The Coming Litecoin Explosion

Computer World and Ars Technica both recently ran stories based on a recent Mt Gox official statement. The statement was regarding a series of DDoS attacks which Mt Gox has been undergoing as of late. The statement significantly acknowledged that Mt Gox had been planning to support litecoin trade and such plans had been postponed due to the attention shift toward security interests.

Litecoin is a cryptocurrency based on an altered bitcoin protocol with significant improvements adding real value. The mining protocol is based on scrypt rather than SHA256. Scrypt is best mined with GPU power which is consumer-grade. This makes litecoin a more “democratic” currency, and allows it to fulfill the cryptocurrency’s necessary trait of a widely distributed network, at least for the short and mid terms, better than bitcoin.

In this article I go over some other things which give litecoin intrinsic value and even a competitive advantage.

Interesting that so many Russians are searching ltc 😉

In the long run by the quantity theory of money, assuming litecoin and bitcoin can function equally well, litecoin should have a value of .25BTC. This is because there will be a total of 4 times as many litecoins ever produced as bitcoins ever produced. However in the short to mid-term, litcoin will be significantly more valuable by the same quantity analysis because currently the ratio is closer to 17LTC for each 11BTC and the equalization process takes the course of several years as it is determined by each coin mining its maximum number of coins, which takes many years.

This would yield a short term price of 11BTC/17LTC which very slowly approaches .25BTC/LTC over many years. However this does not account for the non-quantitative qualities. As I have previously argued litecoin is fundamentally superior to bitcoin. How much superior? That is the question. I have no idea. Perhaps that is a topic for another article.

However, presuming LTC>BTC this implies that BTC will be valued at LTC>BTC>0. From a statistically ignorant point of view the 50% mark is the best choice. Therefore I will presume that the intrinsic value of bitcoin is .5 the intrinsic value of litecoin. Note that I am not talking about individual coins here, but rather the entire system.

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