Litecoin (LTC): LitePay and the Future of Cryptocurrency Transactions
Litecoin (LTC)–Litecoin’s price surge this week has paved the way for a recovery in the crypto marketplace. While some of the value is being pumped for unscrupulous reasons (namely the expectation of free coins, a la Bitcoin Cash, through the upcoming hard fork) Litecoin has distinguished itself as a cryptocurrency dedicated to usability and utility through transactions. Litecoin investors, developers and founder Charlie Lee have correctly recognized that the future of cryptocurrency is through commerce adoption. If people can spend the currencies, as they would any form of money, the technology behind crypto suddenly becomes far more attractive than as a niche form of asset speculation. While Litecoin Cash might be muddying the water of an otherwise exciting price run, Litecoin is also being recognized for its value as a currency-alternative to Bitcoin, with cheaper fees and faster transactions.
LitePay is another major development that investors are taking notice of.
What is LitePay?
LitePay is a payment processor that exchanges Litecoin for government fiat anywhere in the world. The system is designed to be the world’s first cross-border, international cryptocurrency payment network, with an emphasis on being an easy-to-use solution for business looking to implement cryptocurrency. LitePay, as the name suggests, only accepts Litecoin for transactions and immediately converts the payment into the fiat-denomination of the seller’s choice. This solves two problems currently plaguing the adoption of cryptocurrency commerce: the first is sellers who wish to deal with crypto customers while retaining their sales in fiat. The second is the highly variable pricing of cryptocurrency–at least for now. Because LitePay instantly converts LTC payments to fiat, sellers are not at risk for a fluctuating currency that undermines their pricing structure. Imagine you charge someone 3 USD worth of Litecoin for a coffee, only to have that amount be 2.50 USD by the time it clears the books. Merchants want to deal in cryptocurrency and thereby open themselves to a growing customer base–one flush with funds from the past year of appreciation–while mitigating their risk to the sudden price swings.
There are some drawbacks to the current model. LitePay is not dealing solely in cryptocurrency as some advocates would prefer–those especially who envision moving away from government fiat all together. However, it does combine the best of both worlds with an easy to implement payment processor. Crypto enthusiasts or those with substantial crypto holdings now have access to a debit card that can be loaded with Litecoin and converted to fiat in any transaction that currently accepts debit (which is universal in most Western countries). Merchants have a convenient processor that allows them to accept Litecoin at a locked-in exchange rate, thereby eliminating the uncertainty of crypto payments (on the seller’s end).
How this Could Change the Landscape of Litecoin and Cryptocurrency
Litepay is underappreciated at this point because of the fees and the exchange of crypto to fiat. Most hardcore crypto enthusiasts–which make up the majority of crypto blogs and forums–are dismayed by the idea of transferring their coins back to fiat instead of having merchants accept the Litecoin as-is. There is also a decided lack of excitement over customer-burdened fees, a feature most U.S. based debit card users have never had to deal with, at least not directly. Merchants are charged with a 1% per-transaction fee, which is a discount from the typical 3% charged by most bank and credit card companies. However, it is not clear at this point if the LTC spender (i.e. the person selling Litecoin in the transaction) will also have to pay a similar 1% fee per debit use. Regardless, fees are a common feature of Litecoin, or any cryptocurrency based transaction, even if they may not total up to 1%. For larger purchases, LitePay may not be ideal on behalf of the customer due to the 1% fee. But for smaller purchases, such as coffee, movies or groceries, LitePay is still the simplest method for transacting with crypto. Compare that to the current method, which would require cashing out of Litecoin through an exchange that accepts fiat, transferring that fiat to a linked bank account and then spending. LitePay allows for the payment to be made in one step, with one card that can be preloaded with Litecoin.
LitePay is a symbolic step forward in the maturity of cryptocurrency. The past several years have seen cryptocurrency going from tech-nerd/hobbyist obscurity to household name commodity. Now, in 2018 and beyond, the onus of the cryptocurrency industry should be on real-world implementation and usefulness as a currency. Gold can sit in a storage locker and appreciate over time. Bitcoin, Litecoin and other cryptos, which are not backed by any physical product that has material scarcity, do not have the same luxury. For crypto to relegate itself solely to an asset class–such as gold, real estate and stocks–undermines the value of these technologies as moneyed currencies. LitePay now allows anyone, on both sides of the buyer-seller equation, to participate in cryptocurrency with a simplistic processor. Litecoin customers can go about their day to day lives using LTC exclusively. Merchants can tap into the growing cryptocurrency user base and a booming financial market with a payment processor that protects them against volatile exchange rates. It’s a win-win for both buyer and seller, with the added bonus of greatly increasing the usability and real-world presence of cryptocurrency.
How Does LitePay Benefit Litecoin Investors?
For starters, increased liquidity. Investors who hold Litecoin, particularly those who have large sums of LTC, now have an outlet for regularly spending their coins. Just like a typical bank-account linked debit card, LitePay users can carry their entire holding of LTC on a ready-to-use card that is accepted anywhere that takes traditional debit. That increases the liquidity of coins in the market, as people start spending Litecoin rather than exclusively holding it. We’ve discussed in the past how deflationary currencies are antithetical to consumer spending. LitePay at least gives customers a simple, one-step solution for spending their LTC as opposed to stashing away their coins in private wallets or exchanges. The movement of currency through the market drives up the demand for Litecoin, as those speculating on exchanges combine their purchasing power with LitePay users transacting for goods and services. Demand is beneficial for both the price of LTC and also the market interest–as more retailers begin adopting LitePay and tapping into the industry’s consumer base, other businesses will feel the pressure to follow suit. This could lead to the oft-mentioned domino effect in adoption: if enough smaller merchants start accepting cryptocurrency, Amazon, Walmart and other big-name players will have to give crypto a consideration (the opposite approach could also occur–if Amazon dives into crypto expect everyone else to follow).
Bottom line: increased availability, utility and ease-of-use is going to benefit both Litecoin and the industry as a whole. The general media and cryptocurrency skeptics have long been able to point out that there is little use for crypto outside of price-based speculative trading, similar to a ponzi scheme. LitePay now provides a strong counterargument. You can buy and transact exclusively in Litecoin and merchants have a legitimate processor for accepting cheap, fast Litecoin payments for real-world goods and services.
Ex-Google engineer, Charlie Lee is the creator of Litecoin and MD of the Litecoin Foundation. Previously Director of Engineering at Coinbase, Lee now focuses full-time on Litecoin. To enhance fungibility and privacy of LTC, integration of MimbleWimble has begun, however Lee has recently announced a crowdfunding launch to fund the development.