According to the latest eToro research, Litecoin is one of the most undervalued cryptocurrencies. The eToro research paper outlines why the cryptocurrency is undervalued and delivers a synopsis on the functions of Litecoin.
“According to the metrics we have analyzed below, the current price that LTC is trading at could be seen as a massive discount to what it should be worth.”
What is Litecoin?
Litecoin (LTC) has often been marketed as digital silver, comparable to Bitcoin (BTC), described as digital gold. This is because while BTC is useful as a store of value, LTC is faster and serves better as an everyday medium of exchange. When the eToro paper was released, one BTC was worth 85 LTC, comparable to the ratio of gold to silver. The 5 year gold to silver ratio stands at 79, so it is not just a metaphor but manifests in real time trading.
Litecoin was established in 2011 by Charlie Lee. There are 84 million LTC in circulation and Litecoin has implemented Lightning Network and Segregated Witness, much like Bitcoin. It is cheaper and faster than Bitcoin, though still fails in relation to some of the newer cryptocurrencies on the market. Litecoin has a shorter 2.5 minute block time, compared to the ten-minute Bitcoin block time. It is managed by the non-profit Litecoin Foundation, and Charlie Lee sold his coins to avoid a conflict of interest, though still works on the project.
Why is it undervalued?
The paper cites a number of reasons as to why LTC is undervalued right now. Aside from being cheaper and faster, it has numerous advantages.
One advantage is that Litecoin uses a scrypt dominant proof of work (POW) system. It is designed to make hardware mining specialization more difficult, something which Bitcoin suffers heavily from. This will result in a more decentralized mining network. It also means that the network is more resistant to attacks. Even if all hashing power was turned towards cracking Litecoin via a 51% attack, it is unlikely to be successful against its consensus mechanism.
LTC can be viewed as a complement to BTC, and when BTC rises, LTC is sure to follow. So in many respects, they are not actually in competition, having many of the same features.
Perhaps one of the main reasons why Litecoin is undervalued is the level of adoption. Compared to Bitcoin Cash, Dash, and Ether Classic, Litecoin has a higher number of daily active addresses with respect to its market capitalization. It has partnered with TokenPay to acquire a 9.9% stake in WEG Bank. It has also undergone an 81% drop from all-time highs seen in December 2017. This can be compared to the 71% decline in the overall market cap of all cryptocurrencies –
“Given that Litecoin has an established and stable working product, as well as significant adoption, this bear market of the whole cryptocurrency industry could have lead to Litecoin being oversold.”
Is it a buy?
LTC has all the ingredients for a price appreciation. It is not plagued by the political controversies seen with other coins, has excellent market penetration, and it is fast, decentralized, well-established, and transparent. It is arguably one of the most solid cryptocurrencies to invest in.
For a serious long-term investor looking for a cryptocurrency with good upside and little downside, LTC is one of the best. It is identical to Bitcoin, just faster, cheaper, and with no mining centralization. Taken together, the two make a formidable team to replace legacy fiat.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.