Blog Crypto A deep dive into Litecoin: Is it smart to buy LTC?

A deep dive into Litecoin: Is it smart to buy LTC?

date March 1, 2021 time 6 min read 695 views

Litecoin is a staple in the world of alternative digital currencies. It is a spin-off of Bitcoin, created to help solve some of the challenges of using Bitcoin including the high cost of transactions and slow processing speeds. Litecoin has also captured the attention of crypto lovers worldwide thanks to its safer and more democratic mining algorithm, Scrypt.

Bitcoin is the first and mainstream cryptocurrency in the market. As with most firsts, however, Bitcoin came with several flaws. Top on the list was its slow speed and high cost of transactions. 

Naturally, tech innovators grabbed the opportunity to create altcoins to solve Bitcoin’s challenges and, hopefully, capture a good section of the crypto market.

Among the altcoins that have attempted to bank on Bitcoin’s shortcomings, the Litecoin network is by far the most successful. Litecoin network has managed to process transactions 4X faster than Bitcoin, hence its name “lite.”

Litecoin network is the first successful altcoin with 4X faster transactions compared to Bitcoin
Litecoin network is the first successful altcoin with 4X faster transactions compared to Bitcoin (source: medium.com)

Right now, Litecoin ranks top 10 in the world by market cap and trade volume and easily makes it on almost any list of “best cryptocurrencies to invest in.”

But considering how speculative and volatile crypto investments can be, is it smart to buy Litecoin in 2021? 

In this article, we give you all the information you need to know about Litecoin to help you decide. 

Read on to find out.

Litecoin definition: What is LTC?

Litecoin is a crypto network built based on Bitcoin technology. Unlike the numerous Bitcoin fork projects in the market, Litecoin is an entirely new blockchain created using a copy of Bitcoin’s source code.

Litecoin was made for crypto investors and people looking for a more secure money transfer system. 

So successful has the Litecoin network become, it is now the preferred test network for developers who want to implement new features on Bitcoin.

Litecoin has become the preferred network for developers who want to implement new features on Bitcoin
Litecoin has become the preferred network for developers who want to implement new features on Bitcoin (source: freepik.com)

Litecoin vs Bitcoin

While it is similar to Bitcoin, Litecoin also differs significantly from Bitcoin as it has key features that improve on some of Bitcoin’s shortcomings. These include:

  • A more efficient blockchain with 4X faster money transfers (2.5 minutes for Litecoin vs 20 mins for Bitcoin.) This makes it a safer platform by reducing the chances of losses through hacking to slow down the network.
  • Use of a different proof of work (PoW) algorithm, Scrypt, (instead of Bitcoin’s SHA-256). 

Scrypt has several advantages over SHA-256. Some of these are:

  • It is more democratic – Scrypt uses more memory than SHA-256, making it impractical for large miners to have an ASIC (Application-Specific Integrated Circuit) that would give them a greater mining advantage than those using CPU or GPU mining
  • It is more difficult to brute-force Since Scrypt is memory-intensive, it is harder to make ASICs for breaking passwords 
  • Miners don’t require special, expensive hardware to mine – Although slower, miners can use available CPU power on their personal computer to mine Litecoin. This makes mining accessible to more people, increasing distribution.

Litecoin is an open-source platform allowing developers to easily implement new features to keep up with market needs and security patches to keep hackers off. Bitcoin is not fully open-source but consensus-driven which can drag vital network modifications due to long voting times

Litecoin vs altcoins

Compared to newer altcoins, Litecoin holds its value better thanks to its higher market cap. It is currently the 8th largest cryptocurrency in the world with a market capitalization of  $14,653,351,168. It is also the 5th most traded crypto according to Statista.

How Litecoin was created

Litecoin is the brainchild of computer scientist Charlie Lee, who released it on 11th October 2011. 

Lee borrowed Bitcoin’s basic ideas and designed a network that could produce 4X times as many coins as Bitcoin to solve some of the challenges plaguing the Bitcoin platform which include;

  • Scarcity of coins leading to excessively high prices
  • Slow processing caused by small, high-volume transactions 

Since there were already other competing coins in that market, Lee decided to use different strategies for his currency to stand out: 

  1. He released Litecoin after mining only 150 coins, which allowed many people to get in on the coin from the start, increasing distribution compared to Bitcoin.
  1. Lee marketed his coin as the “silver of Bitcoin” carefully riding on Bitcoin’s popularity which gave him an edge over other coins. 

The latest Litecoin blockchain update was on 11th June 2020. It included updated translations, bug fixes, new features, and performance improvements.

Litecoin price history

Unlike other coins which go through Initial Coin Offerings (ICO), Litecoin did not start as an ICO. Its price is instead completely based on its proof of work algorithm similar to BTC.

