Cryptocurrencies have taken the entire world by a storm in the last two weeks or such. Notably, Bitcoin has ruled the roost in the world of cryptocurrencies up till now. This virtual currency, undoubtedly the most talked about asset class today, has spurted over 115% in the past one month. The popular cryptocurrency, due to its volatile nature, has even struck fear among others and confused the heck out of the rest of us. The latest to join the mania is a digital currency called Litecoin. This virtual currency has observed stellar growth in the last few weeks or such, but all in the shadow of Bitcoin. The fourth largest digital currency by market capitalisation, Litecoin, has risen 7,291% against bitcoin’s 1,731% since the beginning of 2017. The prices of Litecoin breached $320 for the first time on Tuesday. Litecoin is trading at $327.95 up 447.64% at Coinbase at the time of writing the report. There are investors who consider Bitcoin-rise to have touched the saturation level and are seeking opportunities in cryptocurrencies such as Litecoin which have a substantial potential to rise further.
What is Litecoin?
Litecoin is a peer-to-peer cryptocurrency and open source software project released under the MIT or X11 license. Creation and transfer of coins is based on an open source cryptographic protocol and is not managed by any central authority. While inspired by, and in most regards technically nearly identical to Bitcoin (BTC), Litecoin has some minor technical differences compared to Bitcoin and other major cryptocurrencies.
Legendary investors from India and around the world have time and again cautioned investors to stay away from it. Thomas Carper, a senior United States Senator once remarked, “Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.”
No fundamental value
Legendary investor Warren Buffett had said in an interview to CNBC in 2014 that virtual currencies especially bitcoin is a “mirage”, adding that investors should “stay away from it”. In the same interview, Warren Buffett said, “It’s a method of transmitting money. It’s a very effective way of transmitting money and you can do it anonymously and all that. A cheque is a way of transmitting money, too. Are cheques worth a whole lot of money just because they can transmit money?… The idea that it has some huge intrinsic value is just a joke in my view.” Reiterating his belief on Bitcoins and cryptocurrencies, Warren Buffett told Marketwatch in October this year: “You can’t value bitcoin because it’s not a value-producing asset,” adding that it is a “real bubble in that sort of thing”.
The rapidly surging price of virtual currency such as Bitcoin, without any underlying asset or value-base, has irked the top banker Jamie Dimon. “Bitcoin is a fraud and will blow up,” Jamie Dimon, the CEO of JPMorgan Chase, said earlier this year, adding, “The currency isn’t going to work.” He pointed out to the absence of an underlying monetary base to support its value. “You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” Jamie Dimon said.
Renowned investor Jim Rogers, sometimes referred to as commodities guru, too has sounded a note of caution on the prospects of cryptocurrencies, preferring to stay away from them for now. “I wish I was smart enough to buy cryptocurrencies.” Jim Rogers said in a recent interview with Kitco news. Further, Jim Rogers seemed to suggest that there might be a bubble building up in the cryptocurrency space. “It looks bubblish when you see the kind of price we see in bitcoins,” Jim Rogers said, adding that he doesn’t own any of the cryptocurrencies. “I certainly don’t know which one will come out on top, or if anyone comes out on top. But, I don’t own any.”