For those unaware, Litecoin is an alternative cryptocurrency based off of the Bitcoin protocol. The differences; however, are vast. For instance, Litecoin operates off of the scrypt protocol in its proof-of-work algorithm. The Litecoin network will also produce 84 million Litecoins, which will be four times as many Bitcoins. Litecoin is much faster as well; it processes a block every 2.5 minutes while Bitcoin takes 10 minutes. So why isn’t it feeling the success of Bitcoin right now?
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[dropcap size=small]L[/dropcap]itecoin is, arguably, the second-most popular cryptocurrency in the world. With Bitcoin being the first most popular, Litecoin has been able to stay relevant among the over-saturated altcoin markets. Through crowd-sourced PR efforts, they’ve been able to latch themselves close to Bitcoin’s success and share in the price fluctuations since their origination in 2011.
Over the past few weeks, Bitcoin has experienced a $200 increase in value. Historically, Litecoin has always reacted positively to Bitcoin’s successes. This time though, Litecoin is hovering around the same $11 value it has experienced for months.
“The problem is that when BTC sneezes, Litecoin gets pneumonia,” user Forceflow said on litecointalk.org, “We need to either accept being linked to Bitcoin's successes and failures or strike a new path.”
One reason that Litecoin may have stagnated is the introduction, and recent popularity, of Darkcoin, one of the newer altcoins touting anonymity. While Darkcoin has claims of “developer pre-mining” always following, the coin has seen even more success than Litecoin lately. It was only a week ago that Darkcoin was hovering at $13 in value while Litecoin sat on the sidelines at $11.
ASIC Mining Effects
Charles Lee, creator of Litecoin, seems to be finding positives in the world of his currency; specifically in the area of mining. In an article with Wired, Lee talked about the success of new mining technology, scrypt-ASICs. On the other hand, mining pool centralization has becoming an issue in the Litecoin mining network once again.
“Having ASICs come out to mine Litecoin means that it’s really gotten to a point where it’s succeeded. Now Litecoin is being protected by its own hardware,” he said.
Commenting on this further, a Reddit user weighed in on the effects ASIC miners will have on Litecoin. “It's a gigantic vote of confidence in the coin, which will attract investment. Not just people buying Litecoin, but companies considering accepting it or companies developing products and services surrounding it. It demonstrates Litecoin is a strong option with investment in infrastructure.”
Stagnation or Stabilization?
While the Litecoin community has felt an underlying sense of positivity, the market has yet to react. Litecoin’s price remains stable. Litecoin also isn’t the only scrypt-based cryptocurrency on the market. Litecoin has progressively gotten much harder to mine, and miners with ASICs may be looking to dig for easy coins they can immediately flip on the market for short-term gain.
Stagnation is not always a negative though. While the price has seemingly stopped in its tracks, it also shows that it may not be as volatile. Bitcoin, being the highly popular currency that it is, has a knack for drastic market fluctuations that leave people outsiders uneasy about its functionality. If Litecoin can hover around one price for long enough, it may be able to prove to the world that it isn’t taking part in a wild ride that can frighten day-traders.
If Litecoin’s initial reaction to Bitcoin’s success has anything to say for the future, Litecoin may be looking at an eternal summer. Whether that’s a good or bad thing depends on what the community wants: A way to get rich quick, or a stable economy.
Featured image by Shutterstock.