Litecoin SpacesuitX Analysis

Overview

Litecoin (LTC or Ł) is a peer-to-peer cryptocurrency and open source software project. Creation and transfer of coins is based on an open source cryptographic protocol and is not managed by any central authority (1). It is one of the oldest cryptocurrencies and is an early fork of bitcoin, and as such has many similarities to the original. Often seen as the silver to the gold of bitcoin, Litecoin is still instantly recognizable and holds a place in the top ten cryptocurrencies.

Security

Score: 9, -1 for centralized mining. (weighting – 15%)

  • Security of the blockchain being used: Litecoin blockchain in many ways is like the Bitcoin blockchain, which means highest level of security, time-tested since 2009 on Bitcoin and since 2011 on Litecoin itself. Also, faster block time mean greater resistance to a double spending attack over the same period as bitcoin.
  • Centralization: Litecoin mining is quite centralized. 6 biggest pools control 91.8% hashrate, with the 2 biggest – Antpool and F2Pool in control of 32.6% and 28.4% respectively (2). Charlie Lee: “Bitcoin and Litecoin’s Achilles heel is miner hardware and pool centralization. This is a clear and present danger (3)”.
  • Other known attack vectors: same as Bitcoin., although it is potentially more resistant to spam attack because it is capable of handling a higher transaction volume.

Participation

Score: 10, fair start can make a good example for this asset class. (weighting – 10%)

  • What are you participating in with this token or coin? It’s simply a a cryptocurrency.
    What portion of earning or equity of a project does my coin represent (if any): this project doesn’t generate any earnings or profit except anticipated (?) price increase due to increased coin usage and limited supply.
  • What portion has been diluted and how? There was no premine of Litecoin, since start coins were distributed as mining reward.
  • How fair and transparent was the issuance process? Absolutely fair and transparent. Source and binary was released almost a week before launch and launch time was selected by forum poll.

Accounting and Legal

Score: 10, no significant issues found (weighting – 5%)

  • How are holdings calculated: holdings stored in open, public, decentralized blockchain.
    Is it open source: yes!
  • Are there significant legal risks for any key contributors, managers or entities involved in this project: Such risks not know at this moment.
  • Is this project legal in jurisdiction important to you: legal in some jurisdictions, grey zone (not regulated yet) in others.

Community, Management & Team

Score: 9, more independent developers could be great. (weighting – 10%)

  • Who is working on this project? Charlie Lee is creator of Litecoin. He is one of the most popular (154k followers in twitter) and respected persons in the cryptocurrency space. In a June 2017 he left the position of Director of Engineering at Coinbase to “shift his focus to Litecoin”4. Now he is full-time Managing Director of Litecoin Foundation Ltd., which is a non-profit organization registered in Singapore (Unique Entity Number 201709179W) (5).
  • Is there a community? There is a significant community interested in Litecoin. Forum litecointalk.org has 7,320 members. Reddit.com/r/litecoin/ has 60,898 readers. Both are active in time of writing.
  • For FOSS, who contributed, how when and why? There are few people constantly contributing to
    Litecoin. For example, there were 8 people mentioned who were directly contributed to v0.13.2.1 Litecoin Core release, not including Bitcoin Core developers (6). Latest commit made 4 days ago.

Supply & Demand

Score: 9, – 1 for high concentration of wealth. (weighting – 10%)

  • Is supply fixed or limited: limited release, geometric series, rate halves every 4 years (840,000 blocks).
  • How many coins will be issued: final total should be 84 million LTC. Right now, circulating supply is 53,164,332 LTC (7).
  • How coins are issued: through mining, scrypt based proof-of-work scheme. Miners are currently awarded with 25 new litecoins per block.
  • Who can change this: can be changed by HF with overwhelming support of developers, miners & community, which is highly unlikely.
  • Who controls large amount of coins: There are 2 addresses which holds more than 1 million of LTC: 1,670,000 (3.14%) and 1,210,000 (2.28%) LTC respectively. There are 74 addresses which holds more than 100 000 of LTC, and they hold 40.15% of all LTC in circulation (8). This is a high concentration of wealth, but is quite a fair distribution in comparison to other coins.
  • What is real market strength and market cap value: Market Cap is $2,918,103,274, 5th position (9).
  • Is there enough market depth to support significant sales at a similar price or is it too thinly traded: I think there is enough market depth with trading volume $131,915,000 (3rd position for today) (10).

