Ethereum Classic Surges 19% to $14 Ahead of Coinbase Consumer Listing

Francisco Memoria
  • Ethereum Classic recently surged thanks to an announcement from Coinbase, revealing it'll be listed on Coinbase Consumer later today.
  • The cryptocurrency is now trading at little over $14, far from its $47 all-time high.

Ethereum Classic (ETC) has recently surged over 19%, shortly after the popular San Francisco-based cryptocurrency exchange Coinbase announced its adding it to Coinbase Consumer. Its users will be able to buy the cryptocurrency on its website and mobile app later today, August 16.

As CryptoGlobe covered, Coinbase announced it would add support for Ethereum Classic earlier this year, at about the same time leading exchange Binance added ETC trading pairs. The result was a 20% price surge.

Earlier this month Coinbase revealed it was in a final testing phase before adding support for the cryptocurrency, which helped its price surge to a three-month high of $21. The cryptocurrency’s all-time high, reached back in January of this year, came close to $47.

Shortly after Coinbase’s announcement, commission-free trading app Robinhood also revealed it was adding support for ETC, which further helped its price reach the $21 mark, before enduring a small correction and seeing today’s surge.

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Whenever a cryptocurrency is added to Coinbase, it’s price usually surges in what has become known as the “Coinbase effect” – currently affecting ETC. The effect is partly caused by the added liquidity the firm brings, provided by its over 13 million users. Recently, its CEO revealed it was adding 50,000 users a day last year. Notably last year, when the San Francisco-based exchange added Bitcoin Cash (BCH), the cryptocurrency’s price surged ahead of its official announcement.

At the time most believed someone leaked the information, meaning the price pump was a result of insider trading. Recently an internal investigation found there was no insider trading ahead of BCH’s listing.

While ETC is the latest cryptocurrency Coinbase is supporting, the exchange has revealed it’s considering various tokens. As covered, the company announced it’s looking into Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRX).

In a subsequent blog post, Coinbase revealed its institutional custody service, Coinbase Custody, is exploring a range of new assets as well, including Ripple’s XRP, NEO, XMR, and EOS. The company recently made its Index Fund more attractive by halving its fee from 2% to 1%.

Will Litecoin Become Obsolete Due to Bitcoin's Lightning Network?

Litecoin (LTC), a proof-of-work (PoW)-based peer-to-peer (P2P) cryptocurrency which uses the Scrypt mining algorithm, instead of Bitcoin’s (BTC) SHA-256 algorithm, has been criticized for not having a legitimate use case.

Earlier this month, Michael Novogratz, the founder of Galaxy Digital, a full-service digital asset merchant bank, argued that LTC’s recent price surge did not make sense. Novogratz, a former partner at Goldman Sachs, had compared the market capitalization of BTC to that of LTC and noted that LTC was overvalued as he thought its market cap was unjustifiably high, At the time, it stood at about 6% of BTC’s overall market share.

LTC, A “Glorified Testnet” For BTC?

According to Novogratz, the Litecoin network is only “a glorified testnet for BTC” and it does not have a unique value proposition. However, a Redditor with username iDONATELLO posted a detailed explanation on why he believes Litecoin is “useful.” The post claims Litecoin is “the second most secure [cryptocurrency platform] behind Bitcoin.”

The Redditor believes that “high levels of mining decentralization” and Litecoin’s use of the Scrypt algorithm are “the ultimate reason” why the LTC network is able to maintain a very high level of security. iDONATELLO wrote:

[By using] a different algorithm than Bitcoin (SHA256), [the Litecoin network effectively] prevents Bitcoin miners from attacking the Litecoin [blockchain.] Litecoin [also] has the most hash power [when compared to all] other Scrypt coins. This makes it very very difficult to attack Litecoin. [The same argument] cannot be [made] for other Proof of Work coins, [with the exception] of Bitcoin.

$99 Million LTC Transaction Settled In Minutes, For Only $0.40

In addition to providing robust security, LTC transactions can be settled fairly quickly and also in a cost-effective manner. The user noted that “the average transaction fees for a Litecoin transaction is 4 cents and about 2.5 - 5 minutes for a transaction to be considered confirmed.”

Notably, iDONATELLO pointed out that an LTC transaction worth around $99 million was conducted and its associated transaction fee was around $0.40, while its confirmation time was approximately 2.5 minutes.

The Redditor also wrote that Litecoin’s integration of the Lightning Network (LN) protocol could potentially lead to even lower transaction fees and faster transaction settlement times. He added that “much of the criticism of Litecoin is [centered around] it becoming useless since Bitcoin will use LN to increase speed and lower fees.”

However, this argument may not be valid because it doesn’t take into consideration that Litecoin may also “benefit from LN.” According to iDONATELLO:

Naturally, Litecoin is the cheapest and fastest on ramp to Lightning Network. What's really cool about the LN though is the compatibility with the two coins. With atomic swaps, you can swap Bitcoin into Litecoin and make payments much quicker than with Bitcoin alone.

“Bitcoin Is Your Savings Account, Litecoin Is Your Spending Account”

He continued:

The way I see it, Bitcoin is your savings account and Litecoin is a spending account. This is not to say Litecoin is not a good store of value, but Bitcoin is more scarce and more secure, making it a stronger store of value to Litecoin, which is more suited for making payments.

The user further noted that both Bitcoin and Litecoin benefit from the Lindy Effect. He explained:

The Lindy Effect is a theory that the future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy.

Lindy Effect And Network Effect

Per the Redditor:

[The Lindy Effect] applies to both Litecoin and Bitcoin. They are the two oldest coins, genesis blocks created in 2011 and 2009 respectively. Both have survived the test of time, creating more confidence that [their networks] will continue to survive into the future.

Going on to mention what network effect means, the Reddit user quoted Wikipedia as follows: 

A network effect (also called network externality or demand-side economies of scale) is the effect described in economics and business that an additional user of a good or service has on the value of that product to others. When a network effect is present, the value of a product or service increases according to the number of others using it.

“What this means,” iDONATELLO wrote, is “as the user base/community [of a decentralized cryptocurrency platform] continues to grow, it becomes easier for it grow further. Litecoin has grown a massive community over its 7 and half year existence, [remaining] a top crypto since the beginning, making its future growth easier” and sustainable.