Litecoin has been very stable for months, hanging around $4, but suddenly the currency began moving, doubling in hours, reaching a high of slightly above $8. Today it has further increased by almost 20%, but is this a blip or has something changed?
The currency has been overshadowed recently by more innovative coins such as ethereum and monero, but it seems to have attracted the attention of Bitcoin Core supporters. That’s because Litecoin intends to implement segregated witnesses (segwit), an upgrade which would allow the Lightning Network to function.
Segwit has stalled in bitcoin for months, with many considering it a rejected proposal. For litecoin, it appeared to be a done deal, but it seemingly stalled there too, with miner’s adoption of segwit standing just above 20%.
However, a number of litecoin explorers mistakenly reported segwit had reached 50%. It appears price began moving around that time, somewhat retracing down to $6 after it became clear the reported segwit numbers were mistaken.
Then, F2Pool began signaling for segwit on or around April’s fools. It’s not clear whether they did so as a prank, but segwit’s adoption currently stands near 60% on litecoin. The market seems to have liked the news for price quickly reacted, rising from $6 to above $8.50 and seemingly continuing to rise at the time of publishing.
Segwit now requires around 20% to activate, but whether it does so or otherwise may be less relevant than the attention litecoin may begin to receive. In particular, r/bitcoin has been giving much attention to the currency, probably as a proxy regarding their own push for segwit on bitcoin.
The intricate proxy politics may be less relevant than the potential consideration some Bitcoin Core developers, especially blockstream employees, may move to litecoin if the currency activates segwit while bitcoin does not.
However, the problem for both litecoin and blockstream is the fact that the currency is hardly used. It barely has 4,000 transactions a day, compared to ethereum’s more than 100k daily transactions and bitcoin’s 250k.
Nonetheless, TA says the currency should moon. On a temporary basis, the fundamentals somewhat support this analysis. On a longer time-frame, the currency is of course just a copycat, but if blockstream employees do move to litecoin, it may become somewhat more interesting.
Then, this space may have a three-way race. A scalable bitcoin focused on attracting mainstream adoption, a tech focused ethereum more concerned with smart contracts, and a layered litecoin that uses a sidechained approach.
If that does become reality, it won’t be too easy to foresee the outcome. The three might co-exist, or the usual 80/20 rule may come into force. Regardless, if blockstream employees do move to litecoin, any prudent investor would wish to diversify and hold bitcoin, ethereum and litecoin. Not doing so would be somewhat irrational.
If blockstream employees do not move to litecoin, the currency will probably go back to being forgotten after some weeks or maybe 3-4 months of segwit related hype and proxy politics. In such event, the third place would still remain open, but litecoin appears to have a chance of retaining it on a long time-frame if and only if blockstream moves to the currency.
Such outcome would probably result in an orderly end to the blocksize debate, with both sides able to compete on a fair basis as judged by the free market. Eth would probably remain the joker card, but the entire field would become once more very interesting with innovation probably blossoming in all corners.