Solana vs Litecoin

What is Solana and How Does It Work?

The Solana blockchain was created by former Qualcomm executive, Anatoly Yakovenko, in 2017. It uses a timestamping methodology called proof of history (PoH) to achieve consensus instead of PoS which is used by most other blockchains. Solana thinks that its unique PoH consensus mechanism can help it become faster, cheaper to use and more scalable than other blockchains. Solana has a similar use case as Ethereum in that it allows other applications to be built and run on it, like the ability to support smart contracts, NFTs and DeFi products. Solana, however, boasts of being much cheaper, faster, and more scalable than Ethereum and has thus been dubbed as the Ethereum killer by crypto market watchers.

Analysing The Solana Network: The Good and Bad

When assessing a blockchain, we need to examine both the merits as well as flaws so that we can form an objective view. First let us examine what is good about Solana.

The GOOD

The PoH method Solana uses to verify transactions indeed makes it very fast since time stamping can be done in milli-seconds. It has also proven to be scalable in that it has successfully processed more than 65,000 transactions per second without any lag although in theory, Solana claims to be able to process up to 710,000 transactions per second.

The BAD

One reason why negative social media mentions on Solana have been increasing is due to its persistent breakdown issue that has been plaguing the network for the past year. This is one major bad point regarding Solana.

Solana has been criticized frequently for sacrificing security for scalability after experiencing outages for more than 8 times over the past one year as its popularity is also the one major undoing that has increased Solana’s negative publicity. Solana’s breakdown has become a frequent topic amongst crypto twitter, affecting investor’s trust in the blockchain at a bad time like the current bear market that we are in, which adds to the already negative sentiment on its token, SOL.

Even as at the time of writing this article, Solana is having yet another setback, with Solana wallets reported to have been hacked on 3 August 2022, resulting in losses of at least $15 million for users. While the latest update is that the compromise is not due to Solana’s core code but rather, a vulnerability in wallet software, this kind of news is nonetheless not good publicity for Solana.

More Solana Interesting Facts

The key to why Solana can achieve such high throughput is because it under its PoH method, transactions can be verified in mere milli-seconds as it uses a synchronized clock to time stamp transactions instead of doing it like other blockchains which have to wait for validators to agree in order to achieve consensus. This makes Solana cheaper to use as well since there is no need to pay validators a fee to verify transactions, unlike other blockchains. The cost and speed factor were the main attraction that led to the adoption of Solana and its token, SOL.

SOL burst onto the crypto scene with a large increase of price during the bull market of 2021. Its revolutionary browser wallet named Phantom, which was an idiot-proof platform, brought many new users into the DeFi and NFT market through its easy-to-use, intuitive user interface and beautiful graphics.

Furthermore, its relative low cost compared to Ethereum when ETH gas price was skyrocketing forced many users to abandon ETH and move to SOL, which caused the number of SOL users to surge sharply. This further led to an increasingly favourable media sentiment on SOL, which in turn drove up its price as both long-term investors and short-term traders FOMOed in to buy SOL.

However, as the bear market came knocking, the price of SOL retreated more than 80% off its bull market all-time-high.

Solana Price Prediction

Despite the vulnerability issues we have discussed above, experts are mostly cautiously bullish about the future price of SOL. Most analysts think that the current year 2022 is a low point for SOL, with the most bearish prediction expecting SOL to end 2022 at around $40, while the most bullish analysts see SOL ending 2022 around $270. By 2025, the most bearish prediction for the price of SOL is $123 while the most bullish is for SOL to trade around $1,445.

What is Litecoin and How Does It Work?

Litecoin was founded in 2011 by former Google engineer, Charlie Lee, and is one of the earliest blockchains to be released. Litecoin was created as an additional way miners could earn from cryptocurrency mining when competition for mining Bitcoin was getting heated. It was created via swapping the SHA-256 in Bitcoin’s mining algorithm with a scrypt hash function using a new alternate code called Fairbrix that was peculiar to Litecoin. Because of this Bitcoin related origin, many crypto market watchers like to refer to Litecoin as “the silver to Bitcoin’s gold”, a phrase that has been used very often by Charlie Lee to promote Litecoin.

Analysing The Litecoin Network: The Good and Bad

Just like Solana, Litecoin has both good and bad points. We will look at both below.

The GOOD

As Litecoin is modelled after Bitcoin, it in a way has similar security and reliability traits to Bitcoin and is deemed to be almost as secure as the Bitcoin network, although using the scrypt hash function makes Litecoin able to process transactions faster than Bitcoin. Litecoin can process up to 56 transactions per second and typically takes around 2.5 minutes to confirm a block. For the record, Litecoin has never stopped functioning, been hacked into, nor has ever failed to send a transaction in its 11-year history.

