It's Just a Matter of Time Before Litecoin Overtakes Bitcoin

The news below got my attention for many reasons, one of which is that it disproves my belief that bitcoin could one day become the digital gold. Although I understand that bitcoin has a long way to go to get this most coveted title. The other reason is that the article comes short in explaining what "overtake" means. Did he mean overtaking bitcoin in terms of volume or in market capitalization or both? There are clearly 3 different things.

It's a possibility that litecoin could overtake bitcoin in volume due to its speed and low transaction cost. But this would not mean replace bitcoin as a store of value. Gold is now considered by many as the top contender for storing value (look at the price of gold during the last financial crisis) but nobody is using gold to buy grocery, pay rent or even properties like a house or a piece of land.

If litecoin does overtake bitcoin's volume, will it take the title of the digital silver? Not even close in my mind. Rather it will be the digital equivalent of USD or EUR.

How about litecoin overtaking bitcoin in market cap? I don't think the conditions are present for this to occur anytime soon. Gold is gold partly because it is be traded in the commodity market through many investment vehicles including futures, ETF and stocks. Litecoin is far from getting its commodity index and ETF.

I thought it would be fitting to close this argument with the concept of "gold" for there are several misconceptions about the commodity. First, gold is not the most expensive commodity. In fact, gold is trailing at # 15 in the list that is dominated by Diamond and Californium. Second, gold is the first precious metal that humans fell in love with which probably contributed to its status as the king of store-of-value.

Hence, bitcoin being the digital gold does not mean it is the most expensive crypto. Although being the main "storage" of value during hard times, its total market consequently increases.

It's Just a Matter of Time Before Litecoin Overtakes Bitcoin

Last year, cryptocurrencies put themselves on the map with perhaps the greatest single-year performance in the history of any asset class. After beginning the year with a market cap of $17.7 billion, digital currencies finished 2017 with an aggregate market cap of $613 billion, representing an increase in value of more than 3,300%.

2017 was also the first time we saw a clear bifurcation in purpose among cryptocurrencies. Most have chosen to focus on the development of blockchain technology, which is the digital, distributed, and decentralized ledger underpinning most virtual currencies that's responsible for transparently logging all transactions without the need for a financial intermediary. Blockchain is primarily being marketed at financial institutions, although it has plenty of non-currency applications, too.

The other purpose for cryptocurrencies is as a medium of exchange and a replacement for cash. There aren't too many digital currencies focused on securing merchants, but that's exactly what bitcoin, the largest cryptocurrency in the world by market cap, and Litecoin, which I'd consider to be bitcoin's greatest rival, are trying to do.

Bitcoin's reign as a medium of exchange appears to be coming to an end
Bitcoin was the first cryptocurrency to be traded back in March 2010 and is often credited with bringing blockchain technology into the spotlight. Having a first-to-market advantage has certainly helped with its media exposure and its ability to sign up new merchants. In many instances, bitcoin is the cryptocurrency that investors will need to buy to exchange for less popular digital currencies on decentralized exchanges.

Yet for as consistent as bitcoin has been, Litecoin is catching up. As bitcoin's popularity has grown, chinks in its armor have become clearly visible. Its large, open-source network has made gaining consensus difficult when trying to implement needed software upgrades to its blockchain. With bitcoin, 80% approval is needed among the community to implement upgrades. An inability to reach this consensus has caused numerous forks, creating new digital currencies in the process, and relegated bitcoin to an ever-slower and pricier network. On average, the typical bitcoin transaction takes longer than an hour to process, with fees of around $28. That's almost the same cost as a bank wire transfer, and as a result it makes bitcoin a poor choice for day-to-day transactions. Source