Litecoin, a cryptocurrency that is down by a steep 48% this year, witnessed a sharp but brief spike in its prices yesterday after an entrepreneur backed by American Express expressed enthusiasm for its smart contracts during a Reddit Ask Me Anything (AMA) session. The cryptocurrency gained as much as 13% within a couple of hours during that time period.
Abra is a San Francisco-based digital wallet company that has raised $40 million from the likes of American Express Co. (AXP) and Foxconn. During the Reddit AMA yesterday, the company’s CEO, Bill Barhydt, explained his reasons for adding litecoin to their smart contract solution. (See also: Why Litecoin Is Vastly Underrrated.)
“We went with Litecoin as the second asset class, after bitcoin, for our smart contract investing solution for 3 primary reasons: 1. commitment to bitcoin compatibility: core roadmap, p2sh support, lightning support, etc; 2. slightly better scalability than bitcoin in short term (block size and block times); 3. mining fees which are primarily a function of #2 although this is more of a short-term benefit as mining fees would likely sky rocket if we’re successful anyway!,” he said. According to Business Insider, which claims that litecoin’s price rose by as much as 15%, this was the primary reason for the crypto’s price jump yesterday.
Is Litecoin Out of the Woods?
Not much detail is known about the release date, platform or functioning of the proposed smart contracts. In fact, some commenters on Reddit have surmised that the smart contracts will “work like magic.”
The increase in prices for litecoin is welcome after the cryptocurrency crashed following the closure of its LitePay payments solution. That event also occurred following a disastrous Reddit AMA of its CEO during which he was unable to provide details or answer basic questions related to the proposed system’s functioning.
Litecoin’s price has tracked that of the general cryptocurrency ecosystem, which has undergone a prolonged slump during the last two months. Yesterday’s jump also occurred in tandem with a rise in valuation for other cryptocurrencies. And it also fell along with valuations for other cryptos. Litecoin fell in the hours immediately following the spike and has lost approximately 13% of its value. At 17:00 UTC, it is trading at $118.44, down by 13% from its highs yesterday. The sudden increase in litecoin’s price is consistent with previous valuation jumps for the cryptocurrency. For example, its price shot up last year briefly in December last year. But the jury is still out on the reasons for that surge in prices. (See also: Litecoin’s Price Surge: 5 Likely Reasons Why It Occurred.)
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