Known as the "silver version of Bitcoin," the existence of Litecoin is dwindling due to its tendency to have a stagnant price. Why is this the case?
The name Litecoin is quite popular in the crypto world. Litecoin is one of the most popular pioneer altcoins, known as the "silver version of Bitcoin." However, Litecoin's fate is not as lucky as Bitcoin, especially regarding price movement.
As of the writing of this article, one Litecoin is priced at $90. In 2013, Litecoin was only traded at around $4 per coin. Then, this crypto asset experienced a growth of 3,275% until 2020.
During the same period, Bitcoin's price surged much higher, reaching a growth of 238,300%. Bitcoin's price was around $13 per coin in 2013, and seven years later, BTC reached $31,000.
This situation certainly hurts Litecoin's existence. Charlie Lee's crypto asset is not only falling but potentially sinking completely. So, why is Litecoin's price growth not as good as Bitcoin's? Read the full explanation below.
Getting to Know Litecoin, the Altcoin Pioneer
Before we delve into the discussion about Litecoin's decline, let's get to know this "little brother" of Bitcoin a bit better. Pioneered by former Google engineer Charlie Lee, Litecoin was initially formed out of curiosity.
Lee replicated Bitcoin's blockchain network by adding an anti-hacking technology called Scrypt. This technology requires users to solve a puzzle before making a new transaction on the blockchain.
Litecoin and Bitcoin use the same consensus algorithm, namely proof of work. They also both have a limited supply but with different amounts. Bitcoin's supply is capped at 21 million coins, while Litecoin's is capped at 84 million.
The time it takes to create a transaction block in Litecoin differs from Bitcoin. Litcoin only takes 2.5 minutes to create a transaction block, while Bitcoin takes longer, around 10 minutes.
With these advantages, Litecoin became an altcoin that seemed promising. However, instead of surpassing Bitcoin, the price of this altcoin pioneer has only declined over time. The price and the market capitalization value of Litecoin is far behind Bitcoin's. As of July 2021, Bitcoin's market capitalization value was around $562.19 billion, while Litecoin was stuck at $7.31 billion.
What is the Cause of Low Litecoin Price
So, why has its price growth been so low?
For years, the question of why Litecoin's price is so low has been a topic of discussion within the crypto community. The answer to this question eventually boils down to assumptions such as the following:
Litecoin is a Bitcoin Clone
This assumption is the most commonly mentioned among the crypto community. They believe that the concept of Litecoin is not original. The altcoin's founder is considered to have merely copied the proof of work consensus algorithm concept, a digital exchange tool in the virtual world. With similar blockchain and coin characteristics, it is unsurprising that the crypto community prefers Bitcoin over Litecoin.
Moreover, Bitcoin's existence gradually becomes a store of value due to its limited supply. The fact that Litecoin's supply is four times greater makes it difficult to compete with Bitcoin as a store of value.
Furthermore, the demand for Bitcoin is far greater than that of the pioneer altcoin. Ultimately, this directly affects Litecoin's price as a crypto asset. To this day, this assumption is held firmly by the world's crypto community.
There are Other More Advanced Blockchains
As previously explained, the Litecoin blockchain is more or less identical to Bitcoin's. Unfortunately, sometime later, many new blockchains emerged that are much more advanced, rivaling all the benefits of the Litecoin blockchain.
For example, the Ethereum blockchain, equipped with smart contract technology, can be used for everyday economic activities such as savings and loans, investments, and insurance. In addition, the Ethereum blockchain system has successfully become the embryo of a decentralized finance (DeFi), the latest breakthrough in digital economic activities.
The advanced blockchain system of Ethereum appeared in 2013, exactly two years after the Litecoin project was launched. As a result, the reputation of Litecoin as the pioneer of altcoins has become increasingly marginalized because the crypto community is more interested in exploring the latest blockchain, such as Ethereum, rather than Litecoin, which appears to have no innovation.
The situation of Litecoin became even more difficult after the emergence of even more advanced blockchains such as Polkadot and Cardano. This has caused demand for Litecoin to decline. The price of Litecoin has remained stagnant over time.
The Spread of Anti-Litecoin Sentiment
The last and most controversial assumption regarding the decline of Litecoin is the existence of anti-Litecoin sentiment within the crypto community. This crypto sentiment began in October 2017, when the price of Litecoin reached $310 per coin. Unfortunately, this moment coincided with Lee's decision to sell all of his Litecoin.
As a result, many people accused Lee of pumping and dumping the price of Litecoin for his benefit. However, on the other hand, Litecoin argued that Lee's actions were intended to avoid conflicts of interest. At that time, Lee sold his position in Litecoin because he would take an engineering position at Coinbase Exchange.
Moreover, in response to the Litecoin incident, many threads appeared on Reddit forums. These threads were suspected to be initiated by individuals claiming to be part of the Bitcoin Maximalist group, which are Bitcoin's hardcore fans. This can be seen from CoinMarketCap data, where Charlie Lee's coin once ranked fifth in market capitalization. A year later, the position of LTC dropped significantly to thirteenth place.
Is Litecoin Still Worth It?
Amidst the controversies surrounding Litecoin, some analysts believe that the pioneer altcoin is still worth holding. Analysts from WalletInvestor, Trading Beasts, and The Economy Forecast Agency predict that Litecoin's price may reach $1,000 in the next five years.
As Litecoin is identical to Bitcoin, some investors consider its price will significantly increase when inflation rises. Additionally, market players still consider Litecoin in terms of its price because it is cheaper than Bitcoin. This can be a positive catalyst for Litecoin in the future. Furthermore, Charlie Lee has returned to Litecoin, and the cryptocurrency community believes this event can restore Litecoin's credibility as the pioneer of altcoins worldwide.
These are some reasons Litecoin's price has been sinking in the market. However, it should be noted that the above reasons are based on the assumptions of the cryptocurrency community, and there is no guarantee of their accuracy. On the other hand, Litecoin is still considered worth holding for the long term.
Despite the controversies of Litecoin, Altcoin is still a good asset to invest in. These coins can be stored in all kinds of wallets. What is the best hardware wallet to keep Altcoins?