Crypto Asset Statement: LTC (Litecoin)
Last updated: March 28, 2023
About this Statement
CatalX CTS (“Catalyx” or “we”) strives to provide our users with information to assist in understanding crypto assets that are offered for trading on the Catalyx platform (the “Platform”). One of the crypto assets we offer on the Platform is Litecoin (LTC). This summary sets out certain key information about LTC as well as some of the risks involved in trading it. While we tried to describe the key features of LTC here, this summary doesn’t provide all relevant information on LTC. We encourage users to perform their own research in order to understand any crypto asset that they intend to trade on the Platform.
History & Characteristics of LTC
What is LTC?
LTC was created in 2011 by former Google employee Charlie Lee. LTC uses a majority of the Bitcoin codebase, and as such has often been referred to as the silver to Bitcoin’s gold. LTC is largely seen as being a complement to Bitcoin, rather than a competitor.
LTC is based on an open-source global payment network that is not controlled by any central authority. Like Bitcoin, new LTC is created by “mining” on a proof-of-work algorithm. On a predetermined schedule the LTC network generates a new block of recent LTC transactions, and makes it visible to network participants or miners. Once a miner verifies the block it enters the LTC blockchain which acts as a permanent record of every LTC transaction ever made.
One difference between Bitcoin and LTC is that Bitcoin uses the SHA-256 algorithm, whereas LTC makes use of a newer algorithm called Scrypt. Another difference is that blocks are mined on a more rapid schedule in the LTC network vs Bitcoin, this allows the LTC network to handle more transactions because of this shorter block generation time. Both Bitcoin and LTC have a finite number of coins that will be produced. Bitcoins supply is capped at only 21 million coins, whereas LTC is capped at 84 million coins.
This overview provides a summary of certain risks associated with LTC. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading LTC, and in addition, does not take into account an individual’s particular situation or risk tolerance. Purchasers are encouraged to conduct their own research prior to trading any crypto asset on the Platform. Catalyx users should read the Risk Disclosure Statement for additional discussion of general risks associated with crypto assets made available through the Platform.
Decrease in Block Reward. LTC’s initial block reward was 50 LTC, however, every 4 years, the block reward is divided. Currently, the LTC block reward is 12.5 LTC, which will be reduced to 6.25 LTC after the next halving in August 2023. The mining incentive structure will change to rely more heavily on transaction verification fees as the block reward continues to decline over time in order to encourage miners to keep devoting processing power to the blockchain. The market might be unwilling to use Litecoin if transaction verification costs rise too much. Less interest in Litecoin could have a negative impact on its price. Additionally lower block rewards could result in less miners being interested in mining on the LTC network which could also make it more susceptible to 51% attacks.
Please note that these risks and the associated summaries or overviews provided for in this Crypto Asset Statement and the Risk Disclosure Statement are not intended to be an exhaustive discussion pertaining to all such risks and, in addition, there may be other risks that come with exposure to LTC. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with LTC and to determine whether this level of risk is acceptable to them.
How Catalyx determines which Crypto Assets to List
Catalyx has established robust policies and procedures to review each crypto asset offered for trading on the Platform. Among other information, we review available public information relating to the crypto asset on the following topics prior to making a determination on whether a crypto asset will be listed:
The history and characteristics of the crypto asset including whether the crypto asset was launched by ICO;
Analysis of the founders or inventors of the crypto asset/related network and a review of their ongoing involvement with crypto asset/network;
How the crypto asset functions including a review of its utility or purpose;
The market liquidity for the crypto asset;
The current and proposed governance of the ecosystem on which crypto asset operates with a focus on the level of decentralization of such ecosystem; and
The position taken by any regulator with respect to the crypto asset including any enforcement action taken against the crypto asset, the related network, or the founders.
In addition to the above we also conduct an analysis of factors weighing in favor or against the crypto asset being deemed to be a security based on Canadian securities laws.
No securities regulatory authority in Canada has expressed an opinion about LTC or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that LTC itself is not a security and/or derivative. Changes to applicable law may adversely affect the use, transfer, exchange, or value of any crypto contracts or crypto assets you hold on the Platform.
Certain statutory rights under securities legislation in Canada do not apply in respect of this Crypto Asset Statement.