to me in 2017.” The reason being that, with Bitcoin already being a scarce and simply transferable supply of worth, there was no use for Litecoin.

Nevertheless, many inside the Litecoin camp would argue that its decrease charges and higher scalability have enabled it to carve a spot for itself as a medium of alternate.

“[The silver and gold analogy] makes a whole lot of sense once you have a look at essentially the most used cash for funds. Bitcoin nonetheless has market share, however Litecoin is the second most transacted digital forex for funds,” stated Litecoin Basis Director Jay Milla.

Taking a look at Litecoin’s transactions per day, common numbers are noticeably decrease in contrast with Bitcoin’s.

7-day shifting common. Supply: Bitinfocharts.com

Litecoin witnessed simply over 100,000 transactions on June 15, whereas Bitcoin processed 296,000. Extra usually, it has usually had over 100,000 transactions per day since early 2021, with different comparable altcoins — e.g. Bitcoin Cash (BCH), Dogecoin (DOGE), and Dash (DASH) — seeing round 80,000, 30,000, and 20,000 per day, respectively.

Litecoin nonetheless has makes use of

So whereas Bitcoin builders and holders might argue that Litecoin isn’t actually wanted, the latter remains to be doing higher than many comparable cryptocurrencies. And lots of inside its group argue that, no matter its scale of utilization, Litecoin nonetheless operates as a type of helpful testnet for Bitcoin.

“Growth on a really decentralized forex may be gradual. The Litecoin ecosystem is fortunate because it nonetheless has its creator concerned. Charlie Lee and the Litecoin dev staff have made various wanted improvements to Litecoin which have already been adopted by Bitcoin,” stated Jay Milla.

Milla refers to Litecoin’s deployment of SegWit in 2017 as a primary instance of the altcoin’s worth to the broader cryptocurrency ecosystem.

“This allowed transaction signatures to be recorded outdoors the block, which in flip was a necessity for Lightning,” he added, earlier than declaring Litecoin was also early in actually using the Lightning Network.

Even lately, Litecoin continues to function a testnet for promising new cryptocurrency applied sciences and options. This consists of the appearance of MWEB (Mimblewimble Extension Blocks), which for Milla makes Litecoin “essentially the most broadly accessible cryptocurrency” with improved fungibility and confidentiality options.

“It’s now the best cryptocurrency to acquire for one merely not eager to broadcast to the world how a lot cash they’re sending. Better of all, it is elective: exchanges and wallets can select to implement it or not,” he informed Cryptonews.com.

It’s for such causes that Milla and the Litecoin Basis are assured that the altcoin has a vivid future forward of it. Its prospects are additionally helped by the rising integration of Litecoin into varied platforms and portals.

“With the addition of main fee methods like PayPal and Venmo, to the buying and selling firms like Interactive Brokers and Robinhood, entry to Litecoin for brand new customers has been rising. LTC transactions have seen a staggering 352% enhance in exercise from 2019 by 2021, whereas Bitcoin has seen negative growth,” Milla stated.

Nevertheless, per BitInfoCharts knowledge, this 12 months, BTC carried out considerably higher.