Litecoin (LTC)–For several months Charlie Lee, founder of Litecoin, has been touting a “big surprise” that would boost investor outlook for Litecoin. While some had predicted the news would be a big platform partnership, such as Amazon or Facebook, Lee revealed last week that Abra had adopted Litecoin for use in smart contracts on its trading platform.
Abra is using the Litecoin network for its smart contracts. No partnerships needed as Litecoin is an open network.
— Charlie Lee [LTC] (@SatoshiLite) March 27, 2018
The news was underwhelming for fans expecting a household name company, but Abra does represent growing adoption for Litecoin–and cryptocurrency–in the space of investment and financial services.
What is Abra?
— Charlie Lee [LTC] (@SatoshiLite) March 21, 2018
Similar to Coinbase, Abra is attempting to become an all-in-one cryptocurrency platform that functions through a smartphone app. This invest on the go approach is targeting a new generation of investors, mainly those of the millennial and digital age, and providing the widest amount of access. Rather than setting up a brokerage account on a site like Etrade or Charles Schwab, Abra is giving users the ease of access to start buying and selling through their phones. Coinbase has long been lauded as a industry-leader in providing a user interface and setup appealing to newcomers. Abra could challenge that space, albeit with tools more geared for serious investors, with an app that is simple to download and get started.
Some Reddit users have pointed out flaws in the registration process for Abra, namely the lack of 2 Factor Authentication and requiring a social security number with the initial setup (many exchanges rely on a driver’s license or passport as sufficient identification).
However, with the launch of Abra’s app, we are seeing more contenders and competitors to Coinbase enter the realm of iOS and Android based cryptocurrency investment. Apps are the simplest way to reach mass-adoption. It’s much easier to show friends and coworkers an app that they can download on their phone within seconds, as opposed to the more bulky and technical heavy online exchanges.
What Role does Litecoin play in Abra?
Abra’s primary feature is going to be offering users access to twenty different cryptocurrencies (with more coming in the future) along with fifty fiat currencies. Abra functions through the use of smart contracts to allow investors to gain exposure to other currencies without actually trading for them. A user can fund their account with 200 USD of Litecoin, and then buy exposure to other offered currencies. As the price changes in value, so does the initial investment, tied to a “synthetic currency” that represents the second-party currency without actually being exchanged for. Meaning, if a user were to contract 5 LTC worth of Ripple, and the price of Ripple doubles, that user can now cash out their investment for 10 LTC.
Litecoin plays a role in this process as being the network of choice for Abra smart contracts, in the form of the synthetic currencies, to function on. Originally, Abra was using Bitcoin as the scaffolding for its contracts, but switched to Litecoin’s blockchain for its improved efficiency. From the Abra blog,
“Abra has chosen Litecoin as the primary asset class for our investment platform although we now have the ability to move users between Bitcoin and Litecoin contracts. We chose Litecoin after a long and thorough research process to determine the asset class that met our criterion: secure, safe, scalable on-chain and off-chain, low mining fees.”
Following on the heels of this partnership with Litecoin, Abra’s CEO Bill Barhydt made waves by predicting the coming flood of institutional investors would make “all hell break loose,” in the valuation of cryptocurrency in 2018. While his company is in position to widen the appeal of crypto through app-based portals, it also provides a new avenue for investors and those looking for more advanced mechanics in buying and selling–particularly through the untapped feature of smart contracts.
The presence of Abra could drive up demand for Litecoin, in addition to the other currencies accepted for payment in lieu of a U.S. Bank account, while simultaneously simplifying the process of investing in altcoins. Rather than finding an exchange that offers trades for coins like Ripple, Dash and Stellar, Abra users can gain all of the benefits of price speculation while retaining their initial investment currency. Meaning, there is now incentive for users to retain and transact in one currency, as opposed to the far-flung current method of investing in tens or hundreds of cryptos. This could lead to investors, particularly those new to the market, valuing their portfolio in Litecoin (as most people would USD), thereby opening a long term view of holding and spending the currency as traditional fiat.