Litecoin is a digital asset that is constantly securing the top 10 cryptocurrencies spot by The market capitalization (or market cap) of a cryptocurrency is a measurement of its market value. In other words, it.... And it’s certainly not surprising to see such impressive performance from this altcoin over the years.
If you’re one of those curious folk, that’s still puzzling how this coin survived the crypto turbulences and soared to the top. You’re not alone!
Today, we’ll dive deep into the mechanism and its prospects. In the end, you’ll understand if it’s really worth your time and effort to invest in it.
What Is Litecoin (LTC)?
Litecoin is a peer-to-peer blockchain built as a fork of BTC Core Client by Charlie Lee, a former software engineer in Google. The birth of Litecoin was a result of the modifications on Bitcoin’s code with several enhancements. For example, Litecoin features a faster transaction processing time, lower cost of transactions, and better security.
But, what’s most intriguing about Litecoin is its capability to process a block within 2.5 minutes, which is four times faster than Bitcoin.
The best part?
It’s at a much lower cost because Litecoin uses a scrypt algorithm that is more cost-efficient than Bitcoin’s 256-hashing algorithm.
While the flexibility Litecoin possesses and the quick adoption in innovation makes it easier for developers to adjust the system that caters to their needs. At the same time, changes can be executed quickly whenever there are errors. The rapid implementation of software security patches also makes the blockchain less vulnerable to cyberattacks.
How Litecoin Remains A Top Crypto Even After A Decade?
Litecoin remains one of the most popular altcoins to date. Still, there is potential for growth due to its technical potential and the possibility to generate considerable ROI.
In fact, most retail investors and traders prefer LTC mainly because of its lightning-fast transaction speed.
As compared to its counterpart, it is less risky to invest in LTC. As a widely adopted crypto, LTC is the world’s eighth-largest cryptocurrency with over an $8 billion market cap. Plus, it’s traded nearly on every crypto exchange, and it has the second-largest crypto ATM network with 3,709 kiosks worldwide supporting LTC.
As of 2021, Litecoin is currently accepted by more than 40,000 merchants worldwide, with 70% of them located in the US.
Besides, Litecoin was one of the first to integrate the SegWit technology. That means, with the segregated witness’s adoption, the lightning network enables participants to exchange currency at virtually no cost. You’ve heard it right. Yes, without a cost!
That means it’s less volatile, and the flexible usability is much more adaptable for small to large scaled merchants. Hence, when comparing Litecoin to Bitcoin, it is more scalable even though they’re using the same Proof of Work consensus.
Another reason Litecoin secures its ranking is because of its store of value. The limited supply makes LTC valuable according to the demand-supply concept. However, it’s still possible that Litecoin’s protocol will be changed to allow for a larger supply.
Considering all these factors, it becomes clear why Litecoin remains a popular crypto asset among investors.
Litecoin vs. Bitcoin vs. Ethereum
As mentioned earlier, Litecoin uses a different hashing algorithm known as Scrypt, in contrast to Bitcoin’s SHA-256 algorithm.
But what you did not realize is that Scrypt makes mining more attractive as it does not consume resources and is less costly. That means miners can mine LTC using GPU (graphics processing units) that are much cheaper than Bitcoin’s ASIC (application-specific integrated circuits) hardware. Thus, it’s more accessible for the public to verify the block which has been created. Therefore, improving speed and network scalability.
On the contrary, Ethereum cannot be mined after the PoW consensus switch to PoS, which implies different monetization methods and network support methods.
Litecoin can process a transaction that is way quicker than both Ethereum’s (before sharding) and Bitcoin combined. While Bitcoin can handle 7 Transactions per second (TPS) is the number of transactions a blockchain network can process each second or the number o... (tps) and Ethereum at 19 tps, Litecoin can process a whopping 56 tps. Of course, scalability has always been the issue. Thus, Ethereum aims to overcome its scalability and capacity by implementing the Sharding technology during the ETH 2.0 roll-out. However, since this technology is not fully-integrated, at least not by (2021 to 2022) according to Cointelegraph, Litecoin remains the pioneer in this aspect.
Should You Invest in Litecoin?
After having a better understanding of Litecoin and its comparison with the other two top cryptocurrencies — Bitcoin and Ethereum, it’s common to evaluate if this crypto is worth the investment.
So, is Litecoin a good investment?
The following information will help you assess this asset’s potential and decide on a suitable strategy for your portfolio.
The Retrospective of Litecoin
Here are the key milestones achieved by the Litecoin team:
- Litecoin was created in 2011. Charlie Lee devised a better version of Bitcoin, yet not taking its place. Hence, giving its nickname “Digital Silver.”
