What is Litecoin-A biginners guide. 0/0
Litecoin-Beginners guide to understanding litecoin
Sometimes referred to as Bitcoin-lite, the cryptocurrency “Litecoin” has gained fairly widespread adoption since its creation in 2011.
In this guide, you’ll get to understand the uniqueness of these cryptocurrency, how it is created and where and how you can get it.
What is Litecoin?
It is a peer-to-peer cryptocurrency that enables a seamless and instant online payments for a near-zero cost. it was created by former Google engineer Charlie Lee with the intention to improve upon Bitcoin.
Using a modified version of the Bitcoin open source code, Lee designed it to solve some of Bitcoin’s issue like transaction times, fees and concentrated mining pools.
Litecoin was announced in 2011 with the goal of being the ‘Silver’ to Bitcoin’s ‘Gold’. At the time of writing, it is the 5th largest cryptocurrency according to market capitalization.
How does Litecoin work?
Like Bitcoin, it was originally intended to conduct transactions online but it can also be used as a store of value. Like many other cryptocurrencies in the past year, its value has increased exponentially. At the start of 2017 a single Litecoin was worth just $4. At its peak in December that same year it hit $371, correcting to about $135 at the time of writing.
That’s quite an enormous growth which shows that it can also be used as a great store of value. Though, its market cap of around $7 billion put it behind the biggest players in the cryptocurrency space.
That shouldn’t put investors off it though. Litecoin has firmly cemented itself as one of the most important cryptocurrencies and a regular transactional medium. By maintaining full compatibility with the Bitcoin API, Litecoin has made it very easy for developers and traders to integrate the network into existing applications that already offer Bitcoin support.
Although Litecoin shares huge similarity with bitcoin, there are some notable differences between them which make Litecoin a cryptocurrency of its own.
Transaction Speed: Litecoin can confirm the legitimacy of transactions a lot quicker than Bitcoin. This is because it generates block about four times faster than Bitcoin. The faster block time of Litecoin makes it possible for the network to handle a higher volume of transaction – faster and cheaper.
However, it is important to note that as Litecoin gain more adoption and usage, this confirmation time gets slower and also attract higher fees.
Mining: Like Bitcoin, Litcoin is generated by mining. Mining involves the use of powerful computing hardwares to perform complex mathematical calculations. Each time a block is solved; a predefined number of coins is created and distributed among the miners as a reward for their service. (To learn more about cryptocurrency mining, read our Introduction to Cryptocurrency Mining Gude).
For miners and enthusiasts though, litecoin holds a much more important difference to bitcoin, and that is its different proof-of-work algorithm. While Bitcoin employs SHA-256 (Secure Hash Algorithm 2) which is considered to be relatively more complex, litecoin uses a memory-intensive algorithm referred to as scrypt. This is much easier to compute, light on the workload and enables the faster confirmation of Litecoin transactions.
Number of Coins: The limited supply of a cryptocurrency contributes to its market value. This is another difference between the two cryptocoins. The number of Bitcoins that can be mined is limited to 21 million, while the total number of Litecoins will never exceed 84 million. Around 55 million Litecoins are already in circulation, which means there are only 29 million left to be mined.
Where and How to Buy Litecoin?
As mentioned above, Litecoin is generated by mining. However, it is a complex process and not meant for everyone. There are other simpler options available.
Litecoin can be exchanged for other digital coins like Bitcoin and Ether through cryptocurrency exchanges. Some of these exchanges enable investors to purchase this cryptocurrency with fiat money like USD. Litecoin can be discovered on exchanges under the cryptocurrency symbol LTC or XLT.
However, before you purchase Litecoins, you should make provision for their storage. There are a few different options available including hardware wallets like the Ledger Nano S and desktop wallets like the Litecoin Core, which was created by the development team. (To get more on digital wallet types, read our guide on Types of Cryptocurrency Wallets).
Listed below are a few top exchanges where you can purchase It;
There are a lot more market places for the cryptocurrency, those can be found on the company’s website or Coinmarketcap. Once the coins are in your possession, you can start spending them or store them as value. There are several companies that accept it as payment, all of which you can check out on the company’s website.
Is it a good Investment?
Litecoin has soared in value since its inception in 2011. In 2017 alone, it recorded a value growth of about 8,000% against Bitcoin’s 1,800%.
The cryptocurrency have cemented itself among the top ten cryptocurrencies and with a daily trade volume of about $500 million, the cryptocurrency doesn’t seem like it will diminish in value yet.
Litecoin has a solid team who is devoted to the growth of the cryptocurrency. The Litecoin development team with Charlie Lee as the founder of the project; have lined up quite a number of technological implementations for the network. These implementations will be an asset to the entire crypto community and will also enable further adoption of Litecoin.
However, that doesn’t mean that Litecoin will continue to grow in value and remain a profitable investment in the future. Cryptocurrencies are often associated with volatility and this is due to its unregulated nature. Even Litecoin creator Charlie Lee has advised that investing in the cryptocurrency could be “extremely risky” and buyers should be able to handle a huge value decline.
This is already seen as 1 LTC which was worth as much as $370 in the middle of December 2017, lost around 70% of its value as the price dropped to just $110 in February 2018 before it started climbing again.
In my opinion, Litecoin like every other cryptocurrency presents a good gamble for investors. Stabitlity for such assets can never be assured, but as a great innovation for the global financial system, cryptocurrencies are more likely to take one direction: To Grow.
As with any investment, it is important to analyze the fundamentals and consider whether an asset fits your investment plan. In addition, it is important to consider your risk profile before investing in it or any other cryptocurrency.