Litecoin (LTC) saw a sharp 64% price drop in the first half of 2022. However, it has made an impressive comeback in recent months. According to tech expert Anders Bylund, this finely tuned Bitcoin clone altcoin has unique features that set it apart from its larger parent, including faster transaction processing and support for enthusiast-grade mining hardware. We have prepared Expert’s reviews and comments for our readers.
Where will altcoin go next year?
cryptocoin.comLike most cryptos, Litecoin (LTC) made some serious price cuts in the first half of 2022. Investors and regulators struggle to manage an inflation-plagued global economy. In such an environment, the altcoin fell 64% between the New Year and the end of June. This correction was slightly sharper than Bitcoin’s (BTC) 57% price drop. It was also far behind TRON, which fell only 17% lower at the time.
But it’s too early to count Litecoin in mid-summer. The altcoin has made an impressive comeback in the second half of 2022, gaining 18% since June 30. Bitcoin, TRON, and Solana have seen additional price cuts ranging from 17% to 65% instead of an increase. How has Litecoin achieved its last rejuvenation as the crypto market as a whole continues to struggle? This performance also holds some clues as to the likely direction Litecoin will take in 2023.
What is Litecoin?
Litecoin started life in 2011 as a modified clone of the Bitcoin platform. The code changes have in many ways created a lighter version of Bitcoin. Litecoin is the ‘silver against gold of Bitcoin’ powered by thousands of retail stores and e-commerce services.
Litecoin creates a new data block every two and a half minutes. In contrast, it takes about ten minutes for Bitcoin to generate a new block. Bitcoin is notorious for a lifetime supply limit of 21 million coins. Litecoin has adhered to the concept of lifetime limit. However, it raised its ceiling to 84 million tokens.
Both Litecoin and Bitcoin are Proof-of-Work (PoW) systems that generate new blocks of data by mining operations. However, they use completely different mining algorithms. Bitcoin’s SHA-256 encryption is best suited for mining with special-purpose chips. Litecoin’s Scrypt algorithm, on the other hand, requires a lot of memory. Also, it is more suitable for mining with AMD and Nvidia graphics cards. The Litecoin network has also been supporting smart contracts since the fall of 2021. Thus, it rips a page out of the Ethereum (ETH) playbook.
Also, the MimbleWimble code update of January 2021 added privacy features to the Litecoin system. This is a worthwhile upgrade as it adds a feature that Bitcoin can’t match. But it’s also a controversial feature. Because many law enforcement agencies assume that confidential transactions will result in illegal activities such as digital payment fraud, payments for stolen goods, and direct payments. So, money laundering.
Hence, Litecoin processes transactions faster than Bitcoin, supports enthusiast-grade hardware for mining, and tries to incorporate features that are missing from the Bitcoin system. Otherwise, the two cryptocurrencies work in similar ways and their developer communities share similar goals.
What happened to altcoin in November 2022?
Two events have moved Litecoin’s needle in recent weeks. First, global payments specialist MoneyGram (MGI) announced a crypto-based transfer service that supports three cryptocurrencies at launch. As you can imagine, Litecoin was shoulder to shoulder with Bitcoin and Ethereum on this particular list. Litecoin, the smallest name in the shadow of the two giants, saw prices rise 8% on Wednesday and 22% over the weekend.
Three weeks later, the FTX meltdown worked in Litecoin’s favor. Many cryptocurrencies crashed hard during this crisis. However, Sam Bankman-Fried’s companies did not report any significant positions in Litecoin. Therefore, Litecoin investors took a deep breath. Thus, the altcoin increased its price by 29% in two days. Both of these leaps highlight Litecoin’s unique value proposition as a smaller and faster version of Bitcoin. That means ‘Bigger is not always better.’
Does the Litecoin community have big plans for 2023?
Litecoin follows a strictly planned inflation schedule. At first, the Litecoin network issued 50 new coins each time a new data block was generated. The reward was halved to 25 tokens after block number 840,000 was mined. This took almost exactly four years, as the awards were given about 2.5 minutes apart.
The so-called halving of 2015 was followed by another in 2019. Now the clock ticks towards Litecoin’s third halving in August 2023. This tick tock program will continue until the mining reward is rounded to zero coins. It will be the end of Litecoin mining and inflation in a snap. You don’t need to plan for this though. The final Litecoin block will be mined somewhere around the year 2142. Thus, the final Litecoin supply will reach 84 million coins.
These halvings are crucial for any PoW cryptocurrency. Halving the mining reward increases the amount of cryptographic computing required to earn the next handful of coins. The idea is to set up a rock-solid, stable but limited inflation system. Each halving should be followed by a doubling of the price of the cryptocurrency. Otherwise, miners will lose their incentive to keep the machines running.
In practice, this price doubling does not happen immediately. Bitcoin, for example, has halved its rewards three times so far in 2012, 2016 and 2020. In any case, price increases followed roughly a year later. In the case of Litecoin, altcoin prices fell in the months before each halving and rose a few months later. According to this historical pattern, Litecoin is currently in the low price stage of preparation.
So is it time to buy Litecoin today?
Hence, Litecoin investors can expect a massive comeback in 2023 regardless of where the rest of the crypto industry is heading. However, not immediately! Assuming that the post-halving boom, meanwhile, no external events will upset the crypto market, it is possible that it will start to gain momentum in the second half of next year and peak in the first half of 2024.
Of course, past performance is no guarantee of future market behavior. But these halving cycles prepare some cold, hard math on the effects of investors’ crowd psychology. That’s why I wouldn’t bet on Litecoin before next year’s halving. Still, as your personal budget and Litecoin’s fluctuating market prices dictate, it might make sense to stock up on a few of these cryptocurrencies cheaply.
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