Lately, the cryptocurrency craze has raised any number of questions, but probably the most pressing one for the payments business is whether any of these hundreds of tokens can ever succeed as an actual payment device. But while fluctuating trading values plague all of the digital currencies, one stands out as having been created specifically to buy things from merchants.
“We’re targeted toward payments,” Charlie Lee, the inventor of Litecoin, tells Digital Transactions News. In fact, Lee predicts 90% of online and brick-and-mortar merchants will be accepting cryptocurrency within 10 years, and Litecoin will be leading that charge. “A coin like Litecoin can do a better job at it,” he says.
The reason, he says, is that transactions on the Litecoin network are faster and cheaper in comparison to the number-one digital currency by market value, Bitcoin. For example, transactions on the Litecoin blockchain can be confirmed in two-and-a-half minutes, he says, compared with 10 minutes for Bitcoin.
As of Tuesday morning, the median transaction fee for consumers spending Litecoin was a nickel, compared to 12 cents for Bitcoin, according to Bitinfocharts.com. At nearly $126 per coin, Litecoin had a market value of just over $7 billion, ranking it fifth among the cryptos after Bitcoin, Ether, Ripple, and Bitcoin Cash.
Litecoin enthusiasts include Eric Brown, founder and chief executive of Aliant Payment Systems, a Fort Lauderdale, Fla.-based independent sales organization. Last month, Aliant added Litecoin to a crypto menu that includes Bitcoin and Ether. “It’s cheaper for consumers and faster to hit the blockchain,” says Brown, “The payments space, that’s where Litecoin comes in.”
But Litecoin has also had setbacks. Last week, a nascent company called LitePay, which had been set up to process Litecoin for merchant acceptance, suddenly shut down. The Litecoin Foundation, a Singapore-based non-profit which Lee heads and which had been helping to fund LitePay, posted a note about the startup’s failure and its alleged opacity regarding its operations, “Litecoin was doing perfectly fine before the promise of LitePay and will continue to do so,” the post promises.
For his part, Lee, a former engineer at Google and Coinbase who created Litecoin in 2011, entertains few illusions about the tough road ahead for his brainchild. “It’s not easy competing with credit cards and debit cards,” he says, even though cryptocurrency offers consumer advantages over plastic, including the ability to keep personal information private.
While he maintains a majority of merchants will accept digital currencies by 2028, the first wave of acceptance will come from online retailers, he says. Already, major e-commerce sites like Overstock.com and Newegg have become well-known for their support of Bitcoin.
Brick-and-mortar will come later, Lee predicts, in part because many of the companies that make payment terminals remain unconvinced about crypto. “They’re not very friendly,” he says.
Last year, Lee says, he sold all of his Litecoin, arguing his holdings represented a “conflict of interest” because of the potential they had to influence the coin’s price. “I don’t invest in Litecoin right now,” he notes. “I want it to be independent of myself.”