After trading horizontally for the past week around the $150 mark, the Litecoin price has surged 56% reaching highs of $235. This comes in response to the recently announced Litecoin Cash hard fork, which has seen investors buying up LTC looking to cash in (pun intended) on the February 18th fork.
If you are not familiar with this terminology or why it might impact the price of LTC, a hard fork is basically when the developers disagree on the projects direction so split the coin in two. Everything will remain the same with the LTC blockchain, but everyone holding at the time of the fork will be awarded free LTC Cash in a ratio of 10:1. So for every one LTC you will get 10 Litecoin Cash.
Given the price of Bitcoin Cash, this could lead to quite a significant gain for investors. However, other forks have been known to disappear almost entirely. Regardless, there could still be gains to be made by riding the hype wave and selling before the fork, as the price could crash after the distribution.
Why the Fork? Is it a Scam?
As is the case with most forks, Litecoin Cash is claiming to have lower fees and faster transaction times than its counterpart. However, no one can be sure until the network is actually put under real stress. What’s more, it was recently announced that LTC fees will be dropped significantly in the next Core update, averaging around $0.003 – 0.004. Which begs the question, is the Litecoin Cash fork necessary?
Another key difference will be that it is moving to the SHA-256 encryption algorithm, which means that the same mining equipment used for Bitcoin can now also be used with Litecoin Cash. Again, it’s hard to see how this change is significant enough to result in much higher value for the underlying asset. Likely why Litecoin founder Charlie Lee has labelled the fork a scam, tweeting:
PSA: The Litecoin team and I are not forking Litecoin. Any forks that you hear about is a scam trying to confuse you to think it’s related to Litecoin. Don’t fall for it and definitely don’t enter your private keys or seed into their website or client. Be careful out there! https://t.co/qXbiIxp5Al
— Charlie Lee [LTC] (@SatoshiLite) February 4, 2018
One Redditor has expanded on the dodgy nature of the fork even further, highlighting how one of the Litecoin Cash team members has a picture emoji in place of a PR photo!
