There Is Only One Litecoin


Litecoin has been a reliable, secure, and independent blockchain for more than a decade. No hiccups. No down-time. That alone makes it a one-of-one. But, with recent narrative swings and uninformed takes on Litecoin, let's review what makes it unique.


Let's get the easy slurs and accusations out of the way:


Useless


This implies that there is no purpose or use for Litecoin. Usually a statement from Bitcoin maximalists, it normally leads to a conversation about the lightning network and how it solves all scaling problems for Bitcoin. It does not. It might be able to at a cost or with tradeoffs, but that cost is one reason why Litecoin is so heavily used. Centralization.


Bitcoin loves the layered money thought experiment. Sure, if/when Bitcoin becomes a reserve currency, it can viably be a settlement only layer between nation-states, banks, and future trillionaires. The cost of this layering isn't borne by governments and central banks, but by the normal man. You know, the people that Bitcoin was originally intended for. Bitcoin (L1) is beautiful, but it is purposefully kept simple and small for stability.


Bitcoins L1 qualities include:

  • Verifiable scarcity

  • Division and dispersion (decentralization) of power separating those who verify transactions, hold Bitcoin, and secure the network

  • Pseudonymity

  • Simple custody

Though nations will continue to enjoy many of these benefits, there should be more concern about the average aunt, uncle, or grandma being able to enjoy these basic tenants of Bitcoin into the distant future. As fees rise over the next 100+ years to support an adequate security budget, and therefore hashrate, these normal people will start to be priced out from transacting on the base layer. Lyn Alden places a reasonable expectation of a single transaction having a fee of somewhere in the ballpark of $100 to $1000+ USD (current value) to maintain a reasonable security budget.


Mom and pop's most reasonable action (and the one encouraged by their local government most likely) will be to sign up with a corporation or government service provider for some form of an L2. Think Strike, Coinbase, Venmo, Chivo, etc. Basically anything that can be a KYC checkpoint and remove the keys from your possession. Will it lower the fees? Yes. Will it simplify the user experience vs opening, running, and constantly maintaining a connected Lightning node? Yes.


It will, however, undercut the entire premise of the bearer asset that is Bitcoin. A substitute will be needed. Or, as Litecoin has labeled itself in the past, an "overflow" will be needed for when the Bitcoin network becomes and maintains congestion.


Even now, before Bitcoin has any real congestion problems. People still want something with the quality of Bitcoin, but without the friction of fees large enough that makes using crypto as an actual currency painful. Though this demographic of users is likely not the most white collar (and more recently Wall Street) types Bitcoin seems to increasingly be courting, this poverty level to lower-middle class still wants and deserves the same access to an asset with the qualities of the base layer of Bitcoin. In other words, a $1 fee per transaction may not matter to many of those in the suburbs of the USA, but elsewhere in the USA (and the world more largely), $1 per transaction is unbearable for someone making $50 per day. Litecoin has thrived (and will continue to thrive) in that role. It continues to grow, not collapse. Yes, it is frustratingly lagging in number-go-up, but organic growth as a currency is long-term preferable to growth by government encouragement and Wall Street investment.



Zombie Chain


So far, the only thing mentioned to differentiate Litecoin from Bitcoin has been fees and throughput. What about the accusation that it is abandoned and undeveloped? While yes, one must admit that Bitcoin has more L1 developers, L2 developers, social influencers, and billionaires, it does not mean that anything with less is a "zombie chain."


First, Bitcoin L1 development IS Litecoin L1 development. And often, even if it starts within a Bitcoin context, Bitcoin's good (and remember, open-source) ideas are implemented on Litecoin either first or simultaneously. Litecoin may be merge-mined with Doge, but it is merge-developed with Bitcoin in many ways. This is even true, though perhaps to a lesser or slower extent, to Bitcoin's L2s (assuming they are and continue to be open source).


Lightning network is the easy example here. Litecoin is lagging Bitcoin in use and development because the Lightning Network is complex and rapidly evolving, requiring lots of man-power to develop. But also, it's lagging because the need for it on Litecoin is lagging the desperate need for it on Bitcoin to make maximalists' dreams even a remote possibility. Thankfully, Litecoin already has the basic infrastructure for the Lightning Network, with ongoing work for adding more user facing and user friendly implementations that will be available before any large scale need arises.


Now, the elephant in the room. Privacy. Seemingly, Bitcoin is solidifying on its base layer, and I would contend is in danger of morphing into a compliance and/or surveillance L1. There's plenty of big talk about privacy on Bitcoin. But that's exactly the thing, it's mainly just talk. It's all patchwork and work arounds — mainly things that are either insufficient, complex, or centralizing. Let's throw out a few simple examples:

Liquid (Blockstream)

A self-described Bitcoin L2 that boasts confidential transactions (you can't see the amounts sent between users). What's the problem? It is incomplete privacy, but more importantly, it takes the MOST secure digital asset ever (Bitcoin) and trades it in for their token (L-BTC) which is described as "sending BTC to a multisig wallet controlled by the Liquid Federation." It's an "11-of-15 multisig wallet, with each of the 15 keys stored on a device called a functionary held by a Liquid Federation member."


Sounds like decentralization theatre. I need someone to explain to me how this is better than using the reliable and 1:4 unbreakable pegged asset that is Litecoin.

Lightning Network

UTXO control and mixer wallets

Enter the differentiating privacy development that Litecoin has recently launched. MWEB. Based on MimbleWimble plus advancements (such as non-interactive transactions), it is a privacy technology most closely related to implementations in other cryptocurrencies, most notably BEAM and Grin. And though there are some privacy limitations compared to Monero (as an example), MWEB is designed to scale and transact more quickly, matching Litecoin's origin and ethos. Plus, MWEB's main shortcoming (a recordable transaction graph if by a sophisticated enough actor) can be solved or at minimum reduced through future MWEB development if desired by the community.


So, what makes MWEB perfect for Litecoin? It provides scalable privacy. Although increasing L1 scale and effective block-size is near anathema within Bitcoin, Litecoin has tended to take a more moderate approach. Typically resistance to increase L1 scaling has to due to with trying to keep the system requirements to run a node simple. While there is truth in this concern (see Ethereum or more notably Solana), these concerns are generally overblown. My node is on a typical (non-gaming Windows) laptop that I purchased more than a decade ago. It not only handles Litecoin main chain, but is up-to-date to handle MWEB. There have been no issues, and I can still use my laptop normally with it running in the background.


MWEB gives a value proposition outside of being Bitcoin's overflow. Now, you can have, hold, and use a bearer asset with only a memorized 12 word seed phrase. No equipment or connections required. There is no compromise required such as handing over your keys, managing or maintaining an even more specialized node and constant internet connection, or trading in your trustless asset for a wrapped token managed by someone's multi-sig.


This is not a divergence from the origin of cryptocurrencies. It is its fulfillment. Litecoin continues to have good company in Bitcoin for establishing non-state, uninflatable money. Going one step further, Litecoin has worked to extend the reach of Bitcoin's power by furthering itself as a pegged L2 that can be offered to those either transacting more often or with smaller amounts. However, it seems a divergence is coming.


As global adoption of crypto continues, Bitcoin and Litecoin may finally reach a crossroads moment for development. One solidifying as a maximally transparent L1 that values stability and security over all else. The other solidifying as a maximally useful currency, valuing the self-sovereignty and financial privacy needed by those looking for a bearer asset checking account. It is the best at its role.


As Saylor quips, "there is no second best." The question most fail to ask is, "second best at what?"


Witness the fulfillment of digital silver. There is only one Litecoin.


- Vitamin Ł (@LtcBtc)

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