Before you ask how much Litecoin will be worth next month or next year, you must know about Litecoin’s influence. In January of 2009, Bitcoin was created, to little acclaim or even notice. The first of its kind, almost no one in the world had any idea what a cryptocurrency even was. Ever since there’s obviously been an explosion of attention focused on cryptocurrencies, but there’s also been an explosion of new cryptocurrencies, from the technical to the absurd. One coin that’s been consistently amongst the top 5 but that you may not know much about is called Litecoin. Litecoin makes for a unique and fascinating study not just in its identity as a cryptocurrency, but also in the nature of its high-profile founder, Charlie Lee.
Not only has Lee built a cryptocurrency that consistently ranks amongst the top 5, but he has actually divested himself of all of his Litecoin holdings, not as a sign of lost faith in the coin, but rather to avoid conflicts of interest as he continues to participate and wield influence in the cryptoverse, thereby influencing the value of Litecoin, amongst others.
Before we learn all about this coin and its fascinating founder, however, let’s get a quick refresher on cryptocurrencies and blockchain technology.
A cryptocurrency is a digital currency that is created and made secure through the use of cryptography. The cryptography component is key because it’s what allows cryptocurrencies to be reliable, safe, unhackable methods of payment. Cryptocurrencies are decentralized, meaning there is no bank that produces them or single person who manages them. They are maintained by a decentralized network of computers (that anyone with the right hardware can become part of) that is constantly doing the requisite calculations and tracking activity (“mining”).
Once a cryptocurrency is set up, any transactions made with the currency are recorded on a public ledger, called the blockchain, in order to preserve security and accountability. The decentralized network of computers conducts a series of ever-more-difficult and energy-intensive calculations to encrypt and double-check the transactions recorded on the blockchain. In return, these computers are rewarded with ever-diminishing amounts of the coin, allowing some to obtain the coin without having to purchase it (by contributing a valuable service to the cryptocurrency). The increasing difficulty and complexity of the calculations and the diminishing number of released coins ensure the market isn’t flooded, thereby protecting the value of the coin.
There are a couple of reasons that cryptocurrencies are so popular. First of all, their decentralized nature appeals to people who are wary or disenchanted with authority figures. The lack of a central figure controlling the coin means that there’s no one person able to manipulate it or embezzle it or commit fraud with it, at least at the source. You are the sole owner of your account. Granted, there are plenty of scandals in the cryptoverse, like the infamous “pump and dump” schemes, wherein someone with the social authority to influence sales buys up a large amount of a relatively unknown altcoin, hypes it to the point where tons of people buy it (thereby pushing its price up exponentially), and then sells out, making a huge profit at the expense of others. But the vast majority of these scandals occur at the human level, a mistake that the owner makes to buy this altcoin or sell that one, not a fundamental problem at the digital currency’s source (the blockchain). In that sense, cryptocurrencies give much more autonomy and freedom to their owners, especially compared to “fiat” (government-sanctioned) currencies that rely on institutions like banks to house them and government agencies like the Federal Reserve to regulate them. The lack of regulation also makes cryptocurrencies much more volatile, which, for some, means more opportunities to profit.
Another reason for digital currencies’ popularity is that owners are anonymous, thus ensuring privacy on both sender and receiver’s ends. An unexpected consequence of this is that cryptocurrencies are ideal for use in illegal transactions or transactions where people don’t want their identities revealed. Yet for every illegal transaction that occurs using cryptocurrencies, there are many more completely legal transactions that happen.
Now that you remember what cryptocurrencies and the blockchain are, let’s delve back into Litecoin’s origin story and what makes it so special.
Charlie Lee was born and spent his early years in the Ivory Coast. The son of Shanghainese immigrants, Lee and his family were amongst a group of early Chinese pioneers in the Ivory Coast during a time of emerging African independence from colonial rule. At 13, he and his family moved to the US, where he grew up and went on to obtain Bachelor’s and Master’s degrees in computer science. He worked for a number of companies between graduation in 2000 and the creation of Litecoin in 2011, including Kana Communications, Guidewire Software, and Google.
During his time at Google as a software engineer, he stumbled across Bitcoin and was intrigued. This was in 2011, so it was still early days for the coin. He started mining and purchasing Bitcoin, even getting in contact with one of the developers of Bitcoin’s blockchain client software named Mike Hearn. Before long, he was thoroughly impressed with the cryptocurrency and became interested in starting his own.
He wasn’t the only one. At the time he discovered Bitcoin, there were already a number of altcoins surfacing, modeled after the original cryptocurrency. Bitcoin’s creators decided to make their software open source, meaning anyone could access, replicate, and use their designs. Lee noticed that even early on, Bitcoin had some flaws. He believed he could create his own coin that would solve them.
His first attempt, Fairbix, was a flop. Modeled after another altcoin, Tenebrix, Lee and his co-founders made a few early errors that doomed Fairbix from the start. For his second attempt, Lee went back to the original source code: Bitcoin’s. And thus, in October 2011, Litecoin was born.
Although Litecoin was modeled after Bitcoin, there are some key differences that make it a fundamentally different coin. In fact, Lee prefers to think of Litecoin as silver to Bitcoin’s gold, a complementary – rather than competing coin. This is one reason why some longtime Litecoin followers believe the Litecoin price prediction theory that 1 Litecoin will eventually be 10% of 1 Bitcoin. At the very least, differences between the two have served to increase the value of Litecoin and keep it amongst the top 5 cryptocurrencies rather than letting it fall into oblivion with the countless failed altcoins.
