Litecoin: The Journey of the Orphaned Bitcoin Clone
When Bitcoin came out in 2009, nobody knew just how tremendous that occasion would be. The crypto grew in popularity, gathering much attention from both developers and investors. However, the journey of the orphaned Bitcoin clone became apparent recently.
Due to several factors, Litecoin came short with its promises so far regarding the initial goals. Litecoin came to life as a result of efforts that aimed to solve supply and transaction problems. Although growing since its introduction, development hiatus and lack of larger market support tanked its adoption and market value progression.
A Need for Scalability
Designed by Charlie Lee in 2011, Litecoin aimed to solve several issues that plague Bitcoin. As a fork of Bitcoin Core client, it retained most of the algorithm that its older brother has. It still uses ASIC mining equipment, payments are verified much the same, and halving operates the same as BTC.
However, Litecoin introduced these changes to the code to tackle scalability problems;
- Production of a block every 2.5 minutes, instead of Bitcoin’s 10 minutes
- Uses scrypt in the Proof-of-Work (PoW) algorithm, requiring better mining equipment since scrypt is memory-hard.
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Both of these changes aim to tackle supply and transactions. Supply would be limited to those miners that have better (and more expensive gear). However, more blocks per minute would mean more transactions that can take place.
Halving not Providing Desired Results
In theory, faster transactions and slower supply would impact the value positively, increasing the price tag of each Litecoin (LTC). However, history teaches us differently, as halving did not make any noticeable changes on the LTC’s value.
In 2015, when the first halving occurred, miners and traders stashed LTC two months prior to the halving. The effect was interesting – price rose before the halving but then dropped sharply and did not changed even when halving occurred.
In August 2015, LTC value slightly rebounded from $2.69 to $2,80 and then stabilized on that level. After that, Litecoin closely followed Bitcoin in terms of price rising and falling depending on the BTC’s value change.
Development Hiatus & Price Plunge
Following the bear market trend in 2018, LTC could not bounce back for the entire year. Even in 2019, when Bitcoin surpassed $13,000 mark, LTC barely made any progress to gain back its value from 2017. It did not help that Charlie Lee went onto temporary development hiatus in 2017.
Although the concept creator did come back in 2019, a recent study by Electric Capital states otherwise. Namely, it shows that development propositions dropped sharply in 2019, with active devs declining in numbers from 40 to 3.
Since Litecoin keeps the progression open to the public at its Github page, the market did not react well despite Lee’s assurances. Its price in 2019 barely followed Bitcoin and serves as a proof that Litecoin indeed might have support issues.
Although LTC faces support issues, it is still a bit early to call Litecoin’s path as a journey of the orphaned Bitcoin clone. Nevertheless, current market analysis really pinpoints the importance of development and market support. Its price barely moves and with the incoming halving upcoming in 2020, it remains to be seen how the Litecoin team can turn things around this time.
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