Looking for a crypto investment but sick of hearing about the big names like Bitcoin, Ethereum, and Shiba Inu? Look no further than Litecoin ( LTC -0.44% ) and Stellar ( XLM -1.11% ). These under-the-radar assets don’t generate as much hype as their popular rivals, but they boast unique characteristics that could power long-term growth. Let’s dig deeper.
Founded in 2011, Litecoin is one of the oldest public cryptocurrencies available, second only to Bitcoin, which launched in 2009. While the network has fallen behind newer rivals, it still fulfills its role as a faster alternative to Bitcoin.
On the surface, Bitcoin and Litecoin are very similar. Both verify transactions using a proof-of-work (PoW) mechanism where miners solve computational puzzles to update the blockchain in return for new coins. Neither supports decentralized applications (dApps), which use self-executing smart contracts to offer services on the blockchain.
But Litecoin can handle 56 transactions per second, compared to Bitcoin’s seven. And with a market cap of just $7.8 billion, it’s significantly cheaper than Bitcoin, which is worth a staggering $770 billion at writing.
Litecoin also boasts an active development team, which will help keep it relevant over the long term. In January, the platform released its Mimblewimble upgrade designed to boost the network’s security and privacy by enabling confidential transactions on its ledger. Changes like this could help the coin further establish a niche for itself.
Stellar is a blockchain network designed to facilitate decentralized cross-border payments. The platform’s massive addressable market and impressive technical capabilities should help it stay relevant in the face of stiff competition from similar cryptocurrencies.
Analysts at Facts and Factors expect the digital-remittance market to grow at a compound annual growth rate (CAGR) of 15% to $37 billion by 2028 as international migration trends encourage workers to send money to their countries of origin. Stellar aims to create a cheap and accessible way for these people to move money without relying on centralized financial institutions. And while just about any cryptocurrency can fill this role, Stellar’s advantage comes from its speed.
The network can handle 3,000 transactions per second, leaving Bitcoin and Ethereum (which manage seven and 15, respectively) in the dust.
But despite its perks, Stellar has been overshadowed by its larger rival Ripple, which also focuses on cross-border payments and attracts the majority of investor interest because of its high-profile partnerships with major financial institutions. That said, Stellar is differentiated by its focus on regular people instead of banks. And its market cap of just $5 billion makes it a much cheaper alternative to Ripple, which is worth a whopping $37 billion.
Diamonds in the rough?
Litecoin and Stellar exist in the shadows of their larger rivals. But cryptocurrency isn’t a zero-sum game. And the industry is big enough to accommodate many different blockchains with overlapping functionality. With their dirt-cheap market caps and niche advantages, both assets could have a place in your diversified crypto portfolio.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.