What is Litecoin?
Litecoin($LTC) is a decentralized peer-to-peer cryptocurrency created in October 13, 2011 by Charlie Lee. Litecoin was inspired by Bitcoin and is similar in many ways. Litecoin differs from Bitcoin because the Litecoin Network aims to process a block every 2.5 minutes, rather than Bitcoin’s 10 minutes, allowing Litecoin to have a faster transaction confirmation. Litecoin touts itself as being silver to Bitcoin’s gold.
Today we highlight some pros and cons for Litecoin($LTC).
Pros:
Lightning Network Possible Integration With Litecoin
The Lightning Network is a system of smart contracts built on top of the base Bitcoin blockchain that allows for fast, cheap payments directly between two parties. The Lightning Network’s use of payment channels effectively allows users to transact with each other directly rather than broadcasting their business to the entire world. By tracking their payments between each other on their own, the two parties are able to avoid expensive and time-consuming interactions with the blockchain.
If there is some sort of dispute regarding balances on the Lightning Network, either party can send the last valid state signed by both parties to the blockchain which is immutable and cannot be changed. The key benefits of the Lightning Network include: lower fees, instant payments, and the potential for improved privacy since these transaction are not stored in a public ledger forever. However, a downside to the benefits of the Lightning Network is that it requires users to open at least one payment channel to get started.
Some people say the Lightning Network on Bitcoin will kill any reason to use Litecoin. However, it makes economic sense for a Lightning Network transaction to go through Litecoin when Bitcoin networks are congested. Charlie envisions both Litecoin and Bitcoin will work together to solve the world’s transition needs in the future.
In a blog post by Charlie, he said the following:
“Think of it being two highways: Today, Bitcoin is packed full of cars and Litecoin is empty. Even with Bitcoin packed, the cars are not coming to use the Litecoin highway today because it’s not connected and it’s inconvenient (centralized exchanges and slow on-chain transfers) to go across. Lightning Network will build bridges over the highways. But a side benefit is that these brides will connect both highways together. Maybe the bridges on Bitcoin are enough such that cars will stay on the Bitcoin highway. My bet is that the convenience and the cheaper tolls on Litecoin highway will convince cars to cross over and use Litecoin. But we won’t know until both are built.”
Arba Global Choosing To Use Litecoin Smart Contracts
Arba is a player in the cryptocurrency world which supports more than 20 digital coins and 50 fiat currencies. Arba is an application that is designed to support any investor in the retail sector that is focused on extra exposure in digital assets.
Arba had committed to using Litecoin for it’s smart contracts. Abra’s Ceo Bill Barhydt saw compatibility with Bitcoin as a major factor in the company’s choice of Litecoin over Ethereum-powered smart contracts:
“We went with Litecoin as the second asset class, after bitcoin, for our smart contract investing solution for 3 primary reasons: 1. Commitment to Bitcoin compatibility: core roadmap, p2sh support, lightning support, etc; 2. Slightly better scalability than bitcoin in short term (block size and block times); 3. Mining fees which are primarily a function of #2 although this is more of a short term benefit as mining fees would likely sky rocket if we’re successful anyway.”
Cons:
Charlie Lee, Founder of Litecoin, Sold All of His Holdings
On December 20th, 2017, Charlie Lee announced that he sold all of his Litecoin holdings via selling on the exchange and donations. Charlie said in a blog post, “For the first time in 6+ years, I no longer own a single LTC that’s not stored in a physical Litecoin. (I do have a few of those as collectibles.)” According to the announcement, Lee decided to sell all of his Litecoins because of the potential for conflict of internet, given the influence his personal statements can have on the coin’s price. Oddly enough, the price of Litecoin was around $340 when Lee announced he had sold all of his Litecoins. The all time high of $371 was reached a day before, on December 19th, 2017.
Alternatively:
Charlie Lee could have locked up all of his coins, via a smart contract, for say
10 years. This would have showed investors he actually believed in his coin… rather than selling it near the all time high. Furthermore their competitor, Bitcoin Cash, was released as a trading pair (BCH/USD) on GDAX.com the same day Charlie Lee announced his blog post.
Closure of LitePay
On March 26th, the Litecoin Foundation issued a statement informing the public about the closure of LitePay, which was being touted to be a potential merchant solution that would work the same as Bitpay. In the statement, Litecoin director of operations apologized for not doing thorough due diligence before promoting the company. The statement addressed to the entire Litecoin community stated, “We are greatly disheartended that this saga has ended this way.”
As much as Litecoin tries to downplay LitePay’s fallout, there is no doubt that the initial announcement of LitePay had a positive impact on the price of Litecoin. In mid-February, Litecoin’s value increased by more than 30% following LitePay’s announcement. Since having failed to deliver on their promises and ultimately backing out completely, the Litecoin community is trying to to find the light in this situation.
Concluding Points
Litecoin’s success definitely is in the hands of Bitcoin and the successful integration of the Lightning Network. Litecoin is currently struggling trying to recover from the fallout from LitePay, which was supposed to help Litecoin reach more users. Litecoin, like any other coin out there is a risky investment. As per usual, do your own research and come up with your own decisions!
Cheers,
The Blockchain Musketeers
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Disclaimer: The information provided by the Blockchain Musketeers is our own opinions and should not be taken as investment advice, financial advice, or any other sort of advice. Nor should this information be used to determine if you should buy, sell, or hold a cryptocurrency. Please conduct your own due diligence and consult your financial advisory before making any investment decisions. Only invest money which you are willing to lose, as cryptocurrencies is not suitable for all users.