Litecoin Fundamentals
a twitter thread

First let me say happy birthday to all of the litecoin supporters over the last decade. I also want to say thank you to Charlie Lee for creating one of the fairest, ethical and most advanced cryptocurrency the world has ever seen.

This is a thread about the top reasons why I went all in on litecoin. Why I have 100% of my networth in litecoin, and why I left a career of engineering to work full time on litecoin.

It all starts with bitcoin. Bitcoin can’t be destroyed (at least not easily) then you start to realize that litecoin has literally the same qualities of bitcoin. Why? It's the same code (just a few tweaks on block times, total supply and mining algorithm. Both are decentralized and this of course is the most powerful feature. If bitcoin survives, which is what I believe, then litecoin will survive and time has shown that it will. I couldn't imagine a world where only one of them would survive.

Litecoin is and always will be 4x faster than bitcoin. This is because the block times are set to 2.5-minutes with bitcoin having 10-minute block times. This means that for speed purposes litecoin will also have faster settlement times. This is foundational, because litecoin can adopt any bitcoin updates, so litecoin will always have a speed advantage.

Litecoin has the lowest fees out of the top cryptocurrencies, the fees on litecoin are even much lower than dogecoin (yes, much wow!). Which most people don't realize. This results in users using litecoin for more transactions as the fees to move litecoin from one wallet to another is miniscule. Now compare this with bitcoin and ethereum, there are times when fees are more than the amount you want to transact. This locks out many people who want to use cryptocurrencies but don't have a lot of money. Which by the way is most people.

Litecoin was created as a silver to bitcoin’s gold. Silver is similar to gold; in that it shares many of the metal properties that make gold special. Silver is less rare than gold and has a higher inflation rate. Similarly, litecoin has a higher inflation rate but it is only about 3 years behind bitcoins inflation rate. As they both share the same deflation rate schedule with the mining rewards dropping in half every 4 years. Interestingly, litecoins inflation will be on par with golds after halving in 2023. Therefore, litecoin is digital silver.

Bitcoin has the stock to flow model created by Plan B, which was paramount in my decision to literally put all of my 401k and pension into bitcoin (eventually I swapped it all into litecoin). The model was released in March of 2019, and being an engineer, I immediately recognized the profoundness of such a model with the accuracy of an R2 value of 90%+. I believe this is partially what caused the 2019 summer run up (also the litecoin halving). Now, believe it or not I had direct messages with Plan B on litecoin having a stock to flow. I charted the data and was able to show similar “clustering” for litecoin. I also used the Stock to Flow cross asset model which Plan B created to be used on other assets that have a scarcity (stock to flow). Why wouldn’t litecoin fit in this model? I have produced this model for litecoin and actually litecoin has achieved the model in both 2013 and 2017. The model predicts a litecoin price of 3k-4k from 2019-2022 (after the 2019 halving until the 2023 halving.

Bitcoin will only have 21 million bitcoin. Litecoin will only have 84 million (4x more than bitcoin). They both share the fixed supply limit. Unlike other cryptocurrencies like dogecoin or ethereum where the supply has a continuous increase. I would rather store my wealth in a scarce and limited asset.

Both bitcoin and litecoin are proof of work, as Michael Saylor put it recently, PoW is technically, ethically, & politically superior to PoS. I agree as the proof of work adds a second layer of complexity vs a proof of stake system. With proof of work, the energy costs and availability drive decentralization across our planet. With a proof of stake system, it's whoever has the most capital regardless of different energy inputs.

Now, let’s talk about some advantages of litecoin over bitcoin. For one the launch of litecoin was fairer to the world than bitcoins. Bitcoin being the first (by the way the best invention since the internet) it had less people initially mining bitcoin at the start then when litecoin was released. Furthermore, Satoshi Nakamoto the creator of Bitcoin was able to mine about 1M bitcoin (estimated) and in fact still holds these bitcoins (it’s safe to say these will probably never move) but it is a risk that Satoshi could dump them at any moment. With litecoin, the creator has already sold his stash which was timed with the cycle top of bitcoin in 2017. The creator Charlie Lee also made it known to the world that he was selling and had sold. It actually turns out that he sold less than all-time high on average. Not that it matters. I tend to agree these risks above are small but it’s worth understanding since we really don’t know who Satoshi is. It’s possible it’s Adam Back, Hal Finney, NSA or even Charlie Lee. Now, if it’s the NSA would you still want to own bitcoin? I personally, don't think it is but it’s a possibility.

