Litecoin suffers from Coinrail hack, but the bulls bite back

Litecoin looks poised to rebound, after falls over the weekend took a slight gloss off the strong week it had just enjoyed…

Bullish Litecoin fans were in the pink when the top-10 coin bounced back to near record highs last week.

All signs were looking good for the 2011-created cryptotoken. That is, until the early hours of 10 June when news filtered through that South Korean exchange Coinrail had been hacked (more on that here). Along with Bitcoin, Ethereum and almost all of the top-100 cryptocoins, Litecoin lost a portion of its value as spooked investors sold up and fled the market.

According to Coinmarketcap.com, each of the top 10 tokens had lost between 4 and 8% of their value in the 24 hours to Monday 11 June.

Litecoin bulls say they were prepping for a value rise before the Coinrail debacle. Senior portfolio manager at TMT Blockchain Fund, Gabriel Fransisco, had penned a Medium article on 8 June titled ‘Arise chickun arise’ – a reference to an obscure scene from Cartoon Network’s Aqua Teen Hunger Force which has become the meme of choice for Litecoin fans.

“Litecoin is preparing for a breathtaking moon shot,” Fransisco wrote. “Dubbed ‘the rock’ at times, this clone of Bitcoin…has shown incredible market resilience and price inertia.”

Coinrail derails it all

Coinrail represents the industry’s second major exchange hack of 2018 after $500m was stolen from Japan’s Coincheck Inc in January. Each time news of a cybersecurity leak is revealed, the prices of the major coins takes a nosedive and Litecoin is no exception.

Around $40m-worth of altcoins were leaked in the Coinrail hack, the company confirmed: Fundus X (NPXS), Aston (ATX), and Enper (NPER).

Coinrail’s website was replaced with a ‘System Maintenance’ message claiming 70% of the total Coinrail token reserves were safe, and have been moved to a ‘cold’ wallet – one not connected to the internet at therefore less vulnerable to hacks.

“Two thirds of the coins confirmed to have been leaked are covered by freezing/recalling through consultation with related exchanges,” says the statement. “The remaining one-third of coins are being investigated.”

“Transactions and withdrawals will resume after stabilizing the service. We will update the announcement when possible.”

Lite-headed

For Litecoin bulls, it is the underlying structural assets that the coin has over its bigger brother Bitcoin that explains their devotion.

TMT, which holds a $60m blockchain fund focused on early-stage blockchain startups, is planning its ICO for this autumn and recently signed up with decentralised exchange Waves.

“Bitcoin, Litecoin, and Ethereum are and will be the most recognizable assets and brands that will be the first to be added to any bank’s trading desk or corporate wallet,” wrote Fransisco.

“Whenever Bitcoin transactions spike its blockchain becomes less responsive and fees increase. Litecoin immediately gets a trickle down effect of users that discover how low LTC’s fees are, how much faster it is, and how it is equally if not more reliable.

“The gradual global adoption of cryptocurrencies will see Litecoin retesting and if not breaking its previous all time high.”

Of course all hindsight is 20-20 and Fransisco could not possibly have predicted the plunge in Litecoin value arising from the Coinrail hack.

Can anything disabuse Litecoin fans of this notion? Probably not.

Fransisco concludes: “Pegged at 84 million coins, Litecoin is 4 times faster than Bitcoin and has 4 times the supply. In other words, Bitcoin is to gold what Litecoin is to silver…soon Bitcoin will be used as a store of value and Litecoin will be one of the first real world cryptocurrencies to be used to purchase goods and services.”

Looking ahead, the thing that will really give Litecoin a boost is the thing that every crypto investor wants: mainstream adoption. If it doesn’t happen, Litecoin will be “poised on the brink of greatness” but will never achieve its potential. Until we can actually spend LTC, in reality, all of this talk is just noise.