I do value Bitcoin and what it is doing for the crypto industry and how it's changing the world. However, in the long term, I see that there is a bit of a problem with Bitcoin once it reaches one million dollars per Bitcoin. At that point, one penny will equal one Satoshi. And once Bitcoin surpasses one million dollars per Bitcoin, then it starts causing problems in terms of converting to fiat, which is not a bad thing. Obviously, if you're living on the Bitcoin Standard, then you're pricing things in sats and not in fiat. But in any case, it starts to monkey with your calculations, which only gets worse as Bitcoin grows in value and the value of currency diminishes. Now, this is not bad in itself. It's just a bit of an inconvenience, something to keep in mind when you're doing the maths in the future.
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The other problem is that as Bitcoin grows in value the transaction fees start to get larger. And it isn't so much that the network might be busy and fees might be crazy, which can happen. But as the value of the sat goes up then obviously the fiat value of transactions goes up as well. So there can be times in which it is extremely expensive to transact in Bitcoin once we get to a point where sats are more expensive than fiat money.
Now let's think about Litecoin. Litecoin was designed with a higher supply of 84 million versus 21 million for Bitcoin. Therefore, Litecoin has extra runway before this problem of high fees becomes a problem. Litecoin can absorb four times more value before one Litoshi becomes one penny. So we're talking about roughly 84 trillion dollars in value versus 21 trillion in Bitcoin. Not only that, when we get to the point where there's high volume, Litecoin was designed to have lower transaction fees and faster transaction times, which results in less transaction bottlenecks in the mempool. So, if it ever does get to the point where Litecoin were to ever reach 1 million dollars per Litecoin, then the fees would be much less than those for Bitcoin.
Now all of this is something that is not going to happen in the next year or two, maybe not the next five years. But I'm thinking long term, you know, from here till retirement perhaps. I don't expect that Litecoin will reach a million dollars per Litecoin possibly in my lifetime, but it might make significant gains in that direction. A $25,000 Litecoin would be the equivalent of a $100,000 Bitcoin given that you need four Litecoins to equal one Bitcoin in terms of supply. At today's prices, Litecoin at $100 is the equivalent of $400 Bitcoin in terms of supply. This is super affordable today.
In terms of some of the problems of Bitcoin, Litecoin has already solved those problems which are faster transaction times and lower transaction fees. Another thing that Litecoin has going for it is that it is less expensive to mine. Over time I expect Bitcoin to become more centralized as the cost of mining becomes crazy high and only big institutions will be able to mine it profitably.
What this does is that it makes Bitcoin more centralized, which is the antithesis of its whole foundation. Whereas Litecoin was designed for people to be able to mine it on their computer with a lot less resources. In fact, Litecoin uses about 2% of the electricity that Bitcoin does. Not only that, Litecoin is more profitable to mine because you can merge mine it with Dogecoin. On top of that Litecoin has privacy features added to it.
Now I can think of some counter arguments. For example, you can avoid the high fees on Bitcoin by switching over to the Lightning Network or Liquid. And this is true. We saw something similar happen when the world started running out of IP addresses on the internet. We started switching to subnets with network address translation (NAT) to increase the number of devices connected to the Internet. Private networks were able to delay the depletion of IP addresses until they came up with IPv6 to further add addresses to the internet.
Similarly, I think that's the function that exchanges have on the Bitcoin network in that you can conduct transactions within an exchange and they are not on chain. And basically what they do is they settle on chain in net balances rather than every single transaction. So that saves us from driving up the fees for Bitcoin. But, Litecoin does the same thing. It takes some of that load off of Bitcoin. We are also able to transact in Lightning or Liquid. We are therefore able to keep the transaction fees on Bitcoin lower. However, as we know, every bull run, when things start heating up, those transaction fees can get pretty high, which can make living on Bitcoin more challenging. That is, unless you resort to not owning the keys to your Bitcoin. And when you use Lightning or exchanges, you don't actually have Bitcoin, only representations of Bitcoin. Whereas Litecoin has more wiggle room for transacting in Litecoin before the fees get high.
Litecoin has the same advantages as Bitcoin. I believe that Lightning was initially created on Litecoin, although you can get similar results with Litecoin's MWEB. And in addition, you can also trade or use Litecoin within exchanges to reduce the amount of transactions that are on Litecoin. But, again, Litecoin was designed from the start to have lower transaction fees. Now in the long term, I think that if you missed your boat on Bitcoin, and failed to acquire one whole Bitcoin. You still have a reasonable opportunity to buy four Litecoins at a reasonable cost and then hold on to them indefinitely until Litecoin goes up in price.
I think that Cryptocurrencies that have limited supplies are preferable to those that have unlimited supplies that they'll just keep minting, for example, like Ethereum. And my reasoning is that it fixes the amount of coins that are available and therefore the chain can only absorb more and more over time without dilution. So for this reason I like Bitcoin. I like Litecoin. Even Dash is good because it actually has fewer coins than Bitcoin. I think it's 18 million. So if you own 1.1 Dash, that would be the equivalent of 1 Bitcoin in terms of supply.
What we have to keep in mind is that we're buying it to hold as much as we can afford for the long term. And if we're going to be speculating, then we can't speculate on market conditions right now. We've seen a lot of people lose a lot of money because we just don't know when prices will go up or go down in the coming weeks. But over the long term prices do tend to go up.
Looking at the chart for Litecoin it hasn't had the moonshot that Bitcoin has had. But if you look at the chart you also see that it tends to have higher lows over time. So it is gaining value over time, it's just not as spectacular as you see Bitcoin doing.
Therefore I think that in the long term Litecoin has value. It is definitely making gains every year according to its history and its utility. I expect that people living on the Bitcoin standard at some point might be switching over to Litecoin because, again, it starts to get really expensive to transact in Bitcoin as Bitcoin goes up in value and use.
If you're going to be paying, for example, $50 in Bitcoin transaction fees to make a credit card payment, it starts to not be really worth it. You have to make a lot more than $50 in credit card rewards to make it worthwhile. So what may happen then is that people will start shifting over to lower cost chains to do their Bitcoin Standard practice.
I just think that for the long term, you're better off with something like Litecoin or Dash. At least in terms of long term speculation, just buy some and put it away. Continue living on the Bitcoin standard until that becomes unusable and then switch over to Litecoin and Dash for your daily Bitcoin Standard style finances. By that time Litecoin and Dash will either be real money or not. It's a low-risk bet. We have the opportunity to front run the rise of Litecoin given how undervalued it is. If you missed buying a whole BTC, you can buy four LTC and wait.
So I think that wraps it up. I am sold on the promise of Bitcoin, but I think in the long term we may see that it becomes unusable and therefore I think that we should start to think about alternatives such as Litecoin and other cryptos that have fixed supplies and lower transaction fees so that we can make the switch for living off of your crypto when Bitcoin becomes too expensive to transact for daily use.