Litecoin also had no-premine, a pre-mine is where the founder/s of a cryptocurrency mine a large portion of the supply in order to get rich. There are numerous projects that have pre-mines and most have failed. Yet, we still hear about some today. This is a large reason why Ripple (XRP) is currently in a lawsuit with the SEC. Remember, I took my entire networth and converted it over to Litecoin. I wouldn’t do that with any crypto that has a pre-mine.

One of the best features of litecoin is that it is the king of its mining algorithm. Like bitcoin who is the absolute king of SHA256, litecoin is the absolute king of Scrypt. Why does this matter, well the networks with the minority of the mining algorithm can be 51% attacked by the larger hash power resulting from the king of the mining algorithm. For example, there is a competition for peer-to-peer digital cash between bitcoin cash and litecoin. Bitcoin cash is the minority in SHA256 and is susceptible to 51% attacks in the future. Whereas, litecoin does not have this risk as the king of scrypt.

Fun fact, doge was a minority using the scrypt algorithm, and its security was at risk to being 51% attacked. In a strategic move, litecoin was able to offer merge mining support to doge, in a sense giving doge the security and protection from litecoin.

Litecoin is also the number 2 cryptocurrency on Bitcoin ATMs worldwide, many would think it’s ethereum but it's not. This allows more people access to learn, use and buy litecoin. Litecoin is offered at over 21,500 ATMs worldwide. There are also at least 4 ATMs in El Salvador that support litecoin.

As you are starting to see, litecoin is a near identical twin to bitcoin, that shares the same DNA. If you don’t believe me, you can ask Andreas Antonopoulos. He has stated that “one of the magical things about litecoin is that its almost like an identical twin to bitcoin, its a UTXO based transactional system that has 99.5% of the same DNA as bitcoin” he goes on to say “if bitcoin has it litecoin has it almost instantly”

It’s taken bitcoin nearly 12 years to get Bitcoin ETF approved in the world, in fact as of this writing the United States is still yet to approve a Bitcoin ETF. But did you know that there is a Litecoin ETF on the Swiss Exchange today? We all know a bitcoin ETF is inevitable in the US, so why wouldn't a Litecoin ETF also be inevitable? My bet is litecoin will also eventually have a Litecoin ETF. Today, in the US you can get 100% direct exposure to litecoin on the stock market with the Grayscale Litecoin Trust ($LTCN) similar to the Grayscale Bitcoin Trust ($GBTC). Are you starting to notice anything yet?

Okay, the biggest news of 2020 was the addition of bitcoin and litecoin to both PayPal and Venmo. You can go ahead and ask yourselves why the largest and most used online payment giant selected bitcoin and litecoin. Remember, PayPal does payments not store of value. Litecoin is better for on-chain payments than bitcoin both in speed and fees.

One of Venmo’s competitors is Cash App, currently Cash App only supports bitcoin. This is great for litecoin as there is an opportunity for litecoin to be added. We are seeing many “bitcoin only” platforms start to add litecoin over the years. I suspect the Cash App will do the same.

One of the other advantages that litecoin has over every other cryptonetwork including bitcoin is the reliability. Litecoin is the oldest network with 100% uptime, meaning the system has continuously created blocks and transactions for its entire existence flawlessly. Bitcoin has a 99% uptime. Furthermore, litecoin has never done any rollbacks like the ethereum network in which they rolled back transactions through a hard fork. This is why we have ethereum classic and ethereum. Can you imagine if you happened to receive some litecoin and all of a sudden there was a fork and your transaction was rolled back and you ended up not getting paid? These kinds of monetary network changes are detrimental to the trust of the network.

Litecoin was instrumental in solving scalability issues with bitcoin back in 2017, litecoin was first to implement SegWit. After litecoin added SegWit, Charlie Lee actually had a 1M bounty on anyone who could hack or crack the code. It turns out, no one ever was able to get that 1M, and both litecoin and bitcoin have now added SegWit successfully. Also, SegWit allowed for lightning development which we are starting to see the fruits of this strategic update 4 years later.

Now fast forward 4 years and we are close to seeing the largest update to litecoin in its entire history. Litecoin developers are working on adding mimble wimble. Mimble wimble allows for the transactional amounts to be hidden from the public blockchain allowing for confidential transactions between the sender and the receiver. This is important because currently today when you receive bitcoin or litecoin all of the transactions are completely transparent. Imagine, you want to send a payment to your neighbor, they can theoretically look at your wallet and see how much you have in that address. The same could be said about banks and governments using these networks. There needs to be a balance of privacy and mimble wimble is one of the best technologies available.

