FYI I picked litecoin as the vehicle to drive from the local exchange to OKEx because I thought I was being clever by dodging the ‘high’ bitcoin fees. (Bitcoin is $1.30, Ethereum is 55c, Litecoin is 14c, and BCash is 12c).
Well … I should get an alarm that goes off whenever I get the feeling I’m being clever, because just after making this transaction (like, 12 seconds later) I learned that I can’t go from LTC to IOTA on OKEx.
No no, only ETH or BTC can be turned into IOTA. So I went from LTC to BTC, and then from BTC to IOTA, although I should have gone via ETH so I could have dipped my toes in yet another currency.
That initial $500 whittled down to $460 by the time the dust had settled. I don’t know what’s fees and what’s because the price dropped between when I went from AUD to LTC, then LTC > BTC > IOTA.
I will refine this as I go. Next time I will:
- Check first how I can get into an altcoin on OKEx. I think ETH is a good bet because I can go from ether in my local exchange to ether on OKEx then straight into pretty much any coin.
- Record the amount of coin I send vs the amount that ends up in the account to see what fees are actually happening.
- Record the time taken, out of interest.
Now on to the Coin Of The Week …
Litecoin, and why I’ll pass
For some reason, I see Litecoin as a friendly coin. Maybe that’s because its father — Charlie Lee — seems like a genuinely nice guy. His goal with Litecoin wasn’t to change the universe, he just wanted to improve Bitcoin in a few areas he thought needed improvement.
So I have nothing against Litecoin, I just don’t think it’s going to perform better than other coins over the next few years. The reasons I think this are:
- It’s differentiation from Bitcoin is that it’s faster and has lower fees. But lots of coins are even faster and have even lower fees.
- From 12 to 24 months ago it outperformed Bitcoin, but in the past 12 months, it under-performed Bitcoin.
- It’s the silver to Bitcoin’s gold, I’ve heard. But I don’t think the earth has silver because it needs silver — it’s just the way the electrons fell. So I don’t see that the cryptocurrency space necessarily needs a runner up in the general purpose cryptocurrency space.
This marks the first time I’ve thought I’m clever enough to actually make a prediction about the future in the cryptocurrency space, which should probably be setting off alarm bells.
But if I learnt from my mistakes, I would never have bought my eighth cockatoo, who’s a real charmer. This one’s for you, Caroline.
Anyway, since Litecoin positions itself (sort of) as a consumer-level cryptocurrency (with a list of places it can be used on their site), I’ve been thinking about the distinction between corporate-focused cryptocurrencies and consumer-focused ones.
Which eventually lead me to ponder the question …
Do cryptocurrencies even make sense for consumers?
I have great faith that crypto-stuff is going to rock the corporate world, where it solves clearly defined problems, such as the costs and time involved in cross-border transactions.
But I’m not so sure if it’s going to rock the world of consumers.
I’ve heard of people buying pizza with bitcoin, and I’ve heard that litecoin is faster, so it’s better suited to consumer purchases. And up until this week, I’d assumed that this made sense. But does it?
I mean, are there actually people who want to go to the supermarket and pay for their cereal and shampoo with litecoin? Or pay their lawn care professional in monero?
I don’t understand how or why this would happen.
If, for example, 7–Eleven decided to accept litecoin, but still accept payment in local currency, then I assume that the prices on the shelves would be static and displayed in the local currency (a bottle of water would be $2 all day every day), but I could pay in litecoin at the current exchange rate.
So I’d pick my bottle of water and a Snickers and go to the counter and say “I’d like to pay with litecoin”.
The clerk would sigh a deep sigh and … then what? Present me with a screen with a QR code that I scan or something? Then I scan that and see in some app that it’s going to transfer 0.016874 LTC to 7–Eleven Corporation. Or maybe I’ll pay with my TenX litecoin card (pronounced ten ten).
Then what? I wait 2.5 minutes for a single confirmation?
Why would the average consumer want to get paid in USD, transfer it to an exchange, buy some LTC, then transfer LTC to a shopkeeper, who will sell it for USD in order to pay their employees/rent/taxes/etc in USD and let the cycle begin again.
Even for the cryptocurrency enthusiast, when you’ve done this 200 times and the fun of converting fiat to crypto has warn off, what’s the incentive to keep doing it? Is the guy that bought a pizza with bitcoin still buying every pizza with bitcoin all these years later?
From an investment perspective, I think enthusiast enthusiasm can prop up the value of a cryptoasset in the short to medium term. But if the general public don’t adopt a cryptocurrency, I reckon the shine will wear off and the price will fade.
The current state of things
Before writing the above, I made an effort to find articles explaining exactly how a consumer-level cryptocurrency-for-goods transaction would take place. What I found was people comparing crypto to a maximally archaic version of reality, but not a lot comparing it to the status quo.
Here’s a quote from this silly article trying to big-up a Utopian future made possible by cryptocurrencies:
“The year is two-thousand-something-big, and it’s the day your taxes are due. But you don’t file them. Instead an algorithm automatically makes a withdrawal from your electronic wallet, in a currency called Fedcoin.
It’s the digital version of those crunchy bills you only vaguely remember from many years ago, back before the central banks began taking paper cash and redeeming it for fedcoins. Over the years, you’ve seen less and less hard currency. You don’t need it anymore, not when you can walk into a local bank, verify your identity, and set up a wallet on your phone. Sure, you still have a few dollar bills. But they are tucked away as souvenirs.”
That article is from April 2018, even though it sounds like it came from an episode of The Jetsons.