After quickly getting listed on few marketplaces, it reached a value of $0.30.

Litecoin rose slowly to $3 between 2011 and 2013.

Litecoin’s first bull market

Litecoin experienced an extraordinary increase in price in November 2013, when it tripled 10X to reach $50. Some of the speculative causes of the increase were: 

  1. A particular tweet by Max Keiser, a financial broadcaster, speculating that there would be an increase in price of LTC to $50.
  2. The low exchange rates between Bitcoin and Litecoin, which led people to use their Bitcoin to buy cheaper Litecoins.
  3. Crypto investors rushed to buy Litecoin with hopes that it would become less speculative and lead to more riches just like for early Bitcoin investors.
Litecoin prices soared in November 2013 as people rushed to buy Litecoin hoping to be the next “Bitcoin millionaires”
Litecoin prices soared in November 2013 as people rushed to buy Litecoin hoping to be the next “Bitcoin millionaires” (source: pexels.com)

In January 2015, the price of Litecoin fell back to $1 in JAN 2015 due to the Mt. Gox exchange scandal which led to a loss of Bitcoins worth trillions of dollars.

Litecoin’s second bull market

Litecoin experienced another bull market in 2017, reaching a record high of $371. Some of the triggers for the hike in price were:

  • Increased interest in crypto
  • Desire to move away from Bitcoin

Since then, Litecoin has had a series of market crashes and bull markets and is currently priced at over $200.

Litecoin in the future: Will Litecoin be a good investment?

Is it smart to buy Litecoin in 2021? There seems to be a lot of positivity surrounding Litecoin,  pointing to the fact that it could be a worthy investment. 

Here are several reasons why you may consider a Litecoin investment:

  • There are 4X more Litecoins than Bitcoins, making it easier for more people to adopt Litecoin as a traditional currency for everyday transactions. This could increase the demand for Litecoin and hence its value.
  • Its higher speed and lower cost of transactions compared to Bitcoin make it more attractive to new investors.
  • Litecoin has received lots of positive press. 
  • Litecoin ranks 8th in terms of market cap and is the 5th most traded crypto in the world, which could make it a valuable asset in investors’ eyes.
  • Like Bitcoin, Litecoin also halves rewards given to miners for validating blocks periodically, which leads to an increase in value.
  • The launch of the fantasy game, Litebringer, on Litecoin in September 2020 triggered a tripled increase in transactions on Litecoin, with over ¾ of the transactions directly related to the game.
  • The Crypto Research Report notes that more investors are buying Litecoin on exchanges such as Coinbase for use in buying goods and services, increasing its adoption.

Some of the places that accept Litecoin transactions are:

  • Travala, the world’s leading blockchain-based travel booking site.
  • eGifter, a company that sells gift cards.

Sneak, an online store that sells various services including web, cloud, and dedicated hosting as well as VPS (Virtual Private Server) services.

Where to buy Litecoin

There are two ways to get Litecoin. These include:

  • Swapping your crypto for Litecoin: You can swap your Ethereum and Bitcoin for Litecoin at Binance.
  • Use a debit or credit card, bank account Several platforms allow you to buy Litecoin using FIAT currency such as USD, EUR, and GBP. These include:
    • Coinbase 
    • Binance
    • Bit2me
    • Coinflip which accepts a wide variety of FIAT currencies including USD, EUR, JPY, AUD, and more
You can buy Litecoin using your credit or debit card on platforms like Coinbase and Coinflip
You can buy Litecoin using your credit or debit card on platforms like Coinbase and Coinflip (source: time.com)

Where to store Litecoin

Wallets are more secure than exchanges when you want to store your Litecoin safely. In most wallets, you can keep your own private key and have more control over your assets, which is not the case when you’re using an exchange.

Wallets with built-in exchanges

If you are wondering how to use Litecoin to make a profit while still holding it in your wallet, you can store your coins in wallets that also have built-in exchange such as Exodus and Atomic Wallet. That way, you can earn fees when you swap your crypto. 

Hardware wallets

If you want to store your crypto for a long time, go for hardware wallets like Trezor, Ledger nano X, and Ledger Nano S as they are the safest. These wallets store your crypto offline, away from hackers.

How to buy Litecoin without trading your crypto: Take a loan on MyConstant 

If you don’t want to trade your crypto for Litecoin, the good news is you don’t have to! 

You can take a crypto-backed loan at MyConstant against 70+ types of crypto at an affordable interest rate of 6.5%-7%.

When you borrow against your crypto on MyConstant, you also get:

  • Lower rates if you repay early
  • Easy on-ramps from fiat to crypto
  • 24/7 customer service through email and phone

Are you ready to invest in Litecoin? Sign up on MyConstant today and get started.

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