2022: C'mon In, The Litecoins Are Fresh

First small crypto trade of the new year placed. And some other thoughts.

In some kind of dystopian hellscape where the government misinterprets everything and acts against the market’s favor… ETH could be considered a security of some kind, again only in this mirror, darkly kind of alternate universe that becomes possible, depending on how triggered the establishment is by the resilience of crypto.

If ETH’s pre-mine or proof-of-stake ambitions drag it into the regulatory spotlight, it won’t drag BTC and other proof-of-work Satoshi Nakamoto style coins down with it, since they’re clearly not securities at all, nor are they “interest bearing” in the way that regulators could misinterpret what ETH’s proof-of-stake mechanism does — even in the mirror, darkly bureaucratic malaise to come, a Bitcoin or Litecoin or Dogecoin is simply not a security, it’s not an interest bearing bank account, it’s more like a digital piece of art, or a digital commodity — like a digital diamond, or a digital barrel of oil.

The other reason why I bought Litecoin (LTC) as my first crypto trade of 2022, instead of more ETH (which is arguably my favorite crypto still, overall), is that Litecoin is an interesting insurance policy against Bitcoin’s improbable failure, but the rise of crypto itself as an asset class.

I like things that serve more than one purpose, and in this respect Litecoin is both a speculative coin I like on the merits of its brand age and overall rarity (with about 83% of all Litecoins already mined), and on the basis that it performs a lot like Bitcoin… it is also available on some of the same big platforms, including PayPal and Interactive Brokers / Paxos… yet it is not Bitcoin.

It has a different mining algorithm, for one thing, being built ~2 years after Bitcoin first launched. If Bitcoin’s SHA256d algo were for some reason cracked or compromised — by a malicious state actor, by a future quantum computer of some kind, etc. — the same vulnerability may not befall Litecoin, since its mining algorithm is based on Scrypt, not 256d.

Also, even though both are proof-of-work, Scrypt uses far less energy than 256d, on average — when the enviro Nazis come for the cryptocurrencies, as they will one day, this could be a compelling defensive point.

Litecoin is also a thought experiment, to me. If Bitcoin isn’t a fad, if it is instead some persistent new economic model that Satoshi Nakamoto pioneered, where peer-to-peer demand can mainstream something not backed by any government, backed only by its credible rarity — then this economic model should buoy other networks, not only Bitcoin’s network, but others that perform very similar to it.

Litecoin is the best candidate for this experiment, in my opinion at least, since it was the first crypto to launch after Bitcoin itself, and since the recognition / branding footprint is similar — if you have heard of Bitcoin or Ether, you have likely heard of Litecoin as well.

And ideally, ETH will remain a leader in the space. So much is being built around it. But if you also have coins that can’t be harpooned by malicious or shortsighted regulators, you may sleep better through this currency evolution.

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