The cryptocurrency world has been in a state of constant flux for the past few years. With so many coins to choose from, it can be challenging for potential investors to know where to begin.
There are so many different factors to consider when choosing which digital tokens might be worth your while.
Litecoin was actually one of the first forks of the original Bitcoin source code (itself a fork of crypto called CryptoNote).
Created by former Google engineer Charlie Lee in October 2011, Litecoin operates almost identically to Bitcoin in almost every way except for a few unique differences that set it apart from its more famous cousin. Let’s consider all these peculiarities before you buy Litecoin to diversify your portfolio.
What is Litecoin, and how does it work?
In the simplest terms possible, Litecoin is a decentralized digital currency that allows people to send payments from one party to another anywhere in the world. You can think of it as an online payment system that works in a very similar fashion to PayPal or Venmo (except decentralized, meaning no single party controls or owns the network).
Litecoin works on a blockchain network, which is a decentralized network of computers that validates transactions and executes the code behind the digital currency.
People attempting to use the network must solve complex mathematical problems with special technology (this is called mining) to receive small amounts of the digital token behind the network that they are using.
How is Litecoin different from Bitcoin?
While there are quite a few differences between the two digital tokens, the most notable is their total supply. While there will only ever be 21 million Bitcoin in existence, there are a total of 84 million Litecoins.
This is because Litecoin has a much shorter block generation time of 2.5 minutes compared to Bitcoin’s 10-minute block time. This means that Litecoin can produce more coins in a shorter amount of time.
Pros of Litecoin
- Liquidity: Litecoin has a total supply worth well over $13 billion. This makes it more liquid than a lot of other cryptocurrencies you might consider investing in, which can be a significant advantage.
- Security: Litecoin’s proof-of-work mining algorithm uses a Scrypt-based mining method, which is considered to be much more resistant to ASIC mining. While Bitcoin’s algorithm is designed to be more decentralized, LTC’s is designed to be more resistant to centralization.
- History: Litecoin was one of the first major forks of the Bitcoin source code. It has been around since 2011, making it one of the oldest cryptocurrencies on the market.
- Scalability: As mentioned above, Litecoin has a larger total supply than Bitcoin, meaning that it is more scalable as a digital currency.
- Faster and cheaper transactions: This is due to its shorter block generation time and the fact that it has a much lower transaction fee than Bitcoin. With Bitcoin’s transaction fees skyrocketing, more and more people are looking to Litecoin as an alternative.
Cons of Litecoin
- Volatility: One of the most common arguments against investing in any cryptocurrency is that they are very speculative. Because there is very little regulation in the space, even something as basic as government intervention can have a major impact on their value. This is a big red flag for people who are more risk averse.
- Supply: While the fact that there is no cap on the supply of LTC is a good thing for investors, it is also a bad thing for the health of the network itself. The Litecoin network has to process all of those transactions, and the more coins there are, the harder that is going to be.
How to buy Litecoin?
If you decide that investing in Litecoin is for you, the first thing you will need to do is finding a digital currency exchange where you can purchase Litecoin with your local currency. There are many different exchanges you can use, but the most common one is Coinbase.
But if you don’t have any money saved up yet and want to invest as little money as possible (while still making a profit), you can also try using a trading platform like eToro. You can also try using a peer-to-peer lending platform like SALT, which allows you to borrow money from other users to finance your investment.
Final words: Is Litecoin worth investing in?
If you decide to invest in Litecoin, you may have to put in a bit more work than if you were to invest in Bitcoin. It is not superfluous to do your own research on the coin, study its historical performance, and speak to an investment advisor before diving in head first.
That being said, if you’re willing to put in some extra time and effort, investing in Litecoin could be a good asset decision for you.
