Back to the Roots–Why Do I Need Digital Silver, Litecoin?

Last week I remembered the old, good Litecoin cryptocurrency for a simple but important reason. I wanted to pay for something. Most people use cryptos nowadays as a speculation asset only. Very few are paying with cryptos, or making other transactions, transfers.

For me, cryptocurrencies are also payment tools. At least sometimes in a quarter, I used to pay something with Bitcoin (BTC) or Ether (ETH). Mostly digital services, like VoiceIP calls, VPN servers, or software. But these payments with the two leading cryptos got too expensive, as I complained already in July. (Here: Cryptocurrency Fees Are Skyrocketing.)

Crypto-Fees Skyrocketed

The transactions of the digital silver, Litecoin (LTC), are much cheaper. Especially now, in the new crypto-hype, end of 2020 and beginning of 2021. As on the chart, people paid over 8 USD for the average Bitcoin transaction and almost 16 for an Ethereum transfer. More expensive than my transfers in the obsolete old banking system.

At the same time, Litecoin fees were only a small fraction of it, 4.4 cents, and Bitcoin Cash (BCH) fees, 1.4 cents. Almost nothing. Litecoin transactions are also relatively fast compared to Bitcoin. (The block creation time is shorter.)

The Litecoin Network aims to process a block every 2.5 minutes, rather than Bitcoin’s 10 minutes. This allows Litecoin to confirm transactions much faster than Bitcoin. The Litecoin network went live on October 13, 2011. (Wikipedia)

We Don’t Pay with Gold

If Bitcoin is “digital gold”, then Litecoin can be the “digital silver”–a many-year-old idea of Litecoin fans. Why? Storage, transport, the security of physical gold is expensive. People didn’t use gold as an everyday payment method in the Medieval Age. In ancient times, they paid more with silver, copper, or bronze coins in everyday life.

In the crypto-space, the same may happen with digital gold. We need a lighter asset to handle quick and cheap payments, other than gold. Litecoin may be one option. (Perhaps, Bitcoin Cash, another. But also more “transactional coins” exist.)

Litecoin positions itself as a digital silver, complementing—and not competing with—Bitcoin—wrote Elevenews.

Digital Silver vs. Digital Gold

One unit of Litecoin is cheaper, as one once of silver is much cheaper than an ounce of gold. Almost everyone can buy a Litecoin (for $154 at the time of writing). But the price of one complete bitcoin digital token, $33,000, is a fortune for many people. An entire small house in many poor countries. It is only a psychological effect, but it is more tempting to buy complete tokens instead of fractions. (One Litecoin sounds better than 0.021 BTC.)

But over time, litecoin has become cheaper compared to Bitcoin. On chart two, you see how many Bitcoins you must pay for a Litecoin. The digital silver got lower and lower in the terms of BTC.

Other Pros of the Digital Silver

Litecoin, one of the oldest cryptocurrencies, celebrated its ninth anniversary last autumn. That, alone, can inspire confidence in many investors, showing it is not a fad. Litecoin’s liquidity is high compared to other altcoins. Most, or perhaps, all crypto-exchanges and trading platforms support it. It is also available in a lot of cryptocurrency-ATMs (cash machines). The digital silver also appears in some index-tracking investments, European cryptocurrency exchange-traded notes, certificates, and investment trusts (Grayscale Litecoin Trust).

Litecoin can be bought also in modern financial mobile applications, like Robinhood, Paypal, or Revolut (in Europe). The regulatory problems with XRP (Ripple), the third biggest crypto some days ago, may also benefit Litecoin.

Are There Any Cons of Litecoin?

Litecoin has the third-largest capitalization today again, ahead of XRP. (Except the special stablecoin Tether.) But some crypto-professionals and famous persons consider Litecoin as a dead end. They say this system has nothing special to offer compared to Bitcoin or others. The development is too slow, other cryptos are evolving faster. Litecoin is cheaper and faster because it is not in high demand. One of these opinions:

“I’d rather spend time on DeFi projects”–Novogratz responded to a tweet by Alex Saunders, who believes that as exchanges have started delisting privacy coins (Bittrex has announced delisting Monero, Zcash, and Dash), as well as XRP, Litecoin has good chances to recapture the top 3 position that it held once. CEO of Galaxy Digital shared his doubts about Litecoin being able to increase its adoption. Since it does not have the necessary properties for it. (Source: U Today.)

It is not clear how would perform the Litecoin network under heavier usage–wrote Bitrates’ comprehensive comparison post.

Disclaimer

I’m not a certified financial advisor nor a certified financial analyst, accountant nor lawyer. The contents on my site and in my posts are for informational and entertainment purposes and reflecting my collection of data, ideas, opinions. Please, make your proper research or consult your advisors before making any investment or financial or legal decisions.

I’m long in gold miner stocks, uranium miners, silver, platinum, large energy companies, and cryptocurrencies. Short in the S&P 500, Brent crude, and the German DAX at the time of writing.

(Photos: Pixabay.com.)