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How will bitcoin ordinals boost demand for Litecoin (LTC)?

Although early altcoins like Litecoin and Bitcoin Cash have decreased their positions in the cryptocurrency ranking, they remain pretty popular assets on the market, especially for making payments.

What is Litecoin?

Litecoin is a Bitcoin-like blockchain protocol launched in 2011. Although Litecoin is not a fork of Bitcoin, the team used its source code when creating it, and the protocol itself is very similar to the first blockchain in terms of operation: except for the algorithm for calculating hashes (mining) and block parameters, there is no notable difference between these networks. In the crypto community, Litecoin is called "digital silver."

Litecoin is one of the first altcoins and is now one of the top 20 largest cryptocurrencies in the industry, although it has lost ground over the past few years to newer projects such as:

Softfork

In May 2022, the Litecoin network activated the last major update, Mimblewimble Extension Blocks (MWEB), which allowed users to make confidential transactions. The Mimblewimble protocol is used in popular privacy-oriented projects such as Beam and Grin.

One year after activating the Mimblewimble Extension Blocks software in May 2023, the Litecoin team partnered with cross-chain swap aggregator Rubic to accelerate the anonymization of transactions.

The MWEB update also included the Taproot protocol, which is similar to the one introduced in Bitcoin in 2021. The Taproot protocol aims to improve the security and privacy of transactions with multi-signature support.

PayPal integration

In 2021, international payment giant PayPal allowed US residents to use the Litecoin cryptocurrency to pay for goods and services. In 2022, crypto payments with LTC became available in the EU for the first time: PayPal opened the possibility of making transactions with Litecoin and other major cryptocurrencies in Luxembourg.

Litecoin is also a key altcoin among other payment solutions such as:

  • Bitpay,
  • Verifone,
  • Coingate.

New NFT standard

You've probably already heard about the Bitcoin blockchain's "inscriptions" or ordinals, referred to as "digital artifacts," and have caused a lot of hype in the crypto-enthusiast community. The introduction of inscriptions in March 2023 resulted in a new standard of Bitcoin tokens called BRC-20, which is created by adding JSON format files to the blockchain and does not involve smart contracts.

Later, analogs of BRC-20 began to appear in other blockchains — even those using smart contracts, such as Avalanche and TON. As early as April 2023, Litecoin's token standard, LTC-20, created solely for experimental purposes, appeared in the Litecoin network. Of course, LTC-20 did not even come close to the hype around BRC-20 on Bitcoin, but it still became quite popular in the crypto community.

An analog of the Ordinals protocol for issuing and trading digital artifacts on the Litecoin blockchain appeared in March 2023, but the primary wave of popularity only began in May.

Litecoin's third halving.

On August 2, 2023, the Litecoin network at a block height of 2,520,000 saw the third Litecoin halving, a protocol mechanism that halves the reward to miners. After another Litecoin halving, the reward per mined block decreased from 12.5 to 6.25 LTC.

Like Bitcoin, Litecoin halving occurs approximately every four years (820,000 blocks): the next halving is expected in July 2027.

The future of Litecoin

The Litecoin team has not released meaningful updates since 2022 after activating the Mimlewimble Extension Blocks soft fork. Fresh news about the team's current developments and plans is almost non-existent.

Litecoin's network activity cannot be called high either: as of January 2024, the protocol had processed only over 16 million transactions. For comparison, the Ethereum blockchain has processed more than 22 billion transactions, although it was launched much later, and Bitcoin has processed more than 960 million since its launch.

Also, in January 2024, the hash rate (total processing power) of the Litecoin network reached a new all-time high (ATH) of 1.31 PH/s. The last significant news for Litecoin was integrating the MWEB protocol with the decentralized exchange BasicSwap DEX.

No word yet on future updates to the protocol, but keep in mind that this figure is far from decisive: the Bitcoin protocol also rarely gets updates, the last of which was Taproot, launched in 2021. That said, Bitcoin is still the top cryptocurrency in the industry.

It's also important to consider other factors: it's unlikely that PayPal would integrate Litecoin if there were low cryptocurrency demand. Litecoin is a better alternative to Bitcoin for making payments, as its transactions are confirmed faster and cost less.

As noted by Roman Nekrasov, co-founder of ENCRY Foundation, the increased activity in the Litecoin network is facilitated by increased commissions for Bitcoin transactions. Statistics confirm this: as of June 2023, Litecoin surpassed Bitcoin by 34% in the number of transactions, becoming the most-used cryptocurrency for payments.

According to some experts, the growing popularity of LTC-20 tokens may also contribute to the growth of demand and activity in the Litecoin network. Still, regarding the cost of commissions, they are more likely to cause a negative effect.

In any case, the cost of transactions in Litecoin is likely much lower than that of Bitcoin. Many experts agree that the LTC rate will rise during the next bull cycle, as Litecoin is still in demand among miners and users making transfers and payments.

Exchange Litecoin to e-currencies

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