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Crypto review: Risks to Litecoin

Crypto review: Risks to Litecoin

If Mark Zuckerberg sold all his facebook shares, as an investor how would you feel about your holdings?  That’s exactly what Litecoin founder Charlie Lee did in mid Dec 2017, timing it perfectly with the market high. Conspiracy theories soon followed – and the continued success of the project was in doubt due to the perceived lack of confidence in the founder posing real risks to Litcoin.

Litecoin was created in 2011 by ex-Google employee Charlie Lee, and was one of the original alt-coins to compete closely with Bitcoin. Designed as a faster and lower cost alternative to bitcoin, Litecoin reduced transaction times from 10 mins to 2.5 minutes, and boosted its scaling capacity from 7 transactions per second to 56.

With much faster currencies available such as Stellar and Ripple, the use case for Litecoin becomes increasingly uncertain. If the lightening network upgrade goes according to plan, the faster and more scalable transaction capabilities of bitcoin will ask more questions of Litecoin main reason for existence.

Another persistent concern regarding Litecoin is that it promises very little – even the recently hyped Litepay project with Visa was halted indefinitely  – which was announced on the day of the scheduled launch. Its likely this fact was known to the litepay team long before this date.

Given the time it takes for a litecoin transaction, it is not clear how litepay would actually work in everyday consumer retail situations and therefore would be unlikely to get mass adoption.

Long term, there is a risk that as new projects with newer tech and huge world-changing ambitions appear, they may pull investor capital way from older projects like Litecoin.

Lastly, the controversy regarding Charlie Lee and accusation of insider trading as founder of Litecoin and coinbase employee at the time. While not illegal due to the lack of regulation, there are possible ethical concerns, and the potential risk of future legal ramifications. His credibility has been questioned by some.

Although Litecoin had good intentions when it improved on the original Bitcoin design, blockchain technology has grown exponentially since its introduction. With competing protocols such as Ripple able to process instant transactions in the tens of thousands, Litecoin is light-years away from achieving its goal of becoming a global payments system.