Litecoin is Dying: Fact or FUD?

 

There has been a great deal of talk online about the supposed “death” of Litecoin, mainly because of its steep price decline over the last few months.

Is Litecoin Dying?

The truth is however that the likelihood of Litecoin “dying,” or even losing its second place spot in the cryptocurrency hierarchy, is extremely remote for a number of reasons. There are also indications that the rumors were actually begun by fans of other coins, not from the Litecoin community itself.

The problem seems to be a general misunderstanding in the Cryptocoin community about finance in general and Litecoin in particular. Litecoin creator Charlie Lee was recently interviewed by Money and Tech at the Coin Congress and his description of not only Litecoin but the currently perceived mining issues will easily calm most investors’ fears of a Litecoin collapse.

Lee explains that Litecoin was never intended to be a Bitcoin replacement. Instead he intended Litecoin to complement Bitcoin in the same way that silver complements gold. Gold is generally used for capital investments of large amounts while silver is used for smaller investments. Lee foresees a future where consumers use currencies like Bitcoin for major purposes, like automobiles, houses, even businesses, and smaller, faster coins such as Litecoin for smaller, everyday purchases such as lunch or coffee at Starbucks.

The Mining Problem

The mining problem however is a different issue. The number of Litecoins to be produced is higher than the number of Bitcoins which means that profit for miners is lower for each block. When mining first began Bitcoin miners were using GPUs and a Litecoin miner could make a profit using a CPU.

The problem is that ASIC mining equipment designed specifically for Litecoin is not nearly as powerful. A top of the line Bitcoin miner for instance can offer 2TH/s while most Litecoin miners seldom exceed a GH/s. The transaction time for Litecoin is much lower as well, 2.5 seconds to Bitcoins 10 seconds.

The Litecoin community does not seem too concerned with the rumors and some have even banded together to repel the rumors surrounding Litecoin. The Bitcoin community has even been accused by one commenter directly of spreading these FUD rumors to cause tension in the Litecoin community. One user remarked:

“It’s so interesting, that every time there’s a big price move (up or down) the readership of this sub increases 3-4x its normal amount…and half of them are the “peanut gallery” coming from the Bitcoin sub or other altcoins with one tenth of Litecoin’s capitalization and daily trade volume, declaring it dead.” -FreeJack2k2

Other Issues

The market cap and price of Litecoin has dropped recently but so has the price of Bitcoin where in the last few days, the price has dipped below the US$500 mark. There are no speculations that Bitcoin might be going belly up on any of the forums, however. Litecoins success or failure will not depend on the success or failure of Bitcoin anymore than the price of silver depends on the price of gold. They have their similarities but there are also vast differences as well and these differences are what define a particular coin.

Lee further asks people to consider Litecoin as an alternative to painfully slow Bitcoin and t