Charlie Lee
Charlie Lee invented litecoin, which works cheaper and faster than bitcoin. Charlie Lee

On Tuesday, the alternative cryptocurrency litecoin reached a new all-time high of around $323 according to CoinMarketCap, with a global market cap of more than $17.5 billion. This spike caused such a frenzy the popular cryptocurrency exchange Coinbase temporarily disabled litecoin trading to deal with a “major outage.” CoinMarketCap data suggests the litecoin market experienced $1.8 billion in volume over the past 24 hours.

There are several reasons why litecoin is surging. CNBC reported litecoin transactions generally take two minutes while bitcoin transactions, with higher transaction fees, can take nearly 300 minutes to go through. Successful tests of the Lightning Network recently provided this external scaling solution can easily swap bitcoin for litecoin to facilitate smooth cryptocurrency payments at regular businesses. Imagine a $20 bill magically transforming into dollars and quarters if a cashier didn’t have time to make change. This is just one vague and incomplete analogy of what cross-chain swaps can do.

The litecoin community experienced dramatic growth this years, especially considering the token sold for between $4 and $5 each the first week of 2017. The litecoin Reddit community now has more than 118,200 subscribers. “The Lightning Network will help both bitcoin and litecoin scale," litecoin creator Charlie Lee told International Business Times. “In terms of next year, things that we are looking into are more smart contract capabilities for litecoin and also more fungibility. So things like confidential transactions.”

The increasingly global litecoin ecosystem is completely run by volunteers, including around five full-time developers supported by the nonprofit Litecoin Foundation. Lee said he hopes to double the size of this team in 2018. Many cryptocurrencies divergent approaches to privacy, from zero knowledge proofs to ring signatures. The litecoin community is exploring a mechanism called Confidential Transactions (CT), which bitcoin developers are also experimenting with.

“You can tell that the receiver received the amount the sender sent,” Lee described how CT enables private transactions on a public network. “That’s proved cryptographically with math. But only the sender and receiver knows how much was actually sent. This is one way to preserve some privacy.”

Litecoin was invented to grow alongside bitcoin. Their technologies are so similar it only takes a few quick tweaks for a platform that already supports bitcoin to add litecoin support. Lee’s goal was to make the silver to bitcoin’s gold, a cheaper version of the original open source cryptocurrency. In 2018, Lee’s team also plans to explore Merkelized Abstract Syntax Trees, a way for cryptocurrencies such as bitcoin and litecoin to layer with smart contracts.

Smart contracts are mechanisms that automatically execute to govern transactions. For example, if you buy a purse but the QR code isn’t scanned within 72 hours, proving it didn’t ship, you could be automatically refunded. Or what if Mr. Bank and Ms.Bank agree to swap certain share if the price of oil rises above a specific amount. Smart contracts can automate transactions with variables.

Ethereum is currently the most flexible cryptocurrency in terms of adding diverse smart contracts. In the future, Lee hopes both bitcoin and litecoin will have some similar features. “MAST is going to add some more smart contract capabilities to bitcoin and litecoin. But it’s not going towards the more Turing complete smart contracts [like Ethereum],” Lee said. “Things like, if you want to build it you can have better custody of your coins. You can send it somewhere or to someone to keep it safe so that if someone finds your private keys, they steal your coins, you can pull it back.”

The litecoin community doesn’t want this cryptocurrency to replace bitcoin or compete with Ethereum. The goal is simply to make a fast, easy cryptocurrency for payments that is compatible with the broader bitcoin ecosystem. These CT-enabled smart contracts will add features to improve the technology’s ability to transfer value. “More smart contract capabilities makes the currency more powerful in terms of being programmable money,” Lee said. “In my mind, bitcoin is the most decentralized and most secure cryptocurrency. And it has to stay that way...with litecoin, it’s less decentralized and less secure. But the trade-off is it can move faster and be cheaper.”