Interesting fact, the original mimble wimble white paper was released by an anonymous person. I think it’s plausible that Satoshi Nakamoto himself might have released mimble wimble. If this is true, imagine if litecoin were the first to adopt this technology. Would it actually be Satoshi's vision? Mimble wimble also offers fungibility, which is a word that honestly I have never heard of until learning about bitcoin/qualities of money. Think of fungibility like this. When someone gives you a $20 dollar bill do you question how it was used prior to you receiving it? Imagine if you knew that it was stolen? Used in illicit activities? Or rolled up and used to snort drugs? Would you still want to receive it? With the way bitcoin and litecoin are structured today you theoretically can know the previous transactions and events. We are also seeing an increase in government overreach, and social canceling of opposing views. What if they knew your bitcoin or litecoin was used previously to fund opposition? They might choose to ban or deny those transactions. Mimble wimble offers fungibility, which is one of the last missing characteristics of good money.

This video does a good job at explaining mimble wimble.

With the NFT craze over the last year, litecoin developers are working on a new layer called Omnilite. This will allow for the network to support stable coins and NFTs. I am mostly excited about having stable coins built on litecoin as the network is fast and has lowest fees and is proven. It would be great to have a USDT or USDC stable coin on litecoin. I would sleep well at night knowing if I ever needed to move or store value in a stable coin, I would want it on litecoin over ethereum. The same can be said with NFTs, if you have ever minted an NFT on ethereum the gas fees are ridiculous. Litecoin doesn’t have high fees.

*anticipated after the #MWEB upgrade on litecoin Q1 2022

Many bitcoin maximalists have recently been saying that litecoin becomes useless with lighting layer 2 on bitcoin. My counter argument is that doesn’t bitcoin become useless when litecoin uses lighting on layer 2?What if I told you that the first lightning transaction was on litecoin?

Litecoin is the same code as bitcoin, just 4x faster. It’s something to think about. What I really think though is that both will coexist and transactions will occur both on-chain and on the lighting network seamlessly for bitcoin and litecoin. Furthermore, I would rather close a lightning channel on litecoin than on bitcoin since it's faster and less expensive. There also exists a technology called atomic swaps where bitcoin can be swapped for litecoin and vice versa in a decentralized manner over lighting. This would allow merchants to convert to one or the other seamlessly. I am bullish on litecoin lightning in the next 4 years.

Now for the creator of litecoin Charlie Lee, he is a smart man and a humble man, he was able to see bitcoins potential early on, he was able to see that he could help bitcoin by creating a similar version with a couple key differences. He also was ethical with the creation by not having a pre-mine and setting a fair launch. This shows his character, I can probably say that most of us would probably have a pre-mine. Charlie respected and honored the Satoshi innovation. Litecoin was launched with a different mining algorithm to not compete with bitcoin. It was literally created to complement, litecoin is silver to bitcoins gold. Charlie over the past ten years has strategically laid out a vision and a plan for litecoin and its success has been shown with the consistency in the top 10 market cap. Charlie also made the tough decision to sell all of his litecoin investments in 2017 and use that wealth to work full time on litecoin. Many dislike Charlie for this move, but to many like myself I see it as further eventual decentralization and it allows for continuous successful development on litecoin as Charlie himself now works full time on litecoin. He leads the litecoin foundation, and has been instrumental in laying out a vision to implement mimble wimble on litecoin. He also donated 1M to code.org (this shows he is also into philanthropy).

I still think it's possible that Charlie Lee is Satoshi Nakamoto (my leading candidate is Adam Back) however, Charlie could be Satoshi. Think about it, he was able to create a second version of bitcoin and is allowed to continuously work on it out in the open. Since we probably will never know, Charlie Lee is the closest person we have to Satoshi Nakamoto.

It is my understanding that bitcoin and litecoin are the best inventions since the internet. We are seeing a transformation of our old fiat monetary system to a new system based upon digital sound money, with reliable and trusted decentralized networks. Imagine what it would look like if we were actively switching from one currency to another. It might just be happening today. Fast forward 4-8 years, what if every country is using bitcoin and litecoin to store wealth and transact. Litecoin has shown over the last 10 years that bitcoin won’t be the only currency and network. There will be at least two.

Litecoin Fundamentals a twitter thread

Litecoin Fundamentals
a twitter thread