Complex Made Simple

Litecoin, the crypto once dubbed the silver to Bitcoin, is now bare bones

Litecoin looks to be going into extinct mode

Litecoin using a very similar code to Bitcoin, in fact a fork of it, save for a few alterations to quicken transaction speeds and improve scalability Litecoin outperformed the broader crypto market which experienced some 200% price rise in less than six months Now, the Litecoin Foundation has a modest $200,000 in total assets, a lean team consisting of one full-time employee and several volunteers, and a struggling business model

Litecoin, as the name indicates was created as a lighter or quicker version of Bitcoin, back when Charlie Lee created the cryptocurrency in 2011 while working at Google.

It gloriously climbed in the crypto price ranks as late as this summer, but now it’s flirting with bankruptcy.

What is going on? 

A quick look at Litecoin

Litecoin using a very similar code to Bitcoin, in fact a fork of it, save for a few alterations to quicken transaction speeds and improve scalability.

 Lee sought to make litecoin technically distinct from bitcoin in two different ways. He wished for every person to be able to mine it using consumer grade hardware and to create a network that transacted faster (approximately 2.5 minutes per transaction compared to the 10 minutes bitcoin offered) and cheaper.  And the strategy was to enable consumers to use Litecoin for smaller and more day-today transactions.

Read: Bitcoin on diet: Litecoin closing in as favourite among cryptos

Did it work?

In April 2017, the Litecoin Foundation (LTC Foundation) was founded with $0 in the bank. When the price of Litecoin went from $10 to over $200 later that year, more than $1 million in assets was created. 

After ups and downs, mostly a result of great fluctuations and volatility with Bitcoin from 2017 onwards, the digital asset rallied from roughly $30 at the start of 2019 to nearly $150 in June, rising more than 375%.

Litecoin outperformed the broader crypto market which experienced some 200% price rise in less than six months.

Litecoin was also halving on August 5, which reduces the number of cryptos in circulation and was supposed to increase its price based on demand/supply rationales.

Read: If you like volatility for the top crypto Bitcoin, it’s coming

What happened next is bewildering

Now, the Litecoin Foundation has a modest $200,000 in total assets, a lean team consisting of one full-time employee and several volunteers, and a struggling business model that its co-founders have promised to fix. 

Xinxi Wang @TheRealXinxi,  Cofounder of @LTCFoundation said “No, we won’t be bankrupted. We will do more if we have more money and do less with less money. We didn’t have a business model. And we have been trying to figure out ways to generate revenue to be self-sustaining. Let us know if you can help.”

Litecoin has been struggling with many difficulties.

In the absence of new capital flow, transaction volumes have remained tame and the August halving has failed to push the price higher, experts say adding that miners have begun to abandon the network, and now hash rates are falling and concerns are being raised about the network’s security.

Tim Enneking, managing director of Digital Capital Management, said: “Of course, traders are taking profits from an asset with no mass appeal, an ever-expanding competitive landscape, no exciting developments to rally around and a founder with no skin in the game.”

 Earlier this year, Charlie Lee, creator of litecoin, reportedly told Litecoin Foundation director Franklyn Richards that “no one is interested in working on Litecoin protocol development work,” according to Trustnodes.

This threw everyone into a panic.  

The sentiment surrounding Litecoin has grown weak lately, according to data provided by TheTIE.io, which analyzes social media activity.

Development issues

Crypto critics are seeing little to no development, with few commits to GitHub indicating a lack of commitment from developers. 

Charlie Lee set the record straight, explaining that much of the development takes place in such a way that is sometimes unclear to critics.