With the price of litecoin rising, cryptocurrency investors have been forced to take another look at the project – one of the longest-running but frequently overlooked public blockchains.

Once widely heralded as the 'silver to bitcoin's gold', litecoin has in recent years struggled to find its value proposition in a sea of more novel blockchain projects. That may have changed, however, now that it could be utilized as a proving ground for a new technical solution.

As profiled on CoinDesk, litecoin miners have recently begun to show their support for Segregated Witness (or SegWit), a blockchain scaling solution originally designed for the bitcoin blockchain.

But whereas political divisions have largely stymied efforts to approve the upgrade for bitcoin, litecoin recently passed its 75% threshold for activation. Should this hold for two weeks, the new code will go live.

According to analysts, the market's recent response to this development has helped give the project new relevance to investors. All in all, the cryptocurrency has more than doubled its market cap in response, rising from $215m on 30th March to $550m yesterday.

Of interest now to traders and investors, however, is whether this capital will stay in the litecoin ecosystem, and whether the project can develop a long-term value proposition.

While SegWit may be a minor code upgrade, analysts argued litecoin's technical improvements speak directly to the quality of the project's development team.

Further, obtaining the consensus needed to implement the update would show the community's ability to work together, one analyst emphasized.

Charles Hayter, co-founder and CEO of CryptoCompare, told CoinDesk:

However, other experts polled for this article suggested that litecoin could at most only succeed in demonstrating the utility of the code upgrade for the bitcoin blockchain.

OTC trader Harry Yeh said that if SegWit is enacted on litecoin, "bitcoin will be sure to follow", potentially removing any competitive edge.

Still, SegWit could potentially prove a driver for litecoin's price, analysts told CoinDesk, if only in the near to medium term.

Should the upgrade take place, Hayter told CoinDesk, he "would expect the value of litecoin to appreciate".

Others suggested that rising value could become more permanent.

Petar Zivkovski, COO of leveraged trading platform Whaleclub, argued that, since litecoin and bitcoin have similar codebases, litecoin could gain some of the bitcoin's market share should scalability remain an issue for the latter.

"SegWit activation is very likely to create a mid-term bullish trend which will increase litecoin's market cap," said Zivkovski.

However, he concluded that any lasting benefits for litecoin are also good for bitcoin, given that bitcoin is the cryptocurrency that can most readily be exchanged for fiat currencies.

He concluded:

Tiny workers image via Shutterstock

This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.