Litecoin also shares in the limited supply thesis that has made Bitcoin the preferred store of value for many astute crypto investors like MicroStrategy. While Bitcoin has a limited supply of 21 million BTC, Litecoin’s total supply is 84 million LTC, although its circulating supply currently is only 70 million LTC. This means that there could eventually come a time when the price of Bitcoin is unreachable, that investors may turn to Litecoin as the alternative to Bitcoin and use it as a store of value. Furthermore, just like Bitcoin, Litecoin’s block reward halves every 4 years - this makes the remaining supply of 14 million LTC coming into circulation to reduce every 4 years until the year 2142, reinforcing its scarcity proposition.

The BAD

One drawback Litecoin has when compared with other networks out there is its limited usage. Even though it is technically possible to build applications on Litecoin, the blockchain was created mainly as a means of value transfer much like Bitcoin. Hence, there are limited uses and thus, less demand for its token, LTC, compared with other application specific blockchains like Ethereum or Solana. This relative lack of demand, however, can be compensated by its limited supply, since application specific blockchain tokens like ETH and SOL do not have a maximum supply.

More Litecoin Interesting Facts

As mentioned before, Litecoin uses the Firebrix hashing function to verify transactions. This means that Litecoin uses the PoW consensus mechanism instead of the PoS model that is used by most blockchains of today. There are only a handful of blockchains run on PoW due to it being more energy intensive. However, Litecoin is one blockchain using PoW that is energy efficient. According to research compiled by TRG Datacenters, Litecoin, despite being a PoW chain, is the 6th most environmentally friendly blockchains, consuming only 18.52 kilowatts hour (KWh) to perform 1 transaction.

As one of only a few cryptocurrencies around since 2011, Litecoin received much fanfare due to a lack of competition at the time. As its founder Charlie Lee cleverly referenced LTC as the silver to BTC’s gold, LTC received a lot of attention in 2017 and its price witnessed double-digit percentage daily increases during the 2017 bull market rally. Its price surged from $4.50 at the end of March 2017 to hit a high of $375 by 11 December the same year, clocking in a phenomenal gain of 8,300% over barely 8 months. However, as more blockchains with faster speed, lower cost and more usage were created post 2017, the popularity of LTC waned and its price has been suffering from a negative bear market ever since.

Litecoin Price Prediction

As the popularity of LTC has been waning, the price prediction of LTC has also not been as bullish as other newer blockchain tokens, although experts are generally bullish on cryptocurrency prices over the long-term. For the end of this year, most analysts expect LTC to trade around $50 at the worst case scenario, to a maximum price of $148. By 2025, the most bearish estimate is for a low price of $141 and a high of $326, which is not bad as well.

Solana vs Litecoin

After looking at Solana and Litecoin separately, we have finally come to the most interesting part of our article, the Solana vs Litecoin challenge where we compare the two to see which could be the better investment.

Solana vs Litecoin: Similarities

Let us start off by comparing their similarities.

Similarity 1: Both SOL and LTC Are Widely Accepted Cryptos

Both SOL and LTC are cryptocurrencies with a high adoption rate. While SOL is a top ten coin, LTC, being around for much longer, has its own fanbase who thinks that its relatively longer history and similarity to BTC makes it a safer long-term investment. Both tokens are hence widely accepted by at least 1 major crypto payment processor.

Similarity 2: Both are Layer-1 Blockchains

Both Solana and Litecoin are layer-1 base layer blockchains in and of themselves that do not rely on another blockchain to perform transactions.

Similarity 3: Both SOL and LTC Support Self-Custody

As with most cryptocurrencies, both SOL and LTC have their own default blockchain wallets that support the self-custody of their respective tokens. This makes them less dependent on central entities like crypto exchanges for security and storage.

Similarity 4: Media Sentiment Has a Big Impact on Price

The media has an important impact in the price trajectory of both SOL and LTC.

In the case of SOL, team Solana’s clever marketing strategies managed to give Solana a quick head start in 2021’s bull market, earning Solana a vocal fanbase which has been very active on social media. Solana’s community often do social posts to spread the word of Solana, which has been very effective in increasing the internet search trend for phrases surrounding Solana, thereby speeding the usage of Solana based products which in turns drives the rate of adoption of the Solana token, SOL.

