Intro
Litecoin (LTC), sometimes described as “Bitcoin lite”, is a digital asset that is designed to enable the instant peer-to-peer exchange of value at affordable rates. Litecoin was originally created to improve Bitcoin’s perceived shortcomings, such as slow transaction processing speeds and mining monopolies.
The protocol is similar to Bitcoin’s, except for a few details, such as the hashing algorithm, the hard cap on supply, and the block transaction times. With its fast block time and extremely low transaction fees, Litecoin is well suited to microtransactions and point-of-sale transactions.
Amidst the FTX-induced chaos in the crypto market, Litecoin (LTC) is shining brightly. An impending change in supply dynamics due to the halving event next year will reduce emissions of LTC in public markets and constant demand for the BTC shadow will bring good value accrual to the token.
Team and backing
With the help of former Google employee Charlie Lee, Litecoin launched an open-source client on GitHub in October 2011. Since then, its acceptance and usage among merchants have exploded, and it has consistently ranked among the top ten cryptocurrencies by market capitalization. Additionally, Litecoin began using smart contracts in the fall of 2021 to increase its relevance.
Pros
Litecoin is highly liquid, making it easy for crypto trading and value transfer. Many merchants accept Litecoin, including Newegg, SlingTV, and even nonprofits like the American Red Cross.
Litecoin foundation has also launched cards in collaboration with VISA and has support at almost the same number of ATMs as BTC.
LTC is extensively used as a peer-to-peer (P2P) payment system to pay people anywhere in the globe. It can also be used as a safe haven in the digital asset portfolio or a component of a well-rounded cryptocurrency portfolio.
By being available on most major cryptocurrency exchanges, it is ideal for traders. Some people even utilize its network to transfer money between other exchanges or lending platforms due to its relatively low transaction fees to avoid paying hefty transaction fees on networks like Bitcoin or Ethereum. It’s a relatively less controversial and better-managed cryptocurrency and thus hasn’t attracted fierce regulatory attraction yet.
Cons
A recent update on the Litecoin network that has been in the works for a long time was finally implemented early this year. This update was called Nimblwimble. The update provided holders of LTC to transact and transfer without disclosing their transactions or addresses. This function is similar to privacy coins like ZCASH, MONERO, etc. Subsequently, as privacy coins have faced regulatory scrutiny and delisting from a lot of exchanges, LTC is looming in the same space now. Post Terra Luna’s crash earlier this year, South Korean exchanges have been instructed to delist LTC as it’ll now come under a hybrid privacy coin. Although the update was voluntary, regulators are very vigilant of anything that can go beyond their purview.
Technicals
Litecoin uses LTC as its native currency. LTC’s faster block times allow it to provide a higher on-chain throughout and faster confirmation times than Bitcoin’s (BTC).
The hard cap in total supply and predictability in circulation schedule has provided LTC holders with sustained profits and good value accrual. A provider of Cryptocurrency access to various institutional clients via its digital assets trust has seen LTC be one of the best performers in the year and thus indicating a huge interest from institutional investors along with retail participants.
On the 6-month horizon, LTCN’s performance has only been next to chainlink (LINK) amongst the institutional products in thesimilar category. The negative returns in direction but less in magnitude depict the resilience of LTC and the relative stability it has as opposed to other volatile assets in the industry.
Halving
Just like Bitcoin, Litecoin halves in half to control its supply. With 84 million coins in total supply, Litecoin’s supply is capped. But each time a new block is added to Litecoin’s blockchain, miners are rewarded with LTC. If not for the hard cap, this could increase the supply of Litecoin indefinitely. Every four years, Litecoin’s block rewards are halved to reduce its circulation. Miners were originally rewarded with 50 Litecoins per block when Litecoin first started. So far, there have been two halvings in 2015, and 2019, and the upcoming halving is scheduled for 2023. Following the upcoming latest halving, the block reward for Litecoin will drop from 12.5 LTC to 6.25 LTC.
Historically, LTC has behaved similarly to BTC on following halving events but a slight delay of 3 years in its launch from BTC creates a slight difference in the same effects being seen on its timeline. While the supply emission reduction has a similar effect on the price to the upside, a slight deviation from BTC timelines is evident. The next having being slated for August 2023 provides a good entry opportunity in medium term basis.
Competition
Privacy coins like ZCASH and Monero. Value transfer coins shadowing BTC ethos like Bitcoin Cash.
Outlook
LTC returned 28.2% in November as its hash rate hit an all-time high of 547 TH/s. Furthermore, speculation about earlier technical analysis patterns that come before the halving event has been sparked by the confirmation that Litecoin’s third halving event will occur in August 2023. These elements played a part in LTC’s profitable returns this month. We built strategic long positions on LTC during that period and booked profits and look forward to holding LTC in long-term bets too.
