“A good time to remind you all that $LTC is completely worthless. On-chain transactions are a joke. Last 5 blocks are all smaller than 30kb, network is totally empty. It’s not used for payments, it’s not used for anything.”
This was a reaction to the news that Coinbase moved around $5 billion in value of crypto tokens as a part of their system upgrade. As Frank Chaparo of The Block reported,
“The $5 billion number represents 5% of all bitcoin, 8% of the total supply of ether, and 25% of all litecoin.”
This news bamboozled Dogecoin founder and renown crypto commentator Jackson Palmer as he questioned if people leaving their private keys on centralized exchanges defeats the foundational principle of cryptocurrencies.
Litecoin is in terrible shape
Litecoin on-chain metrics are as paltry as it gets. The blockchain recorded only 21k transactions in the past 24 hours, which is 10x less than bitcoin and 150x less than EOS who is leading the market in tx numbers.
Not only that, but the block sizes are, as Paul Everton highlighted, well below 30kb meaning there is simply no transactions on the network to fill the blocks so miners pick up the block rewards by mining almost empty blocks.
Bitcoin and Litecoin have had the same blocksize limit of 1MB. After first Litecoin and then Bitcoin activated segwit, they now again have the same blockweight limit of 4MB.
However, that only determines the maximum size the blockchain could have had by now. We don’t need to store data for unused blockspace!
Since the block header only makes up 80 bytes of data, the transaction data makes up the brunt of the blockchain. It turns out that even though Litecoin has had almost three times as many blocks (1,420,460) than Bitcoin (522,429) due to its faster interval, Litecoin has had much fewer transactions. Lately, Litecoin blocks have had an average size of 31 kB, while Bitcoin’s have had about 815 kB in the past month.
Litecoin’s hashrate is also down, just like the one of bitcoin. At its peak, LTC had around 350 Terahashes securing the network. That number is now almost two times smaller – 150TH.
For a cryptocurrency that was supposed to be the frequent, small transaction size alternative to BTC, Litecoin has failed to catch up in terms of volume as it only had $43 milion of onchain volume. Compare that to the $1.8 billion of BTC or $1.6 billion of BCH.
Besides volume, its median transaction value also proves that virtually nobody uses it for its intended purpose: small transactions, such as buying coffee or groceries. Its median transaction value was $49 to bitcoin’s $69.
Here is another very detailed essay on Litecoin by Multicoin Capital, they too see no real purpose for LTC’s existence.
To reiterate what I already wrote earlier, since nothing has changed around Litecoin:
Litecoin [LTC] is one of the coins that suffered biggest hit by the bear market. The overall market cap has dropped below $2 billion and seems the shedding is not over yet.
It is a well known fact that Charlie Lee sold at the peak of LTC price and tweeted a very good advice to the rest of the holders: On December 12th, 2017, Charlie Lee sent out a tweet telling people not to get too excited with the unsustainable bull run. Charlie warned about the pending multi-year bear market and that anyone who could not handle Litecoin (LTC) dropping to $20 should not buy it. While many attacked him as a FUD instigator, his reasons for making these assertions were rock solid and since LTC is now hovering just aboe $30. Charlie explained that every time the crypto market rises up too fast, it overshoots its real value, which leads to a huge correction, and a price consolidation. Charlie’s predictions have come true.
Charlie is not active in LTC for quite some time – it has been years since he contributed to the development of the once second largest cryptocurrency, that is now ranked at number 7 on CMC rankings.
Being dubbed the silver to Bitcoin’s gold, Litecoin was introduced in 2011 as a quick fix that was supposed to solve some problems typical of Bitcoin. With new projects flooding the market in the recent years, Litecoin’s role seems to be thing of a past – LTC is the odd man out and nobody can bring about a solid argumentation for Litecoin’s purpose in the future. And the reason I think Litecoin is dead is not because of its price – it dropped together with the whole market and not by its own fault. The reason is lack of unique value proposition – it is just blunt copy of bitcoin with couple of parameters changed.
It was that back in 2011 and it is that still in 2018. This lack of vision and will for separation from bitcoin and creation of your own niche will cost Litecoin its existence.
Litecoin can do everything Bitcoin can and it is often called a testnet for bitcoin. But who needs a multi-billion testnet – who needs two identical projects as one is enough and this is a winner takes all battle.
Litecoin depends on Bitcoin. This is not just a hypothesis, this was Charlie’s vision from the project’s inception.
LTC enjoyed the treatment as a bitcoin’s little brother – technology was similar so exchanges and wallets could easily integrate it where ever they integrated bitcoin. This gave it exposure and liquidity which drove its price up especially as many would use it for faster transactions between exchanges or wallets as it had faster transaction time than bitcoin. In the meantime, there are many other coins that can be used for this purpose that are even faster and cheaper, almost free (Nano for example).
With Coinbase and other exchanges adding new projects, the top 10 market caps being dominated by some very diverse and colorful coins and a general lack of media attention and focus on Litecoin unless it makes some significant price movement, I’m not sure what would motivate new comers do the research necessary to learn about Litecoin’s potential.
So if Litecoin’s utility as a micro-payment solution is now in question, where does it stand? I suppose it could be the “silver” to Bitcoin’s “gold”, but if Bitcoins are (basically) infinitely divisible and act as a good store of value, then what does Litecoin do?
As Bitcoin network keeps being optimized and upgraded with new innovations like Lightning Network, use cases of Litecoin will disappear and so will its reason to exist.
Litecoin doesn’t have the name recognition that Bitcoin has. It does have a fantastic advantage to make improvements to itself much faster than Bitcoin does, but with the rise of so many other projects that have base codes that are already more fit for micro-transactions and scaling, has Litecoin missed the train? I would say yes.
LTC will continue to drop as investors move towards projects that are more realistic in their goals. If anyone replaces fiat, it is going to be bitcoin and not litecoin. Litecoin’s boon and curse has been its mirroring of bitcoin – they enjoyed the ride in the past but with every market contraction, we will lose projects that have no reason to exist, like Litecoin.