First of all, as far as cryptocurrencies go, Bitcoin is somewhat large and clunky – it suffers from both long transaction times and large transaction fees. The Bitcoin network only processes a block (entry on the blockchain ledger, i.e., a transaction) once every 10 minutes. If you’re using this to send money to family and friends or make an Amazon purchase, the network gets bogged down and backlogged really quickly. Part of the value of Litecoin, on the other hand, comes from the fact that it only requires 2.5 minutes to process a block – a quarter of the time required for a Bitcoin transaction. Furthermore, its creators ensured transaction fees would remain low, so you’ll rarely pay more than a fraction of a dollar in fees.
For this reason, Lee imagined that the true value of Litecoin would come in its capacity for quick and numerous payments of small amounts (like paying a friend back for a coffee or buying some milk at the grocery store). Bitcoin’s strength is more in larger and less frequent transactions, or in just holding value, as many people do with gold. This is compounded by the fact that Litecoin’s preset maximum supply (the most Litecoins that will ever exist) is 84 million coins, 4x the amount of Bitcoin’s. Since mining is both the way to record (and encrypt) transactions and the way to create new coins, this means Litecoin has longer to go before it runs out of the ability to record transactions.
Second, without getting into the details, the mining algorithms the two coins use are fundamentally different, by design. Bitcoin uses the SHA-256 algorithm, which is extremely processor-intensive. This is why you may have heard complaints about how much energy is being used to mine Bitcoin. The more Bitcoins that are mined, the more difficult and complex the calculations become, meaning the more processing required. This has gotten to the point where people have “mining farms,” collections of tons of computers, specially designed to be processor-heavy and memory-light, all dedicated to mining in order to earn more Bitcoin. Unfortunately, this trend has the effect of edging out people who can’t afford to buy the expensive machines required to mine the cryptocurrency. If you didn’t get in at the beginning, it’s hard to get involved with Bitcoin now unless you buy the coin.
Litecoin, on the other hand, utilizes the memory-intensive scrypt algorithm. This means that, fundamentally, those who mine Bitcoin can’t mine Litecoin with the same computers. They would have to buy completely different machines that maximize memory over processing power. This was a deliberate move on Lee’s part designed at leveling the playing field, ensuring the cryptocurrency was even more decentralized and more accessible to all kinds of people.
A Single Litecoin
As of today, 1 Litecoin or LTC is worth about $150! The year 2017 was a crazy year for all cryptocurrencies, and Litecoin was no exception. Within 12 months, the value of Litecoin jumped from $4 to $371. Although the market has since corrected (at the time of writing the value of Litecoin was $179 with a market cap just below $10 billion), Litecoin proves to be a coin worth watching and even getting involved with, whether that means mining or purchasing. Its quick transaction times and low transaction fees mean that it’s become more widespread and, unique for a cryptocurrency, widely accepted. Increasing numbers of eCommerce platforms and even retail shops are accepting it as currency, which can only cement its standing and make it even more widespread.
In a somewhat controversial move, Charlie Lee decided in December 2017 to sell his entire Litecoin balance and donate the liquidated assets to the Litecoin Foundation to further development of the cryptocurrency. While this might sound like Lee is getting out of the game (some people viewed this as a sign that the value of Litecoin was about to plummet), he was actually, according to him, resolving any potential conflict of interest he induced by owning serious stakes in the cryptocurrency.
While this may sound confusing, you have to realize that since cryptocurrencies aren’t regulated, they are highly volatile. In this day and age, that means that they are highly susceptible to the whims of social media. Lee was a huge influencer in the cryptoverse, to the point where any mention of price (of any coin) on his social media feeds could send the value of a cryptocurrency way up or down. If he wanted to applaud Litecoin for its recent gains or commiserate about its recent losses, any Facebook post or Tweet could be misconstrued as him trying to game the system. This is why he thought it best and most ethical to divest himself of any financial stakes in Litecoin if he wanted to continue engaging with the currency.
Some in the community lauded his “sacrifice” and willingness to do “the right thing,” while others felt that his lack of personal stakes in the cryptocurrency meant he wouldn’t be as committed and wouldn’t be working in the coin’s best interests. Either way, you can’t deny that Charlie Lee is certainly an interesting player in the cryptocurrency game and one worth keeping an eye on, as is the value of Litecoin and its future technological and market developments.
Litecoin Price Predictions
People are talking about the price of Litecoin and its main competitors, Bitcoin, Ripple, and Ethereum. So what does the future hold for all these coins? With the continuing trend, Litecoin is expected to grow at a steady pace. Experts from various corners believe that by 2019, 1 Bitcoin will be worth over $50,000, 1 Litecoin will be worth around 10% of 1 Bitcoin, and that 1 Ripple will be worth over $10. These numbers sound ridiculous when comparing it to the stock market. However, after seeing the rise of EOS and ONT in late April, I now believe anything is possible. Many long-term Litecoin holders will go wild if the 2019 Litecoin price prediction is true.
Remember to do your own research when it comes to cryptocurrency and blockchain. This blog post does not provide any financial advice and only contains personal opinions and speculation.
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