Bitcoin gets all the attention when it comes to alternative currencies and the emerging strata of offerings in this very in-demand realm of finance.
People the world over are tired of endlessly fluctuating currency values and ever-changing exchange rates and, in today’s global market, want a way to stabilize their online dealings through something that is more reliable than government-backed (and often manipulated) currency and exchange rates.
Bitcoin seems to be the alternative of choice, but it has its problems. A former Google engineer, Charles Lee, saw this and while working on the ChromeOS networking code, he put his spare time into another idea: doing a more workable Bitcoin.
Litecoin was born, but unlike many of the Bitcoin wannabes out there, it’s actually doing well and isn’t a scam. In fact, Litecoin’s value has raised from 200:1 against Bitcoin to 50:1, which translates for the currency-bound to a value of $0.07 per Litecoin to $2.40 per compared to Bitcoin’s $13 to $115 rise.
The fate of digital currency, of course, is in limbo, preventing it from becoming a serious financial option globally. Governments around the world are putting the squeeze on the alternative currency and will likely begin either closing it down in their jurisdictions or severely restricting its use. After all, it infringes on their claimed monopoly over money issuance.
The difference between Bitcoin and Litecoin is simple: Litecoin is not a scarce commodity like Bitcoin can be. Most of Bitcoin’s rise in value has been its self-engineered scarcity. Only so many coins are available, so demand will be the sole dictator of their price. This has its place and is a good system in some sense, but as history has shown, it’s limited as well.
Litecoin takes that idea and adds a “times four” factor. There are four times as many Litecoins as there are Bitcoins at any given time. Litecoin’s processes are also much faster and generally discourage large volume transactions of small denominations in order to avoid the Bitcoin network’s nemesis: process overload. Further, Litecoin works better because it does more to encourage coin mining – trading processor time for coins.
It’s a fun world and it will be great to see how currencies like this operate over time. They won’t be stopped, that is certain, because the need for them is too great.