Tag: Charlie Lee

Will Facebook Adopt Litecoin?

Will Facebook Adopt Litecoin (LTC) digital currency?

Posted on | by [email protected]

Back in December 2017, Litecoin creator Charlie Lee announced that he sold and donated all of his Litecoin holdings, attributing the decision to a potential conflict of interest. Around the same time that he sold his stake, a Facebook VP of messaging products joined the board of directors at Coinbase. Many have put the two events together, speculating that the potential conflict of interest that Lee was referring to relates to Facebook’s potential intentions to take on LTC as a cryptocoin within its platform.

So, are the rumors true?

At this point, it’s hard to say. But Facebook CEO Mark Zuckerberg has certainly expressed the importance of cryptocurrencies in light of a larger debate surrounding centralization versus decentralization in the technology sector today.

“Technology was expected to give people more control over their lives,” Zuckerberg wrote. “But as a handful of technology companies become the dominant players and governments used technology to monitor citizens, people increasingly believe technology is becoming a controlling, centralized power.”

In this type of landscape, decentralized technology is gaining prevalence as an increasingly important- and viable- alternative. “[Cryptocurrencies] take power from centralized systems and put it back into people’s  hands. But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how to best use them for our services,” Zuckerberg wrote.

Why Litecoin?

There are multiple reasons why Litecoin could be the cryptocurrency that Facebook chooses to utilize on their platform. Technically similar to Bitcoin, Litecoins are also created through the process of mining, but Litecoin has 84 million while Bitcoin will only have 21 million. This means that as demand increases, there will be a larger circulation of Litecoin to go around.

Furthermore, Litecoins are more susceptible to up-scaling than Bitcoin. Both employ the Proof of Work concept, but use different algorithms to do so. Bitcoin uses SHA-256, a complex algorithm and form of data processing that uses a large amount of energy. Litecoin, meanwhile, uses Scrypt, which is easier to run and more energy-efficient.

Additionally, the generation times of Litecoin is significantly faster than Bitcoin’s block generation time of Bitcoin (2.5 minutes versus 10 minutes), and the transaction fees are much smaller, making it a more appealing choice for large enterprise adoption.  

Litecoin in Your IRA

If Facebook partners with Litecoin and offers the cryptocurrency as a payment option in the platform, it could set Litecoin’s price to a record level high. If you’re looking to diversify your retirement portfolio with alternative assets, now is the prime time to consider adding Litecoin.

Here at Bitcoin IRA, we’re the world’s first company to allow customers to purchase Bitcoin and other cryptocurrencies for their IRA or 401(k) retirement accounts, and Litecoin is one of our supported coins. Give us a call today so we can facilitate the process.

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Charlie Lee evens the ground for cryptocurrency comparison, proposes volume weighted market cap

Posted on | by [email protected]

When it comes to cryptocurrency comparison, people immediately look up to market capitalization as the most reliable metric as it represents currency’s core market value. However, as the cryptocurrency ecosystem is still developing and is a nascent one, their unique characteristic pave way to practices which intentionally or accidentally influence market cap to a great extent. This is exactly what Charlie Lee explained in his series of tweets on 8th February. The creator of Litecoin and Director of Engineering at Coinbase explained through these tweets how market capitalization is not a fair ground for cryptocurrency comparison. The tweets explain how few cryptocurrencies are purposefully locking up coins or destroying them to increase market cap and hence the need for a new grounds for comparison. Let’s dive deep into what Lee is suggesting as alternate:

The problem with Market Capitalization:

Lee explains that with low volumes, the volatility will remain strong and only push prices higher. This would lead to increased market cap but in reality doesn’t reflect the true value of the cryptocurrency. A good example for this would be the launch of Z-cash.

During the first few days of the launch, Z-Cash was illiquid and had a dearth of volumes which increased the volatility. The prices touched an instant high taking Z-Cash’s market cap higher than few of the already existing cryptocurrencies. While in reality this wouldn’t be a measure of the actual value as the currency is new and low on volumes. This will lead to a possibility where a coin with $ 1 Million market cap, may really be worth only $1000 as the daily volume is only $10.

The proposed solution:

To lay down the alternate for the said problem, Lee bases his idea on the fact that Bitcoin and Litecoin volumes are a bit over 1% of their market cap. Using this 1% as the benchmark, Lee has suggested Volume weighted market cap. The volume weighted market cap would reduce the market cap by how much the trading volume is less than 1% of the market cap. Hence the Volume Weighted Market cap would be Market cap times minimum of 1 or percentage volume per market cap. Basing on this method Lee posted the comparison of VWMC in descending order of various cryptocurrencies and that provided a new perspective.

VWMC = MC * Min(1,VOL*100/MC)

Hence Bitcoin and Litecoin’s VWMC would be the same as their market cap because their daily volumes are more than 1% of their market cap. Similarly a coin with $10 Million market cap but only $50K in daily trade volume will have its VMWC reduced to $5 Million. Hence this indeed becomes a very accurate and better way of comparing cryptocurrencies.

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