After a meme-token frenzy drove up expenses on the largest blockchain, a digital token launched 12 years ago as a more transaction-friendly counterpart of bitcoin has piqued the interest of speculators.
Litecoin has gained about 20% since May 8, when bitcoin transaction costs reached a high of US$30 per transaction, compared to a decrease in a cryptocurrency index.
The increase in bitcoin fees has also pushed transactions on the Litecoin blockchain to an all-time high as customers sought a less expensive alternative - without causing a similar increase in expenses.
Litecoin, like bitcoin, uses a proof-of-work process in which "miners" employ high-powered computer rigs to organise transactions on the blockchain in exchange for token payouts. To promote speedier transactions, a new "block" of transactions is added to the Litecoin chain every 2.5 minutes, as opposed to every 10 minutes for bitcoin.
According to CoinMarketCap.com, Litecoin has a market value of approximately US$6.7 billion, making it the 11th-largest cryptocurrency. Bitcoin's market capitalization is estimated to be around $516 billion.
The recent price increase in Litecoin is an example of how a profusion of so-called meme coins on the bitcoin blockchain has reverberated through the cryptoasset ecosystem. Speculators have also piled into Litecoin ahead of a blockchain event known as the halving, in which the rewards miners receive for securing transactions are decreased to cap the amount of tokens.
The halving of Litecoin is predicted to occur in late July or early August.
The recent explosion of new tokens can be traced back to new tools that enable developers to manufacture money on the bitcoin blockchain. These are referred to as BRC-20 tokens. According to Markus Thielen, head of research at Matrixport, there is a possibility that Litecoin's recent gains will reverse once the meme-coin frenzy fades.
Furthermore, based on trade during the last two halvings, Thielen believes that the impending halving will be a drag on Litecoin. Litecoin fell in both of those incidents in the 50 days running up to the halving, he noted.
By fLEXI tEAM