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Litecoin challenges Bitcoin

05 Jun, 2023
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Prior to the advent of ordinals, Litecoin remained in the shadow of its bigger brother, despite having ultra-low fees and faster transaction completion rates. However, continued high network utilisation and cryptocurrency exchanges' increased Bitcoin withdrawal fees have significantly increased Litecoin's appeal for transfers.

Image source: bitinfocharts.com

In May, the use of ordinals (similar to NFTs and ERC-20 tokens) led to congestion on the Bitcoin network. At an average speed of 7 to 8 transactions per second (TPS), it can't handle over 700,000 transactions per day.

As transactions queued up in a long line, users began raising fees for miners to get the transfer processed as quickly as possible. As a result, the average commission on 8 May exceeded $30 and is still above the annual average.

Image source: blockchair.com

The situation was bound to increase the appeal of Litecoin (as we wrote about earlier), which, with fees of $0.01, is 8 times faster than Bitcoin (56 TPS versus 7 TPS, respectively). As a result of many users switching over to Litecoin, the cryptocurrency network had already processed 13% more transactions than Bitcoin by 25 May. And since 8 May (Bitcoin's peak fee day), Litecoin's price has risen 20% against Bitcoin's.

Image source: StormGain cryptocurrency exchange

The Litecoin network overtook both Bitcoin and Ethereum in terms of the number of active addresses on 9 May, breaking its previous record by 33%.

Image source: bitinfocharts.com

Another positive factor is the halving event that's due to take place in early August. Litecoin will cut its blockchain mining fee before other major networks do, thus reducing the volume of its circulating supply, which is good news for its price. Typically, after a halving event, cryptocurrencies show sustained growth in the medium term.


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