- Lee joined Coinbase in 2013 as the Director of Engineering. That affected the value of LTC positively as the price soared almost ten times, from $3 to $30 when this news broke out. Subsequently, the normalized soon after the news passed over time.
- In 2017, Coinbase added LTC to its listing, causing further growth of the coin. It continued to rally up until 2020. By the end of 2020, the price reached $360.
- Simultaneously, in 2017, the adoption of the SegWit and Lightning Network layer further enhanced LTC transactions per second.
Notably, Lee sold all of his holdings in December 2017. That was the same time when LTC peaked along with other cryptocurrencies. The sale of the Litecoin stake by its founder of the network also undermined the faith of investors. Critics suspected that he was manipulating prices, but he explained the reason being a conflict of interests with his designation.
LTC Price Analysis
The way a cryptocurrency performed in the past can help make important financial decisions. The coin reached its all-time high during the crypto bubble in December 2017. At that time, LTC soared and reaching its all-time-high exceeding $300.
However, when the crypto market crashed in 2018, Litecoin was deeply affected as well. Its price plunged to $23, making an over 173% decrease in value. Of course, we know the crypto market is volatile; thus, Litecoin is no exception. At the beginning of 2019, Litecoin started to bloom in the bull market. The price increased more than five times to $140. However, after this, its price subsided again, and only in the late stages of 2020 did it go back up $100 again (the first time in over a year)
With the bul run, the general outlook at the beginning of 2021 has been favorable for all cryptocurrencies and Litecoin nonetheless, with its price hovering around $190 at the time of writing (late March 2021). Could it go on to test its all-time high? Only time will tell.
Is Litecoin a Risky Investment?
In 2019, this digital asset provided more than 300% profit for investors. The risks associated with investing in Litecoin are very similar to Bitcoin, usually related to its price fluctuations. Despite fluctuations, its price always bounces back, with the robust technicalities supporting the asset’s value.
With every new bull run, it reaches new heights, making the risks of investing in LTC lower than any other altcoin thanks to its stable presence in the market. Still, investing in LTC possessess certain risks. That’s mainly because altcoins’ bull is highly dependent on Bitcoin. Let’s say if Bitcoin is in a bearish momentum for a prolonged period, the price of LTC is most likely to dip too.
Should You Trade Or Invest in Litecoin?
Once you have Litecoin, you can decide to buy and hold it in a wallet as an investment asset. If the volatility is extreme, those who already own this digital cryptocurrency can benefit from price swings.
Otherwise, you can choose to trade Litecoin using either spot trading or derivatives trading that can long or short a market position. Holding LTC for an extended period may also pay off nicely as its price reaches new heights whenever Bitcoin soars.
Who Is Suitable to Trade Litecoin?
The potential of cryptocurrency makes it a luring asset for different types of investors. Day traders can use it to earn profit from swings that occur within a day. It can be used as a long-term investment to protect your holdings from inflation and benefit in the long run. Some crypto enthusiasts buy it to support the asset or its mining algorithm.
As far as technicalities are concerned, Litecoin cannot offer anything new but improve its existing framework. However, it is a vital asset and suits investors who are keen to diversify their investment portfolio.
How Much Should You Invest?
The number one rule for all crypto investment is not to invest more than you can afford to lose. That includes whether you’re a beginner or an advanced trader. Also, diversification is a well-known practice. The best way is to invest in altcoins no more than 10% of your portfolio.
When applied to trading, the main rule is straightforward. You should never trade more than 1% of your trading deposit in a single transaction. If you stick to this rule, your funds will be protected in a much better way.
How to Trade Litecoin?
You can buy LTC on most cryptocurrency exchanges to hold for an extended period. However, you can also trade perpetual contracts to speculate the price with a predetermined price at a specified time in the future.
For instance, Bybit offers LTCUSDT perpetual contracts where LTC can be bought with stablecoin USDT via a perpetual contract with leverage. All you need is to fund some tethers to your verified account or convert other cryptocurrencies to USDT.
Here’s how it works:
- Fund your Bybit account with existing USDT or buy them via the Fiat gateway.
- Go to Trade -> USDT Perpetual -> LTC/USDT.
- Set up the expected LTC price for the long or short order and the amount of USDT you want to exchange.
- Once the LTC price reaches the specified limit, you will get a corresponding LTC amount to your wallet.
- Trade responsibly. Use our trading guides to learn how to trade.
All in all, Litecoin is valuable because of its correlation to Bitcoin. The other factor that adds value to it is the scarcity of the currency. Not many altcoins can boast of similar achievements. Moreover, being one of the oldest cryptocurrencies in the market demonstrates enormous staying power in the current conditions of a rapidly changing market.