The unpredictable price movements of Bitcoin, alongside the extreme associated transactional fees, have turned Bitcoin into an inconvenient medium for payments.
At the moment, it seems absurd to buy a cup of coffee with Bitcoin. Back in December 2017, transaction fees reached $25. Consequently, people saw Bitcoin as a store of value, similar to gold.
Charlie Lee envisioned a cryptocurrency that would become the ideal tool for micropayments. He created Litecoin, which was based on Bitcoin’s blockchain with the hope to serve the “silver” of digital assets.
It maintained every Bitcoin novelty, optimizing the features that prevented Bitcoin from being an easy payment method. Litecoin transactions are fast and executed at extremely low costs.
But, when comparing apples to apples, Litecoin should mostly be seen as complementary to Bitcoin, as Charlie Lee has previously confessed in an interview. Based on the Bitcoin Core Client, Litecoin enjoys all the technological enhancements of Bitcoin. However, Bitcoin's future is expected to change with the advent of the Lightning Network.
Theoretically, yes it could. In reality, it probably can’t and it shouldn’t. Bitcoin is the first cryptocurrency ever created, and every other digital currency has been based on its underlying technology, the blockchain. As the leading cryptocurrency, Bitcoin’s price movements drag the prices of every other cryptocurrency as well.
At the majority’s point of view, Bitcoin is the original cryptocurrency. A potential overtake by another cryptocurrency could raise ambiguity over Bitcoin’s trust, that would ultimately question the existence of cryptocurrencies as a whole.
Additionally, a critical factor that determines the price of a cryptocurrency is scarcity. There will only be 21 million Bitcoins ever created, compared to 84 million Litecoins. It would be extremely hard, if not impossible, for Litecoin to exceed the Bitcoin, in terms of price and market cap. However, Litecoin saw a more than 7,000% growth during 2017, compared to Bitcoin’s 1,700%. Litecoin’s price has experienced a significant surge, as several altcoins have attracted the speculators’ attention in the attempt to find the next crypto miracle.
In a way, it may have already done so, according to Litecoin’s proponents. Litecoin is being traded in the most reputable exchanges, and it has remarkable liquidity and trading volumes. Numerous merchants accept Litecoin, and 25 thousand transactions are executed on its blockchain on a daily basis. Regardless of market capitalization and price, Litecoin has already managed to obtain a noteworthy adoption. In other words, one could say that Litecoin fulfills Bitcoin’s initial intent of usage.
Litecoin quickly climbed on Bitcoin’s back and indirectly benefited from its inconsistencies. Bitcoin’s substantial growth which led to network congestion and high transaction fees forced many users and merchants to look towards other cryptocurrencies. For Bitcoin users, Litecoin was the most comfortable alternative because both are based on the same blockchain and use the same client. Also, when ASICs dominated Bitcoin mining, miners with standard PCs migrated to Litecoin and its memory-hard Scrypt algorithm.