If you have heard of cryptocurrency, you have most likely heard of Bitcoin, and its cousin, Litecoin. You may not be very familiar with what it is about, but this article will serve as a guide to its history, as well as why you should invest in it if you can.
What is Litecoin (LTC)?
This is a cryptocurrency – this means that it makes use of cryptography to regulate its management instead of relying on central banks for regulation. It is a sort of lighter version of the Bitcoin currency. The stated aim was to act as a complement to Bitcoin in terms of using it as an everyday currency instead of a store of value.
The founder of the coin is a former Google employee, Charlie Lee. He released it in 2011 through an open source client on GitHub, and it was formed as a fork of Bitcoin Core, with the only difference being a shorter generation period of blocks (2 and a half minutes). Other differences included different hashing algorithms (it uses scrypts), greater coin amounts, as well as modified GUI.
Why is Litecoin different?
Because Litecoin is very similar in structure to Bitcoin, it may confuse people in terms of choosing the better option. However, Litecoin carries some distinctions from Bitcoin, some that we have outlined.
Litecoin networks work to process and approve blocks within two-and-a-half minutes, compared to ten minutes for Bitcoin. This results in faster transaction time.
In the POW (Proof of Work) algorithms, Litecoin uses scrypt for this function. The distinction of scrypt is the memory capacity it uses – it requires greater asymptomatic memory compared to other algorithm functions requiring less storage.
Because Litecoin uses scrypt algorithm during proof of work transactions, it consequently requires complicated devices to mine and produce blocks. This makes them more expensive compared to Bitcoin machines, since Bitcoin uses SHA-256 algorithms.
Alternative coins to use
Litecoin is a trendsetter indeed – with the massive growth it has great potential to succeed greatly among cryptocurrencies, even Bitcoin. However, other coins work equally as well if not better, and we have compiled a list of several of them.
Ethereum/ETH – a very recent one from 2013, it enables distribution of applications and running of smart contracts without interference from third parties. It has a fast rate of processing transactions because it uses programming codes of decentralized applications, unlike Bitcoin and Litecoin that focus on blockchain technology.
Dash – markets itself as a “more secretive version” of Bitcoins. Formed in 2014, it works on a master-code network that enables transactions to be untraceable.
Ripple/XRP – this currency is among the largest in the market, and it offers you friction-less, immediate and affordable international payments. Another distinguishing feature is that you do not need to mine it, and therefore reduces computing power. It is also gaining popularity among financial institutions because it allows them to process their customers’ payments immediately.
Verge (XVG) – this currency is also a recent one, improving on the Bitcoin and Litecoin blockchains. Its main aim is to provide both businesses and individuals with a faster, decentralized and efficient manner of direct transactions while they maintain their privacy. Among its features is an anonymity-centric network including 12P and Tor, and results in transactions becoming untraceable.
Zcash/ZEC – a 2016 product, which offers users additional privacy and optional transparency in transactions. The blockchain design is unique from Litecoin because it only shows you that transactions occurred without revealing the identities of the individuals or the cash involved. It is open source in nature – because of this; the Zcash Company has no control over it.
Monero/XMR – 2014 was the launch year for this currency and its development is unique – it uses donations as well as the power of the community to improve its features. It allows for complete privacy as well through a technique called “ring signatures”.
Technology behind Litecoin
In all transactions, the blockchain acts as an accounting book – it stores the transaction number, the number of coins moved, the digital signature as well as the recipient. For hackers, it is nearly impossible to hack because the data is not within a centralized database; it is in all computers with the software.
You also do not register with a password or username. Instead, you have a private key that allows you to access your Bitcoins and digital assets.
How it works
Litecoin works in a similar way to Bitcoin, but the differences involve mining methods, the number of coins and market caps.
Mining method – the hashing algorithms are different, with Litecoin using scrypt technology. This also affects the distribution of coins when a miner gets solutions. When you do a transaction, it groups with other transactions in blockchains. Computers (miners) use GPU and CPU power to complete complicated mathematical problems until they find a solution, so machines that are more powerful will get more coins.
Distribution of coins – the cap is higher by a significant margin. Unlike Bitcoin, which caps at the 21-million mark, Litecoin will cap out at the 84-million mark.
Trading Litecoin currency
In the case, you are not interested in mining Litecoin blocks; you can choose to trade them by using another currency such as Bitcoin. You do this at website, also known as exchanges. Some of the exchanges can enable you to buy Litecoin using actual currency like USD, and an example of this is Coinbase.
Similar to other cryptocurrencies, you should store Litecoin in a digital wallet. These wallets can vary from software wallets, which reside in your computer, to hardware wallets.
You can also use a paper wallet. It may be complex and outdated, but it a more secure way of storing your coins because it relies on generation and printing a private key on computers that lack web access. The wallets contain private keys that you will need during transactions with the Litecoin.
All these wallets are in the form of mobile or desktop software. Because of this, they are popular in many devices and operating systems. If you use a desktop or laptop, you have the additional luxury of third-party applications like Litecoin Core, which the Litecoin developing team developed. The advantage of this application is that it allows you to download the blockchain from peer to peer networks directly, therefore eliminating the need for intermediaries.
Trading the currency – steps
Before you start trading in the currency, it (along with all other cryptocurrencies currencies) is very volatile, and prices are subject to very quick changes.
Its value is not from an industrialized economic base, but from the work your computer performs – this means you can trade it just like normal items. Many risks come with trading the currency, but as long as you understand them, you can become a player in the market.
Find an exchange provider and open an account – because there is no official exchange provider. Several factors will determine the choice you make, including regulation and fees charge.
Make sure to do your homework – this will help you keep track of the exchange rates.
Make a strategy and implement it effectively
Place a trade using the exchange provider
Close your position after you achieve your targets
Litecoin prices and trading history
The currency is newer than most, so it does not have an extensive history of data in price changes. However, it has set itself as a potentially leading cryptocurrency, as evidenced by its wide adoption by businesses of various types and individuals. However, it is important to remember that all cryptocurrencies are volatile in nature, and price changes may be very significant.
By the end of2017, the value of Litecoin saw a sharp increase, with its value peaking at $186.89, a 4000% increase from the start of the same year. It is safe to say that the fortunes of both Litecoin and Bitcoin are interlinked – based on previous trends, both currencies have gained high popularity. However, the gain that Litecoin has made within the past one year is more than Bitcoin.
This could be because of high levels of unconfirmed transactions, and this makes it look better as a medium of exchange compared to Bitcoins.
Is it worth trading in the coin?
This is a complicated question, because several authorities do not approve of investing in cryptocurrency in general. The reasons they usually give range from the highly volatile nature of these currencies, and the fact that their value is unpredictable. Because of this, they point to cryptocurrency as having too many danger signs.
Other voices point out the increasing value of Litecoin investments – and that if you do not take a chance now, you will regret missed opportunities in the future. We have compiled a list of various facts that make this currency so exciting in potential:
The efficiency – it is ten times better than Bitcoin in particular because of the maintenance cost.
The currency has led to many investors becoming rich within a few months.
It offers a faster solution than Bitcoin because of shorter transaction times
Has more possible applications compared to Bitcoin.
The risks are great, for example the uncertainty in value as well as lack of liquidity. However, if you are prepared to shoulder losses as a probable cost, then you can invest in it.
The rise of Litecoin is synonymous with the rise of digital cash. People want to spend money faster without reliance on institutions like banks that require long protocols and time to approve transactions. The potential benefits are immense if you invest well, but it is best to be careful and not rely on it too much.