If you look at reports from payment processors such as BitPay and merchants such as Bitrefill, you’re going to notice that Litecoin constantly ranks among the top 3 payment options. In hindsight, the reasons are simple:

the transaction fees are negligible, the confirmation time is fast, and there is no way for the user to double spend the transaction through RBF.

However, there are dozens of other coins which fulfill these technical criteria: from Dash to Dogecoin, you’re going to find plenty of contenders. Heck, nowadays you even have stablecions on low-fee networks such as Solana and Tron. So what makes Litecoin so special?

First of all, brand awareness and network effects are extremely important. Litecoin has been around since the fall of 2011, has grown organically over time, and managed to survive every subsequent bear market. Many people know about it, and the “digital silver” narrative has also helped in defining the purpose of this money system.

Secondly, Litecoin’s technical similarity with Bitcoin makes it easy to integrate everywhere BTC is also accepted. Spinning up a full node to process transactions takes only a few hours, and ATM or PoS firmwares don’t require any special adjustments or complex software updates in order to add LTC as a payment option. There’s also something to be said about the identical user experience that you get with Bitcoin and Litecoin: users don’t need to learn anything new, they use the same features and interfaces with which they are already familiar. Simplicity and convenience matter, so the projects which offer them are destined to reap all the benefits.

Thirdly, there is a community of enthusiastic users who constantly increase the demand for Litecoin by using the “pay & replace” strategy. A supply of technical specifications is worthless in the absence of usefulness to humans — and the LTC community consists of people who work to spread adoption across all market cycles. While BTC had a much better market performance, with the price increasing significantly after every reward halving, Litecoin has been a much more rough asset for long-term HODLers. But the fact that there are people who use it for payments even if they aren’t always benefiting from an increased purchasing power (or they don’t outperform stock market indexes) proves that there’s more to the picture than meets the eye. Litecoin is fast, affordable, censorship resistant, and permissionless. So the value proposition is not to hoard large amounts of coins and hold them speculatively, but to participate in commerce. Many users most likely swap other coins for LTC, then send payments to shops, exchanges, P2P counterparties, and processing companies.

Critics will point out a technical flaw in this model: that Litecoin would have high fees and confirmations that take hours just like Bitcoin if the number of users was equal and the market price increased proportionally. And no, the faster block times don’t really provide guarantees of quick confirmations in a high-fee environment.

But Litecoin’s culture and philosophy would push the network to scale towards preserving the low fees and fast confirmations. It makes no sense for the project to follow Bitcoin’s “digital gold” and “store of value” approach. Litecoin must retain its competitive advantage and, before being a specific technical implementation, it’s an idea and an aspiration to achieve certain monetary goals.

There’s also something to be said about MWEB as a scaling layer: it doesn’t only increase privacy, but also future-proofs the network with a throughput boost. So if Litecoin gets the same amount of users and transactions, they won’t pay the exact same transaction fees —they will be at least 50% lower.

But how is this sustainable in the long run, as miners collect fewer fees after every halving cycle and the price doesn’t necessarily double every 4 years? Well, the answer is that the miners will collect more fees from more transactions taking place across multiple blockchains. Today, Dogecoin is merge mined with Litecoin: therefore, LTC miners also collect fees in DOGE and participate in the issuance of new coins. In the future, the potential activation of Drivechains might significantly increase the number of users and allow fee collection across smart contract, privacy, and prediction market sidechains. This way, the fees can always stay low while an increasingly high number of users engage in various types of economic activities.

Litecoin doesn’t aim to compete with Bitcoin directly, but completes it and provides useful feature testing. It benefits from innovation much sooner thanks to a culture that’s much friendlier with change, but also remains similar enough with Bitcoin to enable easy application porting and user migration. Long term, it can also be regarded as a source of market pressure for Bitcoin to improve: if the digital gold seeks to become a more efficient medium exchange, it must learn some lessons from Litecoin and borrow some of the well-tested tech.

But for as long as BTC users prefer to HODL speculatively instead of spending, there will be a demand for alternatives which work similarly but provide extra desirable features. This is why Litecoin is the king of payment coins and will most likely remain so for years to come.

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