Litecoin – “the silver to Bitcoin’s gold” according to its founder Charlie Lee – has been among the most popular virtual currencies for years. Litecoin forked from Bitcoin Core back in 2011, and it has maintained a respectable top-5 market position pretty much ever since.
Lee and his team have been doing a lot to increase Litecoin’s use as a peer-to-peer payment system over the past year. They achieved a major milestone in mid-2017 when Litecoin integrated SegWit and Lightning Network functionality. Now, the cryptocurrency has hit another benchmark: it’s first hard fork.
Litecoin’s first fork, uncreatively deemed Litecoin Cash (“LCC”), took place on February 18 at block 137111. Litecoin trading spiked immediate following the fork as bullish coin buyers rushed to take advantage of the new investment opportunity. However, trading has since fallen flat due to concerns over valuation – including a great deal of criticism from Lee himself, who is not involved in the project.
Excitement Over Litecoin Cash Quickly Peters Out
More and more forks are being announced every day, and for the most part investors love them. New coins developed through ICOs are entering an increasingly competitive market, so many enterprises are now forking large, well-established cryptocurrencies rather than launching an entirely new competitor. Just like a remora feeding off shark scraps, these hard forks can add some value to the crypto ecosystem, but for the most part they’re riding on the name recognition of top crypto coins.
This appears to be the case with Litecoin Cash. LCC doesn’t really seem to add any value to the growing cryptocurrency market, but some investors have already made some decent returns on airdropped coins. Litecoin Cash peaked at $9.56 two days after it forked, more than double the coin’s price at launch. However, this early excitement phased out quickly as crypto investors’ limited attention spans have already shifted to the next hot coin. At press, LCC was worth only about $4.50.
Litecoin Cash’s early trading activity does not bode well for its long-term value. With new forks coming out on a regular basis, investors have become accustomed to quick turn-around investment opportunities that many new coins are setting up. People are claiming and then selling airdropped coins as quickly as possible, expecting trading prices to soar in the first few days and then dropping down to more realistic levels. Regardless of the long-term value that these coins are bringing to the market (or not), we can expect this trend to continue.
Harsh Words From Litecoin Founder
In their purest form, forked coins are designed to improve on the original cryptocurrency they split from. Forked coins have the potential to seriously compete with, or even replace, the originals. However – with the limited exception of Bitcoin Cash – no forked coins have managed to break through to become serious competitors. Much of this is due to the fact that most of them bring little to no value to cryptocurrency markets or – even worse – are launched as pump-and-dump schemes by savvy techies looking to get rich quick. According to Litecoin founder Charlie Lee, Litecoin Cash belongs in the latter category.
Lee is actively warning investors to not buy Litecoin Cash, since he claims the fork is just another scam looking to take advantage of the Litecoin branding. And Lee is right to be concerned. Theft and fraud are unfortunately common in the under-regulated cryptocurrency markets, which have lost hundreds of millions of dollars to hackers and scammers over the past year alone.
Whether Litecoin Cash is actually a useful new coin or yet another pump-and-dump scheme remains to be seen. Regardless of the new forks ultimate fate, everyone should be concerned about the long-term impact of fraudulent market activity. Scam coins may make a few people a ton of cash, but they also have the potential to do real damage to the market overall. There is a great deal of skepticism about the Litcoin Cash fork, and its market performance isn’t very encouraging. So, if Lee is right, we shouldn’t expect anything big from Litecoin’s first fork.