Coinbase Could Be Holding a Quarter of All Litecoin

Coinbase is regarded as one of the biggest, and most influential, cryptocurrency businesses in the world. It has made it to the Forbes Blockchain 50 list, and it has its infamous ‘Coinbase effect’ that sees coins pump when added to the exchange. But does this exchange pack enough power to influence a coin like Litecoin?

Can Coinbase Be That in Control?

It was suggested on Twitter by @TruthRaiderHQ that Coinbase holds 25% of all Litecoin and even a substantial 5% of Bitcoin.

Coinbase holds 25% of all litecoin and 5% of all bitcoin.

— Raider ₿ 🛰 (@TruthRaiderHQ) December 2, 2019

This was followed up by a stab at John Kim, who brands himself as an ‘LTC evangelist.’ The suggestion being that if one company does hold as much as 25% of one coin that promotes itself as decentralized, then the level of its decentralization deserves to be questioned.

If you listen to the fanboy john Kim, who parades around like a cheerleader from high school, you'd miss the fact that litecoin is centralized af.

25%-30% + of this shitcoin is owned by one company.

It is one of the most controlled, like $XRP #RIPPLE $LTC #Ltc @litecoin

— Raider ₿ 🛰 (@TruthRaiderHQ) December 2, 2019

The scope of Coinbase’s prominence in the cryptocurrency space is tough to determine, as is its full record of coins held under custody. However, the similarities to the cryptocurrency exchange and a major bank are quite apparent. Coinbase is a centralized exchange, a breed of exchanges that dominate the market, and are a necessary go-between for fiat and crypto. But also a type of exchange that operates, in many ways, like a traditional bank. In that sense, it faces deposits and withdrawals of crypto and fiat, all the time, and often with huge sums. There needs to be high liquidity at Coinbase, and this means holding a lot of funds.

Does This Make Litecoin Centralized?

As BeInCrypto has previously reported, Coinbase has over $7 billion of BTC under custody, which equates to 966,230 Bitcoin. If this is the case, and the circulating supply is 18 million – or perhaps closer to 17 million because of lost coins – then it would appear that Coinbase does hold even more than 5% of Bitcoin. If it is the case that 25% of all Litecoin is sitting under custody with Coinbase, that is a substantial chunk that is not as distributed as fans of the coin would like or even expect. Coinbase isn’t likely to do anything with that much sway in the Litecoin sector, but it does warrant questions of its distribution. However, what does become concerning is that following its mining reward halving earlier this year, the hash rate for Litecoin has been falling, which does make it more susceptible to a 51-percent-attack. Its hash rate is now the same as it was a year ago.

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Images are courtesy of Twitter, Shutterstock.