The most commonly used positive sentiment social posts about Solana recently include but are not limited to:

market, nfts, like, bought, sol, bullish, buy, worth, crypto, community, best, people, this, discord, auction, live, reserve, time, hours, group, help, follow, buying, free, top, let, here, listed, join, with, now, today, great, long, coming, new, day, going.

When doing search trends on social media related to Solana or SOL, the above words would yield you positive sentiments regarding SOL.

This year however, there has been more negative sentiment social posts about Solana. The most frequent words found in negative sentiment social posts about Solana recently include:

mint, first, solana, one, price, drop, soon, minutes, collection, current, every, sold, it, last, updated, game, bid, still, stage, beta, mentions, point, get, ready, got, targets, member, what, know, just, series, date, selling, partnership, need, link, see, run, chain stop, breakdown, DDos, attack, hack, phantom, loss, solend.

Similarly, in the case of LTC, it has a very vocal and influential founder, Charlie Lee, who often speaks about LTC on social media. Lee’s very good marketing angle for LTC easily anchored it in the crypto top ten up to the year 2020 before other newer tokens like SOL managed to thrust it out. However, during the hay days of LTC, crypto investors would follow LTC on social media to see what crypto thought leaders had to say about the token, which would often move the price of LTC.

At the last time such media related activity caused the price of LTC to surge vertically in September 2021, a fake press release was spread over social media stating that Wal-Mart had planned to accept LTC as part of a partnership. This fake news sent the google search trend for the phrase “Wal-mart to accept LTC” to become the most mentioned phrase on social media for several hours that day before Wal-mart released an official press statement to clarify that the so-called news was fake, after which the price of LTC tanked.

While social media activities on LTC are not quite at the same level as before, many positive sentiment social posts about the crypto market still have LTC mentioned. These keywords include:

buy, crypto, ri̇se, crypto, long, usdt, best, eth, alert, new, join, positive, xrp, eos, rising, group, xlm, bitcoin, good, theta, high, hours, dash, bullish, market, asset, care, egld, pri̇ce, wi̇ll, xmr, atom, trade, trading, bnb, hope, week, litecoin, ltc.

Just as market watchers remember LTC during periods of positivity, investors similarly do not forget about the token during times of market decline. The following are the keywords that are most frequently found in negative sentiment social posts about the crypto market that mentions LTC:

unlock, faucet, zesty, claiming, free, litecoin, ltc, btc, price, claim, making, tweet, one, doge, cryptocurrency, usd, many, like, updated, covid, need, see, why, well, still, homes, hospitals, day, that, public.

Solana vs Litecoin: Differences

After looking at similarities, let us now look at the differences as we pit Solana vs Litecoin.

Difference 1: Use Cases

The most obvious difference between SOL and LTC is the main purpose it is created for. While SOL is made to support smart contracts and run applications, LTC is primarily used as a medium of exchange and cannot support smart contracts nor are applications easily build on the Litecoin blockchain.

Difference 2: Consensus Mechanism

Another obvious difference is their consensus mechanism. While the PoH consensus mechanism that SOL uses is a variation of the PoS model, LTC uses Pow where miners solve an equation to validate transactions and get paid block rewards. In SOL, stakers of the SOL token get paid a staking reward as their ability to validate transactions depend on how much they stake. There is no staking for LTC, only mining, while there is no miner for SOL, only stakers, who are professionally referred to as validators.

Difference 3: Total Supply Limit

While LTC has a total supply of 84 million LTC to ever be created, there is no supply limit to SOL. Instead, SOL has what is known as a fixed inflation rate where the same percentage of tokens would be released every year until infinity.

As of July 2022, the current total supply of Solana is 524,869,954 SOL, with a circulating supply of 345,575,085 SOL. However, this number is not fixed and will continue to increase by 1.5% after its total supply reaches 700 million, which is estimated to be reached by Solana’s 8th year of existence.

Now let us summarise Solana vs Litecoin into a table for your easy reference.

* TPS = Transactions per second

Conclusion

After pitting Solana vs Litecoin, we find that each token has its own merits and flaws, and both tokens are good for the purpose for which it is made for. Litecoin is more a payment token while Solana is more an infrastructure base layer. Both have their unique investment proposition and cater to a different audience. Readers do not need to pick just one out of the two but can invest or even trade both tokens at the same time. The Margex platform is one good platform where traders will be able to trade and earn from the rise and fall in the prices of not just SOL and LTC, but also a whole range of other cryptocurrencies. That said, investment products carry a certain amount of risk and readers are advised to consider your own financial situation before trading, and to never invest more than what you can afford to lose.

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