Litecoin: History, evolution, and comparison between Chinese and American markets
Everybody knows the infamous Bitcoin, with a price that sky-rocketed in 2017 up to a highest value of $19,783. But what ever happened to the other Cryptocurrencies that were developed shortly after?
Lite-, or -lite -depending on whether you use it as prefix or suffix- has been in circulation since late 1920, but didn’t really enter into popular culture until the 1960s (Lite-Brite, a hugely popular toy that allowed kids to create designs with color pegs, was first commercialized by Hasbro in America in 1967, for example, and it’s still being sold today.)
But in the crypto era, Lite means something altogether different. Ever since the concept of cryptocurrencies (‘digital money’) moved from the purely theoretical to a tangible reality, the market has been flooded with hundreds, if not thousands of coins issued as alternatives to the Mother of all Cryptocurrencies, Bitcoin. All these assets, aptly called altcoins, have had various degrees of success. Most have ended up condemned to obscurity in an ever-growing coin sematary. Others, such as Litecoin, remain.
The biggest crypto markets in the world, the United States and China, look and treat Litecoin differently, and so the topic deserves a deeper analysis.
Litecoin is silver to Bitcoin’s Gold
Litecoin is the creation of computer scientist Charlie Lee. Lee, a native of the Ivory Coast, but resident in the United States since he was 13, worked for Google for about ten years in the 2000s, where he wrote code for the now ubiquitous Chrome OS. But Lee’s attention turned to cryptocurrencies when Bitcoin first entered the world stage, and according to the official version, he wrote the blockchain code for Litecoin in his spare time while working for Google.
Lee released Litecoin in late 2011, intending to offer a faster option to Bitcoin’s block creation capabilities (at the time, Bitcoin took 10 minutes to create a new block, while Litecoin only took 2.5 minutes to perform the same operation).
The word itself is a portmanteau of the words lite and coin, and its official website defines it as a “peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world.” Charlie Lee offers a more mundane explanation. He has often been quoted in interviews saying that he created Litecoin as a ‘fun’ and ‘light’ alternative to Bitcoin. Hence, the Litecoin moniker.
Whatever the origin of the term is, in technical terms, Litecoin is an open-source project released under the MIT/X11 license, which enables the user to run, modify, and copy and distribute modified copies of the software, if they so choose. Litecoin has often been referred to as ‘silver to Bitcoin’s gold’ because it uses a large chunk of Bitcoin’s chain code.https://medium.com/pdax/litecoin-and-why-its-considered-the-silver-to-bitcoin-s-gold-ce64ad3c0fbc
Nowadays, Litecoin can be exchanged in a variety of non-traceable methods. These include cash exchanges, bank transfer, cash mailing or anything else you can find on https://agoradesk.com/.
Litecoin in China: Crypto bloodbath in the Year of the Snake
On November 28, 2013, the value of Litecoin suddenly surged by almost 400%. Over the course of three days, the currency’s price rose to $48 coindesk.com/litecoin-price-surges Speculation soon arose about the cause of the spike. Some analysts said it might have been prompted by a tweet from financial broadcaster Max Keiser, who said that Litecoin’s price might soon reach $50. Others said that the surge was caused by favorable exchange rates between Bitcoin and Litecoin.
Less than a month later, however, it would be a different story. In mid-December, the value of Bitcoin began a downward spiral that took the currency’s value to historic lows, trading at just $479. Litecoin, a currency largely pegged to Bitcoin, followed suit. Its price sank to the murky depths of $13 at one point before recovering to $15.
This downturn was precipitated by a single event that would have far-reaching ramifications in the crypto space in China and elsewhere.
2013 was the Year of the Snake in China. According to the Chinese zodiac, the slithering creature represents traits like intelligence, gracefulness, and materialism. Snake-type personalities do not jump into situations, choosing instead to muse about it long and hard.
Either way, the Snake took a huge chunk out of the local crypto market that month, as Chinese regulators moved to ban its banks from enabling any transaction involving Bitcoin.
Litecoin, an American perspective
The sudden crackdown of Chinese authorities on Bitcoin sent ripples around the world. Though the Chinese government stopped just short of outlawing Bitcoin, the trading ban inflicted grievous damage on the currency. Bitcoin’s price nosedived. For many, Bitcoin was all but finished.
They were wrong.
Seven thousand miles away, give or take, the United States had a more positive view on cryptocurrencies, at the time anyway. Remember, this is 2013. Barack Obama had been sworn in to his second term earlier in the year, for example. His historic tenure in the White House restored a lot of the nobility and integrity that the US Presidency had not seen for a very long time (George W. Bush was his predecessor, Clinton before that).
Ben Bernanke, chairman of the US Federal Reserve, spoke positively about digital currencies, particularly from the point of view that they could be used to prevent money laundering.
In the same month (November of 2013) when Litecoin’s price surged by almost four times, Bernanke issued a letter to US Senators in response to a query they had made about virtual currencies
The gist of the letter was that, while the Federal Reserve monitored developments surrounding virtual currencies, it had no authority or power to influence or intervene in these activities. The letter went on to ascertain the potential risks or threats posed by virtual currencies, and the regulations that could be applicable, such as the Bank Secrecy Act (BSA) and anti-money laundering (AML)
The letter, while it mentioned -vaguely- potential risks such as money laundering, also said that ‘there are also areas where they (virtual currencies) may hold long-term promise.’
Bitcoin enthusiasts and investors immediately latched on to Bernanke’s words, which proved to be a much-welcomed boost for Bitcoin. Its value rose to $785 in a matter of days.
Litecoin, too, profited from Bitcoin’s resurgence, its price racing to almost $50 before the crash of December happened.
A view to a possible future
In The Terminator (James Cameron, 1984), Kyle Reese attempts to explain to Sarah Connor the mortal danger she faces. When Sarah questions Kyle’s story about her future role, he says ‘one possible future, from your point of view. I don’t know tech stuff.’
Cryptocurrencies, just like fiat money, are greatly affected by market factors. Be it government decisions, or a letter from a prominent figure in the financial spectrum, external influences can boost or decapitate a currency in a matter of hours. Because of this dependence on external factors, it is hard to see what the future of Litecoin might be. It currently ranks 7th in the top ten virtual currencies, but government-issued regulations or regulatory bodies might deal a crippling blow anytime.