What Is Litecoin and Should You Buy It?
The price of Bitcoin has soared in recent years, with more and more people investing in the cryptocurrency, and this has led some crypto investors to seek out cheaper options.
One of these alternative coins, or ‘altcoins’ as they’re known, is Litecoin, which is based on the same technology as Bitcoin. If you’re considering whether or not you should buy Litecoin, then read on, this article is for you.
We take a look at the history of the coin, how it works, and just what the future of Litecoin could hold.
What is Litecoin?
Litecoin (LTC) was created in 2011 by former Google engineer Charlie Lee as a Bitcoin fork. It’s a peer-to-peer decentralised currency that enables near-instant affordable payments. To understand Litecoin, we have to compare it with Bitcoin since they share several similarities.
Lee believed Bitcoin had flaws that hindered its use for mass payments. While Bitcoin seemed to work well with larger transactions, it struggled with smaller purchases, like buying a coffee or grocery shopping, due to its long confirmation time.
He proposed an algorithm called “Scrypt” (more on this later) that made transaction processing time faster than Bitcoin’s. So, while Bitcoin takes an average of 10 minutes to confirm a transaction, Litecoin transactions are verified in 2.5 minutes.
Comparing Litecoin vs Bitcoin transactions, if you send $500 worth of Litecoin and $500 of Bitcoin to the same person, the Litecoin would arrive far faster than the BTC would. Litecoin can also process 56 transactions per second, which is twice as much as Ethereum and 12 times as much as Bitcoin.
Mining Litecoin: How does it work?
Cryptocurrencies such as Litecoin operate independently and are not regulated by any central bank or administrator.
New Litecoins are issued through an elaborate process called mining. This system of mining Litecoin involves a group of individuals called “miners” creating new Litecoins by solving complex mathematical puzzles. And while the Federal Reserve can print more money to stimulate the economy, there’s a maximum number of Litecoins that can ever be created.
So, how many Litecoins are there? Well, the supply is limited to 84 million. As of April 2022, approximately 70 million LTC have entered the market. This means there are roughly 14 million Litecoins left to mine.
Litecoin miners secure the network and process transactions. In exchange, the network rewards them with freshly minted Litecoin.
These rewards are cut in half during a Litecoin halving event, which occurs every 840,000 blocks (approximately every four years).
Litecoin started with a block reward of 50 Litecoins in 2011. It halved to 25 Litecoins in 2015 and 12.5 in 2019. The next halving event is scheduled for 2023.
This Litecoin halving is another reason why more people invest in Litecoin. As the mining incentive falls, miners produce fewer LTC. This reduction in supply with demand remaining constant creates scarcity, which leads to an increase in price.
Lee opted for the Scrypt algorithm rather than the SHA-256 used by Bitcoin miners. The Scrypt mining algorithm favours miners with access to Random Access Memory (RAM) and not those with large processing power.
This meant that mining Litecoin on computers was possible from the beginning. The idea was to prevent the ASIC mining centralisation prevalent in Bitcoin. However, over time ASIC manufacturers found a way to churn out specialised Scrypt ASICs, making it less profitable for small miners.
Who accepts Litecoin?
Most people buy Litecoin as an investment opportunity, but it’s also useful for everyday spending. There are hundreds of merchants that now accept LTC payments and the list continues to grow as companies begin to see the vast potential of cryptocurrency.
American football team the Miami Dolphins, ice hockey team the Carolina Hurricanes, travel company Travala, and gift card company Bitrefill are just a few of the businesses now accepting Litecoin.
Choosing a Litecoin wallet
Whatever you plan to do with your LTC, you’ll need a Litecoin wallet to store it in. This is the first step before buying Litecoin or any other cryptocurrency at xcoins.com.
The two main types available are hot wallets and cold wallets, but the one you choose will depend on a number of factors, including how much LItecoin you’re planning on buying and the ease of access you require.
Read our crypto wallet guide and find out which is the best Litecoin wallet for you and your needs.
Should you buy Litecoin?
Litecoin is the twenty-first largest cryptocurrency by market cap. It’s a much cheaper alternative to Bitcoin and is seen by some as a better payment system, although some view Litecoin as a less secure store of value than Bitcoin.
Ultimately the decision to buy Litecoin or another cryptocurrency is yours alone. Always do your own research and remember that this is an introductory guide only, and not financial advice.
Litecoin hit an all-time high of $371 in December 2017 before dropping in value in 2018 along with other cryptocurrencies. Since then it’s gone through several peaks and troughs, and at the time of writing Litecoin’s value sits at just over $100.
The future of Litecoin is uncertain. As with all cryptocurrencies, it’s a new asset class and therefore hard to make accurate predictions about. What we do know, though, is that the crypto market is continuing to mature. With investment pouring in and crypto regulations becoming the norm, confidence in Litecoin is likely to increase.
How to buy Litecoin
You can buy Litecoin instantly at xcoins.com using your credit/debit card or by bank transfer. It’s a straightforward process that you can complete in just a few steps:
Step One: Register with xcoins.com if you don’t yet have an account and complete the verification process.
Step Two: Click “Buy Litecoin” and select the amount you’d like to purchase as well as the currency you’re using to buy it.
Step Three: Select your payment method and enter your wallet address so we know where to send your Litecoin.
Step Four: Finally, click “Complete Payment” and we’ll send your Litecoin to you within a few minutes.
As always, this article does not constitute financial advice and you should be sure to do your own research and consult a professional financial advisor before making any investment decision.
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FAQs (Frequently Asked Questions)
Litecoin is a decentralised peer-to-peer currency created by former Google engineer Charlie Lee in 2011. A Bitcoin fork, it was designed to offer faster transaction times and lower fees than Bitcoin.
The price of Litecoin has been fairly volatile in recent years, but then this has been the case for cryptocurrencies generally. The best thing you can do is learn more about Litecoin and its price history, that way you’ll have a better idea of whether or not you should invest.
There are dozens of crypto wallets choose from. Hot or cold, paper or software – it can be difficult to know the right Litecoin wallet for you. If you’d like some help, then read our guide to crypto wallets.