Litecoin hits a record high, up nearly 1,400% this year

Litecoin, the fifth-largest cryptocurrency by value and rival to bitcoin, has rallied nearly 1,400 percent since the start of the year after hitting a record high price.

Litecoin, Monday, nhit an all-time high of $64.2, marking a 1383 percent rise since January first where it traded at $4.33, data from industry website Coinmarketcap.com showed. The price pulled back slightly on Tuesday and was just above $62 in early trade.

CNBC runs through the differences between bitcoin and litecoin, and what’s driving the price.

Litecoin is a cryptocurrency founded by Charlie Lee. It has a market capitalization of around $3.28 billion according to Coinmarketcap.com. This makes it the fifth-biggest digital currency behind ripple, bitcoin cash, ethereum, and bitcoin, which is the largest with a market cap of $72.4 billion.

Like bitcoin, it runs on a blockchain, which is a public ledger of transactions that can’t be tampered with.

• There is a limited supply of 84 million litecoins, compared to 21 million bitcoin. Currently 52,679,982 litecoin and 16,530,563 bitcoin are in circulation.
• Litecoin transactions currently take just over 2 minutes to go through compared to about 100 minutes for bitcoin.

Litecoin creator Charlie Lee recently explained that he sees the cryptocurrency as being a key player in payments, whereas bitcoin is more a store of value.

“Bitcoin will always be the gold standard because bitcoin will have the strongest network, the most secure, the most money mining it,” Lee said in an interview with blogger Crypto Hedge, which was posted on YouTube on Monday.

“Litecoin will be second to that and bitcoin being the most secure will obviously cost more … Litecoin transaction will cost less. So Litecoin will provide a niche where it will be more used for payment whereas bitcoin will be more used for storing.”

Lee is a former Google employee who began the Litecoin project in 2011.

“My analogy with gold and silver is kind of that idea where gold and silver were used as money but at certain times, gold would be more used for keeping it there whereas silver would be more used in coins for purchases. So yes you can use a gold coin to purchase, but it’s not as convenient.”

Litecoin is benefiting from the broader interest in cryptocurrencies. Ethereum, bitcoin and ripple have all seen big price rises this year.

On Tuesday morning, 36.9 percent of litecoin buying happened in Chinese yuan, followed by 22.4 percent in Korean won, according to Cryptocompare. Depending on the time of day, buying in Korean won is larger than yuan.

In South Korea, authorities have been looking at ways to regulate digital currencies, which is buoying the market.

According to CNBC,Thomas Glucksmann, head of marketing at cryptocurrency exchange Gatecoi said that “regulation will bring an aura of legitimacy to the country’s burgeoning speculative cryptocurrency market and will encourage more participation from individual and institutional investors.”

Nearly 18 percent of litecoin buying is happening in bitcoin, which is also showing that current cryptocurrency investors are looking to diversify.

Earlier this year, the litecoin community activated an upgrade to the system called Segregated Witness or SegWit. This essentially increased the capacity of the blockchain and boosted transaction speed.

It’s the same process that happened with bitcoin a few weeks ago. Now the cryptocurrency world is looking forward to something called the Lightning Network. This is a new technology that aims to make transactions with cryptocurrency instant as well integrate the different digital coins.