The analysis I did in the original post showed that litecoin was fairly valued with respect to bitcoin at 0.023 BTC if we assume that "litecoin is the silver to bitcoin's gold."  The next question is how accurate is that assumption?

I would argue that it's not accurate.

There are many ways I can imagine litcoin having less of an economic roll than silver (WRT gold), and few ways I can imagine it having more.  Yet the current price of litecoin is fair only if litecoin achieves some imagined economic roll that it has yet to achieve.  Why purchase litecoin at 0.025 BTC hoping that it will become the "silver to bitcoin's gold" if the expected price should it attain that economic roll is only 0.023 BTC?

Why did society evolve to have two monetary metals (gold and silver)?  Why not just one?  I would argue that the fundamental reason for the monetization of silver was that it solved gold's divisibility problem.  A 1 oz gold coin was the equivalent to a month's wages for many people.  It simply wasn't practical to shave off a small amount of gold to pay for a loaf of bread that represented 15 min of work.  

With bitcoin there is no divisibility problem (and soon there will be no practical limit to bitcoin transactions per second).  Bitcoin is very close to the ideal form of money all by itself.      


That being said, I do believe I understand the true economic roll that alt coins like litecoin will play as the cryptocurrency economy grows.  But that's a topic for a different post.