Markets Unfazed By Abra’s Litecoin Announcement, Users Find Flaws
In the past week, AmEx-backed Abra announced using the Litecoin smart contract system for use in its cryptocurrency payment application. The market reacted positively towards this news, but only for a few hours, following which Litecoin (LTC) prices went into a nosedive. BTCManager tells you why.
“Partnership” with an Open-Source Network
Perhaps the simplest explanation lies in the aftermath of the LitePay fiasco, as well as Charlie Lee’s announcement that the Litecoin Foundation has not partnered with Abra and they are merely using its open source code.
Litecoin creator Charlie Lee about the LitePay closure:
“Like everyone else, we got too excited about something that was too good to be true and we optimistically overlooked many of the warning signs.”
Litecoin’s Appeal Against BTC
Founded in 2011, the Litecoin Foundation created LTC with a clear focus on solving the many issues developers and users had with Bitcoin (BTC), most importantly scalability and possible inflated network fees.
This fallacy, due to which LTC was created, proved to be correct in 2017 when Bitcoin’s network fees famously reached $50 per transaction. During that time LTC remained a cheap and fast payment network.
Litecoin is also easier to mine: Despite the two networks sharing similar proof-of-work (PoW) concept, the algorithms that the two blockchain systems use are quite different.
Lee’s proposed mining algorithms are significantly simpler than those of Nakamoto’s, which, in turn, means LTC can be mined on computers which are less powerful and thus consume less energy.
Abra Chooses Litecoin Smart Contracts over Ethereum
Litecoin’s compatibility with bitcoin was a “major factor” while selecting the Litecoin network, said Abra C.E.O Bill Barhydt.
Explaining the move on a Reddit AMA, Barhydt said that Litecoin offers “unsurpassed lightning support; it is scalable and compatible with the Bitcoin blockchain.” Speaking about the comparison between Litecoin and Bitcoin, Barhydt adds that the former offers low transaction fees which fit into Abra’s near future goals.
Barhydt further added that Litecoin would become the “primary asset class” for Abra in the next few weeks.
Answering a question Reddit users posted about the difference between Abra and other cryptocurrency exchanges, Barhydt said that Abra could not be compared with major exchanges like GDAX and Binance. This difference is because Abra is an application designed to support any investor in the retail sector that is focused on extra exposure to digital assets.
He maintained a positive outlook on Litecoin’s price, saying:
“If Abra can attract a significant amount of users it will further drive demand for Litecoin which in turn could reduce the circulating amount of LTC, pushing the trading price up.”
Reddit Users Find Flaws
With the recent announcement of LitePay’s shutdown, investors and cryptocurrency enthusiasts maintained a calculated approach towards investing in LTC. A few users quickly discovered issues with the Abra app, and soon enough, voiced their concerns on the litecoin subreddit.
According to the post, users faced issues with their accounts, after several were blocked following deposits in American dollars.
Users also pointed out flaws in the registration process for Abra, namely the lack of Two Factor Authentication and requiring a social security number with the initial setup. Given the numerous regulations with regards to cryptocurrencies daily, it is evidently integral to have secure and legal applications to prevent any government or hacker intervention.
(Source: App Store)
Adding to this, the user reviews on Abra’s App Store listing seemed to be dim, with many reporting account lock downs and dollar transfer issues.