Litecoin came before Ethereum.
You read that right. While Ethereum has been stealing the thunder for many years, Litecoin was created first by Charlie Lee in 2011. Ethereum was created in 2015. Before smart contract coins, before Initial Coin Offerings, before Dapps, before proof-of-stake, before staking, and frankly before much of this nonsense Bitcoin had a real competitor. A competitor who had an honest humble beginning, Litecoin.
The space has strayed a bit from its original focus of sound money. That’s somewhat disappointing because sound money is so important to our everyday functions and how we live most of our lives. Much of what the community grovels at today, was popularized by Ethereum. A coin that has seen tremendous growth, drama, and hate. Ethereum stole the show in 2017/2018 with its big promises of becoming the “world computer”. Let’s not forget about the “killer app” that Ethereum promised to give the community. To be fair, Ethereum did pave the way for Stablecoins. And even king of the hill Bitcoin maximalists can admit that stablecoins have been net positive for the ecosystem. This isn’t to say that Stablecoins can only be built upon Ethereum. There are other options. Tether does not have to operate only on ETH or what’s known as an ERC-20 coin. Stablecoins can be built on other protocols including Litecoin. They just haven’t become popular yet. If they do, Litecoin would be a perfect coin to build upon. Litecoin’s inexpensive transactions would crush Ethereum’s current gas fees. Paying less than a penny would allow for much more volume. Litecoin has also kept its eye on scalability all these years, coming out with upgrades like Segwit, Taproot, and MWEB to keep on improving the coin. Ethereum has mostly been empty promises for a number of years.
Nonetheless, with Ethereum’s success, many competitors have come to dismantle it. Too many to list but here are a few: Polkadot, Cardano, Binance Coin, Solana, Tron, and EOS. Sure, there are nuances here and there, and each coin brings something unique to the table, but these coins are generally competing for the smart contract space. To be that ecosystem to do cool stuff on like Non-Fungible-Tokens. Many ETH competitors propose that their “fees” are cheaper than Ethereum’s current gas fees; and therefore, will replace ETH by offering a more sustainable ecosystem. Who really wants to pay a 5-dollar gas fee (it can be much higher) on Ethereum just to move/transact your asset just once? Imagine paying a 5-dollar gas fee to pay for a $2.89 cup of coffee. Or paying a 38-dollar gas fee to transfer your NFT/Coins/stablecoin to a different wallet. No one really wants to do that and economically it simply doesn’t make sense. A coin with high fees cannot be used as a means of payment/transaction unless the fees come drastically down.
Ethereum has promised to fix this for many years, however with all of its “ETH 2.0” promises, ETH has yet to deliver sustainable gas fees. Will they? Who knows. That’s why so many of its competitors continue to thrive. Even if ETH does bring down fees, are the applications built upon smart contract coins really all that important. Are bored ape's the killer app that makes ETH so much more important than coins like Litecoin. Litecoin is attempting to be sound money that scales for payments. ETH is fighting with other coins over Bored Ape's. Kinda feels silly to even compare which use case is more important. And Don’t we have centralized services that accomplish what ETH is attempting to do "decentralized". Is ETH a solution looking for a problem.... Anyways, the arena is so wide open right now we really have no idea which smart contract coin will take the cake. Any one of these coins can still become king in my humble opinion. Why invest in those coins with so much uncertainty.....
Not only do all these smart-contract type coins have an uphill battle for market dominance, but there are many prominent technologists who are skeptical that Proof-of-stake can even work. That’s right, the whole premise of Proof-of-stake coins might not work. https://www.lynalden.com/proof-of-stake/
Technically ETH (as far as I know) is still a proof-of-work coin but with all of its changes it either has proof-of-stake aspects or will have a POS consensus. Simply put; the long-term incentive structure may not work. There is no hate for ETH here, just an analysis of the project. As you can see, a lot of these coins are projects that may or may not work. There is a lot left to be desired, and only the future can determine what will stick. Let’s not forget that Bitcoin is a project. Projects succeed, and projects fail. So far, Bitcoin has been an unbelievable success. So has Litecoin. Surpassing some of the OG’s wildest dreams. Why is that? Let’s try and dissect what is going right.
Bitcoin/Litecoin and a number of other currencies are built upon proof of work. You see, many people think that Proof-of-Work was the genius innovation that Satoshi invented, not the proof-of-stake consensus. This is key. In short, Proof of work has allowed for decentralized success. Betting on a coin in large part depends on what type (and there are others) of consensus algorithm ultimately wins. Sure, both could have its use-cases, but proof-of-work sure seems to be the safer bet at the moment. And it takes on the most important use-case (sound money). Proof-of-stake coins have been littered with past historical failures. Most recently Terra Luna had an amazing crash. Remember, projects succeed and fail. Terra Luna just failed spectacularly. Bitcoin and Litecoin along with other POW coins have next to no failures. 100% uptime for Litecoin, and near 100% uptime for Bitcoin. It’s sound. And you want soundness when you are going to have a sound currency. Kind of a Captain Obvious moment here.
If blockchain/time chain are going to become money, you are going to want a coin that never falters. Imagine the world reserve currency failing for even an hour. There would be mayhem. Proof-of-work appears much better equipped to deal with the sound money problem. One only has to look at Terra Luna to be worrisome of what Proof-of-Stake type coins can bring. Ultimately you realize that Proof-of-work coins are much different than proof-of-stake coins. Both could have its place in the ecosystem. And technically, both could fail. We simply don’t know. All in all, it appears that the Proof-of-work coins have delivered on their promises. Not so much with Proof-of-stake coins.
At the end of the day, Litecoin came before Ethereum. A coin that is designed to be sound money. So far it has checked all the boxes. Safe, decentralized, fast, easy to understand, and a wonderful community. If you know how to send a Bitcoin transaction, you know how to send a Litecoin transaction and vice versa. Ethereum and other smart contract coins can be viewed as a more aggressive experiment in the crypto space. A bit harder to understand that targets different use-cases. NFT exchanges are not the revolution I and many other early adopters were hoping for. Not to get too technical, but Ethereum has a much larger data set, and running an Ethereum node is quite difficult.
This is not a problem with Bitcoin and Litecoin, as the data set is much smaller. Your laptop can run a full node, which ensures what you see on the blockchain is what you get. With Ethereum, you may not have that convenience. That’s why when it comes to sound money, Bitcoin and Litecoin appear to be the best bet. Ethereum (as far as the community) may have given up on the sound-money aspect and is trying to accomplish other things. When investing in a coin, ask yourself what exactly am I investing in? If Ethereum has given up its sound-money aspect, what is it that Ethereum is trying to build? Litecoin knows exactly what it is trying to do - be sound money. Sound money that can scale to the moon, and beyond.