Over an 11-day stretch in November, one cryptocurrency’s market cap doubled, with its exchange rate hitting record highs just as the US Senate opened its hearing on digital currencies.
Of course I’m talking about … Litecoin?
Yes, the silver to Bitcoin’s gold, as Business Insider described it, has quadrupled in value in the last few weeks. The exchange rate of $16 at the time of writing is a modest 2% of a single Bitcoin’s value, but Litecoin is starting to show similar peaks and valleys in its value chart.
On November 18, Litecoin hit the $10 value mark and saw its market cap shoot up above $200 million.
While Bitcoin is the clear frontrunner among digital currencies, it appears Litecoin and others are benefiting from investors who seek to diversify their digital currency holdings.
Or maybe Bitcoin is pricing out some investors.
Litecoin has one distinct inherent advantage over Bitcoin in that its confirmation times are faster (Bitcoin’s take more than 10 minutes, usually).
Also, Litecoin is mined much more easily. Computers are limited in their mining ability simply by RAM; there is no need for expensive ASIC chips to dig up Litecoins. This is by design, so mining can be more democratic and not in the hands of what Litecoin founder Charlie Lee referred to as a “cartel of miners.”
Lee designed Litecoin to exist alongside Bitcoin. It would be the everyday-purchases currency while Bitcoin would be the big-purchases coin. You know, like silver and gold used to be.
Lee told Business Insider that his currency is still two years back in terms of value and adoption. If this is true, early adopters might be holding on for a ride like Bitcoin’s November. We’ll see in 2015.
Other cryptocurrencies are enjoying a trickle-down effect from Bitcoin’s popularity. Peercoin has become the third largest such currency, behind Bitcoin and Litecoin. Its algorithm has a proof of stake / proof of work element that pays holders via transaction fees along the network because some of the new coins are generated based on those holdings.