Usability

Score: 7 for lack of unique Litecoin specific use cases.  (weighting – 15%)

  • What the coin is and will be used for? Litecoin designed especially for small and fast payments worldwide.
  • What is the problem solved by this? Basically, same as Bitcoin (I’m not going to go into details here since it would be a whole article), but with a focus on faster and cheaper transactions.
  • Do people or will people use it? Why? There are some companies (mostly small) which accept Litecoin already. For example, 20 of them listed by Virtualbanking 25th September 2017 (11) GoCoin helps other merchants accept Litecoin like along with Bitcoin and Dogecoin. Of course, it’s very far from wide acceptance or usage, but much more than most cryptocurrencies.

Industry / Institutional Backing

Score: 6 (weighting – 10%)

  • Are corporations or VC’s participating? I don’t know any corporation or VC participating in this project, except for Litecoin Foundation Ltd.
  • Do exchanges list this token or coin? Litecoin listed on many exchanges, including biggest by volume: Bitfinex, Bittrex, Bithumb, HitBTC, Poloniex, Kraken and others.
  • Do companies build business around it? May be not many, but there are few websites accepting Litecoin only, like litecoingames.com
  • Does the project have major industry or non-industry partners? There are rumors about such major partners, but nothing confirmed yet.
  • What is overall market direction? Cryptocurrency market is booming.
  • Who is the competition? Basically, every other cryptocurrency designed for small and fast payments is Litecoin competitor. But considering the strong position already taken by Litecoin, only biggest of them can try to directly compete with Litecoin. For example, Bitcoin Cash could be Litecoin competitor in the certain conditions.

Technical

Technical Score: 7 for the lack of anonymity (weighting – 10%)

  • What are the technical details? Except other details mentioned above, important thing is blockchain size which for Litecoin now is 9.30 GB (12).
  • If this is using a blockchain does it need one? Yes, it’s impossible without blockchain.
    How much has this been tested? It was tested since launch in 2011, so safe to say it passed time-test. New features should be tested at least by few peoples before implementation.
  • Are the speed and efficiency drawback of blockchain worth it for this project? Yes, since it compensated for this project by significant advantages of blockchain.
    Is this blockchain open or permissioned? Open.
  • How resistant to censorship is this blockchain? Very resistant. To censor it someone should control all hashrate.
  • What anonymity features does the tech offer? Litecoin offers same “pseudo-anonymous” level of privacy as Bitcoin does and can’t compete on this field with coins designed with strong privacy and anonymity features.

X Factor

Score: 8 (weighting – 5%)

  • Marketing. Does this project have recognizable brand, slogan, visual image or other similar distinctive features? Litecoin was positioned as “digital silver” comparing with obvious “digital gold” – Bitcoin. It is a recognizable, memorable and attractive image. Also, the Ł symbol is often associated with the Litecoin, which isn’t as perfect as custom Bitcoin symbol introduced in Unicode 10.0, but still very good. So although Litecoin has some distinctive features and a well-known brand, more work is required to give it an edge over other coins.

LITECOIN SpaceSuitX Analysis Overall Score: 74

Analysis by @BitcoinBarons, September 30th, 2017.

SpaceSuitX methodology is a free and open source analysis method for digital assets by Bruce Fenton, Chainstone Labs (http://www.spacesuitx.org/)


1 https://en.wikipedia.org/wiki/Litecoin
2 https://www.litecoinpool.org/pools
3 https://twitter.com/SatoshiLite/status/857374260226007040
4 https://www.cryptocoinsnews.com/charlie-lee-ends-his-coinbase-career-to-focus-on-litecoindevelopment/
5 https://www.cryptoninjas.net/2017/04/03/litecoin-foundation-successfully-incorporated-singapore/
6 https://github.com/litecoin-project/litecoin/blob/v0.13.2.1/doc/release-notes-litecoin.md
7 https://coinmarketcap.com/
8 https://bitinfocharts.com/top-100-richest-litecoin-addresses.html
9 https://coinmarketcap.com/
10 https://coinmarketcap.com/
11 https://www.virtualbanking.com/companies-that-work-with-litecoin/
12 https://bitinfocharts.com/litecoin/