Bitcoin has been perceived as digital gold since gold and Bitcoin have always been safe-haven investments. Investors often seek after them to shield their money from the damaging impacts of inflation and during recessions. Since gold is supported by silver in the finance industry, Litecoin, which has been providing support for Bitcoin, also has the potential to be claimed as digital silver crypto. So, is Litecoin digital silver possible?
A Brief History of Litecoin’s Evolution
Litecoin blockchain was created as an alternative to Bitcoin by Google engineer Charles Lee in October 2011. Although there were certain changes made ever since the origin of Bitcoin, it was based on the open-source code of Bitcoin. Similar to Bitcoin, the foundation of Litecoin is an open-source, globally decentralized payment network. Litecoin is different from Bitcoin in a few ways, including the use of Scrypt as a hashing algorithm and a quicker block production rate.
In 2017, SegWit was accepted by Litecoin, which served as a test bed for SegWit’s feasibility on the wider Bitcoin network due to its resemblance to Bitcoin. Due to the test’s success, SegWit was later accepted by Bitcoin. Bitcoin Cash is the outcome of a hard fork in the cryptocurrency caused by certain opponents of SegWit adoption who pushed for bigger block sizes. The PoW of Scrypt and Litecoin is far more computationally intensive than that of SHA-256 and Bitcoin. However, Litecoin requires less energy to generate a block reward since it has a smaller network and creates tokens four times faster than Bitcoin. Regarding market value, Litecoin was one of the top 20 cryptocurrencies.
Core Features of Litecoin: Silver’s Digital Counterpart?
The presence of some of the core features has made Litecoin worthy enough to be called Litecoin digital silver.
- Transaction Speed & Low Fees: The cheap Litecoin transaction fee and short block time of 2.5 minutes make Litecoin a good choice for point-of-sale payments and microtransactions. It’s a good choice for daily transactions, with costs ranging from $0.03 to $0.04.
- Supply Limitations: LTC supply is similar to the inherent rarity of silver; it has a limited quantity of 84 million coins. Just as the limited supply of silver has historically sustained its value, this constrained supply generates an intrinsic value proposition.
- Security and Decentralization: Litecoin privacy is maintained by security and decentralization through the use of a strong proof-of-work consensus method. These characteristics are similar to silver’s longstanding function as a trustworthy store of value. Like silver’s decentralized commerce in international markets, Litecoin’s decentralized network guarantees that no one can control its system as a middlemen.
- Liquidity and Accessibility: Similar to that of silver in both online and offline markets, Litecoin’s liquidity also follows the same pattern. Its existence in the crypto market guarantees great accessibility, even for investors who are just beginning, just like silver, which can be traded easily across international commodities markets.
Is Litecoin Seen as Digital Silver? – Market Perception
The LTC price prediction states that the LTC price should be around $721 based on the historical gold-to-silver ratio. This indicates that Litecoin is now cheap when compared to Bitcoin, which might lead to growth when the market corrects itself. By embracing this tested gold-to-silver link, Litecoin might develop into a digital silver to support Bitcoin being the digital gold. The digital economy will obviously require silver, and the future of Litecoin shows every possibility of becoming this digital silver. Once investors and the government realize this fact, there will be increased institutional usage of Litecoin ETFs, as they might result from their filing and approval as commodities.
Bitcoin vs Litecoin: A Comparison
Litecoin vs Bitcoin comparison can be done by breaking down each of its features and comparing them in detail.
| Features | Litecoin (Digital Silver) | Bitcoin (Digital Gold) |
| Purpose | To manage transactions, improve the efficiency of Bitcoin, and improve transaction speed and scalability | To replace fiat currencies, decentralized digital money, improved security, cutting out middlemen |
| Block Time | 2.5 minutes per block | 10 minutes per block |
| Supply Cap | 84 million coins | 21 million coins |
| Market Cap | Smaller market cap and ranks among the top 20 cryptos | Higher market cap, holding dominance in the market |
| Transaction Speed | 50 transactions per second | 7 transactions per second |
| Transaction Cost | Lower transaction fee | The higher fee for large volume trading |
| Market Adoption | Merchants and institutions adopted | Almost all major companies, institutions, and investment portfolios |
| Security | PoW Mechanism, mining easily, energy-efficient | PoW mechanism, SHA-256 hashing algorithm, and energy consuming |
| Institutional Interest | Moderate | High |
Practical Application of Litecoin in the Crypto World
The Litecoin use cases have proved that it is not just a network created to cope with the shortcomings that usually exist in Bitcoin. Similar to all other cryptocurrency donations, Litecoin donations are considered to be a non-taxable event, making it an economical option for both the receiver and the donor. With transactions that can be carried out within a second and with the availability of diverse features that are not usually present with Bitcoin, it can be claimed as the crypto silver coin. With the right study, NFTs on the Litecoin network may potentially be a viable investment choice, given how young they are.
Risks & Challenges Face by Litecoin
Compared to Bitcoin, Litecoin price is more volatile because of its smaller market cap, which causes sudden and unexpected price swings. Litecoin adoption has proved that Litecoin is still not as popular as Bitcoin, making its future unpredictable, and how quickly institutional and retail adoption will increase is uncertain. Every day, there are new cryptocurrencies with advanced features that continue to rise, and there are still many projects that are in progress, which will cause heavy competition for Litecoin.
Conclusion
Even though the future of Litecoin is unpredictable due to various challenges faced by the coin, like competition and volatility, there is still a chance for Litecoin to prove itself as a digital silver if it continues to upgrade along with the necessities and work on its shortcomings.
