Bitcoin and Litecoin don’t need to be in contest, and if Bitcoin activates Segwit and the eventual Lightning network, they could work very well together in atomic cross-chain transactions. Yes, sometime in the near future you may buy your coffee by cross chain swapping some BTC for LTC.
Bitcoin LN txns will always be more expensive than Litecoin LN txns. It may make economic sense for a LN txn to go via Litecoin and back to Bitcoin to get the cheapest rate. Lightning makes this possible because it allows the two LN to be interoperable.
With atomic cross-chain transactions via LN two users can trade BTC and LTC instantaneous and without risk. Efficient decentralized exchanges are possible. Or what if a merchant accepts only BTC but you only have LTC. You can now pay LTC and exchange them instantly through a LN exchange node and send BTC to the merchant. Litecoin is better suited for Micropayments.
Both will have Confidential transaction by masking the amount sent at first stage of development then later combining Coinjoin and creating false negatives and pay zero bitcoins to several addresses to obfuscate where the bitcoins really went.
