Litecoin (LTC), the world’s fifth largest cryptocurrency in terms of capitalization, has recently met analysts’ expectations: yesterday its token reached a peak of $ 218, with an increase of almost 30 percent in the last 24 hours, according to CoinMarketCap. This is a 100 percent increase from the low of February 6 ($ 105), although not everyone seems to be happy: some investors – and also the founder of Litecoin, Charlie Lee – are in fact raising concerns about the real factor that led to this result.
It seems that LTC has skyrocketed because of the rumors surrounding an upcoming “hard fork” on February 18, called “Litecoin Cash”. Developers who are working on this move are committed to distributing new tokens to LTC holders, considering that for each individual LTC on the blockchain, 1,371,111 holders will receive 10 Litecoin Cash, or “LCC”.
A hard fork occurs when a single blockchain splits into two without backward compatibility: in short, the code behind the token is substantially modified, creating an old and new version of the digital currency. Bitcoin Cash and Bitcoin Gold are probably the best known examples of hard fork.
To be able to follow a hard fork, it is of course necessary the approval of the holders in the community: all that is needed is in fact that a number of holders with a large amount of a certain token in their portfolios agree in the creation of a new cryptocurrency starting from the original system, with “birth” starting from a certain blockchain block.
But what are the differences between Litecoin and Litecoin Cash? According to what the developers have reiterated, Litecoin’s cash mining will use the SHA-256 algorithm (which already uses Bitcoin), instead of the Scrypt protocol that is used by Litecoin. This will allow those who are already operational and experienced in using bitcoin mining hardware to be able to extract the LCC. In contrast, as Litecoin uses Scrypt, miners will not be able to use “bitcoin” hardware to extract it.
Again, it seems that the cost of transactions for the new digital currency is 90% cheaper than Litecoin. LCC will also provide 4 times the bandwidth of the bitcoin transaction, allowing a larger amount of LCC transactions than equivalent bitcoin transactions.
Having clarified this, it seems that the recent increase in Litecoin’s prices is due to the fact that a large number of investors are convinced that they can benefit from the potential future of this new digital currency. However, warnings and cautions were not lacking. According to Charlie Lee, Litcoin Cash is simply exploiting the popularity of the Litecoin brand to make money: the expert tweeted that “any fork of Litecoin, is a scam for me. Litecoin Cash, Litecoin Plus, Litecoin * … these are scams that try to confuse users into thinking they are Litecoin “.
A CoinDesk analysis published on Wednesday also revealed that the price of LTC was driven by a large number of exchanges from the Coinbase GDAX exchange. The site said that this could be a “sign that less experienced consumers may be active in the market”. It is unclear whether this LTC rally will continue until the fork occurs, or if it has simply been determined by the clamor of the news. But what is clear is that many investors will consider this move as a potential profit-taking.