This.
Litecoin will grow as long as there are bored teenagers with free GPUs mining it. While the rest of the industry deciding where to invest $: in BTC mining hardware or LTC mining hardware will all go to BTC as it is more expensive. In the end, the hashing power of LTC will be laughable comparing to BTC and overall support among non-geeky merchants will be in favor of BTC (because there is network effect).
Fundamentally, LTC provides no extra security or features over Bitcoin (I think it's not worse either, except for shorter block intervals lead to 4x more of wasted computing time — during block propagation). "Max amount of coins" is nonsense — it's just a measure of divisibility of the total supply. With 2100 trillion BTC units we won't need any more divisibility any time soon. Time for first confirmation is nonsense. It still does not help with instant transactions and provides 4x less security than 1 BTC confirmation. You have to wait *time*, not *blocks* to get some level of security. Scrypt is different from double SHA256, but it's irrelevant for mining. The only meaningful thing it does is that it protects weaker network from Bitcoin ASICs that may try 51% attack or temporarily increase difficulty way too much (like what happened with Terracoin).
Litecoin is here only because CPU/GPU miners who lose to ASICs, play this game in the meantime. If it does not fade out in a couple of years, it will still be very limited speculative game while BTC will grow further and expand to more and more merchants. Economically, there is no reason for people to use both LTC and BTC and have both markets constantly expanding.
Litecoin success is not dependant on the variables of the software, it's not about being faster or more secure (or less, but whatever). Litecoin success is dependant on the network effect, like every succesful currency. I'm not going to argue about the technical checklist of any coin, since there is absolutely no proof that any variable is better than other ones. There's absolutely no point in arguing and comparing Scrypt or SHA-256, or whatever time confirmation, because they are only variables without any context.
But, when you mix the context AND the variables, you can get interesting results. Scrypt algorithm, in the context of ASIC appearing on the mining market of SHA-256 suddenly changes everything. I consider the GPU miners crucial people in the adoption of a crypto-currency. GPU miners are average joe with advanced knowledge of computers (by advanced, I mean more than the usual PC user). They are competent enough to use crypto-currencies, and there is a lot of them. They are probably more easier to convince to crypto-currencies than any investors/merchants/bank/businesses/general population. Why? They have:
- Money
- Good knowledge of computers (currently required to use crypto-currencies)
- They like computers! They could do mining for fun. Proof is in the mining section of any *coin forum.
They are the ideal population to kickstart a crypto-currency.
I know there is wishful thinking (ASIC are going to make GPU disappear, like magic! for real!), but these people are going to continue their existence. Their GPU are still going to exist and be used for something. Currently, ASIC are kicking the GPU miners out of the Bitcoin market. Maybe all of those people will stop their Bitcoin mining and stuff their GPU up their ass (or sell on eBay, or anything to make the GPU disappear), but it's not going to happen. GPU miners are going to regroup somewhere, they will find a new mining hobby. My guess is that this new mining hobby will be Litecoin. My guess is pretty good at the moment, since the Litecoin network is the equivalent of Bitcoin network of September-October 2012. It means that, in theory, ALL the Bitcoin miners back from September are currently mining Litecoins.
This. is. huge.
ASICs, by pushing out the GPUs out of the mining market, are kickstarting Litecoin and providing the so-needed network effect to this currency. In a way, Litecoin is simply lucky of having the right variables for the right context.
I strongly believe that the GPU miners are the makers of any coin. If you want your coin to succeed, you need those GPU miners.
Exactly. The network is everything. We can argue about the merits of Litecoin all day, but the empirical fact is that, for whatever reason, the Litecoin network has grown (and continues). Why? That's a good question.
