The Bullish Case for Litecoin

By Goblincore | Cryptovore | 10 Feb 2021


Litecoin is a house name. Created as an upgrade to Bitcoin in 2011, it has always benefited from the “big brother effect”, riding shamelessly on Bitcoin’s coattails into a bright future. After sitting in the Top 10 cryptocurrencies by market cap for almost 10 years, it has gained a lot of credibility, outshining other altcoins some might consider more groundbreaking, efficient or “useful”.

Its main selling points are instant, near feeless transactions. In a space where many cryptos can do the job cheaper and faster (among other use cases), Litecoin's star is paling. Because it is a slow-evolving legacy coin, it has often been described as a boring dinosaur with a ghost team that strives on name recognition, even though it has been slowly bleeding out satoshis for years.

However, Litecoin usually outperforms Bitcoin at regular intervals. Like the latter, it follows a 4-year cycle. In the last bull run, it actually peaked at 90x its value. This time around, the expected price range could be $2500-$6000 by the end of the year (1). Who's boring now?

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Brand recognition

There’s no flourish to Litecoin, but it gets the job done and it has been working towards its vision for a long time.

It is part of Bitcoin’s narrative, long described as the “silver to Bitcoin’s gold”, the “cheap Bitcoin”, so close to the “real thing” that they share the same code and price movements. Litecoin even routinely plays testbed for new technologies that will be integrated into BTC. (3)

Litecoin’s reputation and its strong ties to Bitcoin grant it a huge advantage over competitors. As the bull run progresses, people will get more greedy and desperate to squeeze the pump to the fullest. They’ll throw themselves at lower market cap, "cheaper" coins that did not moon already, and LTC could definitely catch their eye.

Its similarities to Bitcoin will also be a great incentive for merchants, who will integrate cryptocurrencies to their payment system in the future. Litecoin may easily become a common payment method and the Mimblewimble upgrade will give it a leg up in this regard.

Mimblewimble upgrade

With Mimblewimble, LTC is deviating from Bitcoin to solve a real-world problem. This is big.

Around Q1-Q2, the implementation of Mimblewimble will add privacy (opt-in confidential transactions!) and fungibility to LTC without impeding the transaction speed.

Fungibility is a property of fiat currency that cryto couldn't share until now. Essentially, it means the ability to trade an item for another item of the same nature (for example, dollar bills are mutually exchangeable). Some cryptos are “tainted” by criminal activity, and their transaction history can be easily verified. The authorities are intent to crack down on these tainted cryptocurrencies, and in their eyes, one LTC is not equal to one LTC. It is entirely possible that such tainted coins could be refused by exchanges or merchants. You might even be subjected to an inquiry. (4)

The purpose of MWEB is to achieve higher fungibility and improved privacy as a basic human right. (…) In our current data-driven world, cash continues to be one of the most private forms of payment and, with MWEB’s added features, Litecoin will become the most cash-like cryptocurrency in the top 10 due to its added anonymity features.

Smart money is flowing in

Greyscale’s Litecoin Trust has been growing rapidly since 3Q2020, and it shows no sign of stopping. Greyscale's investors (mostly institutional) are also buying it at a huge premium (1641.55%). This ridiculous rate shows how high the demand for Litecoin is. They are literally desperate to get their hands on it.

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It’s on PayPal

By leveraging its base of 26 million merchants across the world, PayPal will be instrumental in making cryptocurrency mainstream. In the last quarter of 2020, it started offering cryptocurrencies, including Litecoin, to its US-based clients. This move will strengthen Litecoin’s legitimacy while expanding its use case. 

To increase consumer understanding and adoption of cryptocurrency, the company is introducing the ability to buy, hold and sell select cryptocurrencies, initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet. The service will be available to PayPal accountholders in the U.S. in the coming weeks. The company plans to expand the features to Venmo and select international markets in the first half of 2021 (…) Beginning in early 2021, PayPal customers will be able to use their cryptocurrency holdings as a funding source to pay at PayPal’s 26 million merchants around the globe. Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees.

Network saturation and ease of use

Litecoin has high liquidity and can basically be purchased on any cryptocurrency exchange. As BTC becomes scarcer, people will look flock to “the next best thing”, and Litecoin could prove very attractive. Additionally, as cryptocurrency becomes widely adopted, network saturation and fees on BTC and ETH will probably motivate people to turn to Litecoin as an easy, fast and cheap way of sending money anywhere in the world. Also, unlike Bitcoin and Ethereum, Litecoin has never been down in more than nine years

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Smart contracts?

Flare Networks plans on bringing DeFi services to the table, and will soon make it possible to use Litecoin with full Ethereum style smart contracts without relying on a centralized third party. It will likely enable the creation of decentralized applications similar to those found on Ethereum. (8)

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The Cardano and Litecoin foundation are also rumored to take preliminary steps towards building a bridge for cross-chain collaboration. (9)

 

Last words

Wherever Bitcoin is adopted, Litecoin usually follows. Even though it is a great trade coin, hodlers would argue that it also serves as a store of value. With its strong brand and straightforward vision, it could easily be widely adopted as a currency, in great part due to the Mimblewimble update, which will take it to the next level and make it almost cash-like. Secure, private, fast, fungible and almost feeless, Litecoin will be primed and eager to reach new heights in 2021. This will be a tremendous year.

I'd like to wrap up this article with a few words from Charlie Lee, Litecoin's very own founder:

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Disclaimer: Not a financial advisor, nor a seer. This article only reflects my personal views on the matter, and I’m painfully aware that there are a myriad of factors that I did not (could not) take into account. My understanding is limited, the future open and the possibilities endless. Please, DYOR.

 

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Goblincore
Goblincore

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