Litecoin up 30% ahead of fork, despite warnings of a scam
Litecoin prices have been jumping in anticipation of a fork, despite clear warning signs.
Litecoin has seen a stark rise in the last 24 hours, with prices rising around 30% from $180 to over $230 in 24 hours. This might be partly down to the generally positive price movements around cryptocurrency, but Litecoin's rise has been especially pronounced even against this backdrop.
The reason for the rise might be the upcoming Litecoin Cash fork. At LTC block 1371111, due to arrive on Sunday 18 February, all Litecoin (LTC) owners will receive 10 Litecoin Cash (LCC). The main feature of Litecoin Cash is that it allows mining through the use of now-obsolete SHA256 bitcoin mining software.
It's possible that Litecoin is being bought up by speculators in order to receive a larger share of the Litecoin Cash.
However, Litecoin creator Charlie Lee has said that in his opinion it's simply a scam, and a worthless coin going for a cash grab. A CoinDesk analysis of current Litecoin trading patterns shows that its prices are being bolstered by high volumes on Coinbase's GDAX exchange. It has a reputation as a place for less experienced traders, and CoinDesk speculates that immature hype around the potential of free money in Litecoin Cash is driving up LTC prices right now.
Since on the topic of scams, any fork of Litecoin, calling itself Litecoin something or other, is a scam IMO. Litecoin Cash, Litecoin Plus, Litecoin *... all scams trying to confuse users into thinking they are Litecoin.
This also applies to all Bitcoin forks trying to confuse.
— Charlie Lee [LTC] (@SatoshiLite) January 30, 2018;
Is Litecoin Cash a scam?
It's not possible to make a concrete judgment one way or another because the definition of a scam hits a grey area in cryptocurrency forks. While the Litecoin creator has called it a scam, he also considers Bitcoin Cash (currently the fourth largest coin by market cap, valued at $1,350) to be a scam. Is something still a scam if the people who "fall for it" make a lot of money doing so?
But the Bitcoin Cash fork arrived at a very different time, in a much less developed market, and had more valid reasons for being created. Litecoin Cash seems unlikely to go the same way.
All Litecoin holders will be getting their free LCC, even those who think it's a scam and want it to fail. The biggest Litecoin holders will get the most LCC, and will probably be the most eager to see it crash.
One outcome of the fork is that the value of Litecoin Cash will crash very quickly after release, as people race to sell off their new LCC as soon as possible while it still has some value. Those who are buying Litecoin now in the hopes of an LCC payday might end up disappointed.
- Hash Wars: Bitcoin Cash ABC takes early lead, but its not over yet
- CoinDesk unveils the “Crypto-Economics Explorer”
- Ledger releases colourful new Ledger Nano S family, up to 30% off
- Cryptocurrency crash: Here’s why the markets are plummeting
- Independent Reserve has a new KPMG cryptocurrency tax estimator
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, XRB, SALT