Following in the footsteps of Bitcoin, a wave of altcoins arose, each aiming to improve or expand on the original cryptocurrency’s goals. Others are complementary to Bitcoin, living alongside it in the same way that silver does with gold.
To Bitcoin’s “digital gold,” Litecoin has been termed the “digital silver.” It resembles Bitcoin in many ways and is one of the first crypto assets to remain in the top ten cryptocurrencies by market capitalization. In the fast-paced crypto market, this alone gives Litecoin enormous investment potential and long-term staying power.
This article will show why investing in Litecoin is a smart idea and why any amount of money put into the cryptocurrency is beneficial when considering its long-term growth potential. We’ll also go over how to invest in Litecoin, as well as the advantages and disadvantages of doing so.
What is a cryptocurrency?
A cryptocurrency (or “crypto”) is a type of digital currency that can be used to buy goods and services and is protected by an online ledger and strong encryption. The bulk of interest in these unregulated currencies is for-profit trading, with speculators pushing prices to new highs on a regular basis.
A cryptocurrency is a form of electronic cash that can be used to purchase and sell goods and services. Many companies have developed their own currencies, referred to as tokens, that can be traded for the goods or services they provide. They have the look of arcade tokens or casino chips. You’ll need to exchange real money for bitcoin in order to utilize the item or service.
The blockchain is the technology that enables the operation of cryptocurrencies. A distributed ledger, often known as a blockchain, is a system that keeps track of transactions across several computers. Part of the appeal of this technology is its security.
Over 13,000 different cryptocurrencies are freely traded, according to CoinMarketCap.com, a market research website. Initial coin offerings, or ICOs, are a popular way of obtaining funding for cryptocurrencies.
The total value of all cryptocurrencies was above $2.5 trillion on October 22, 2021, down from an all-time high of $2.6 trillion two days before. Bitcoins, the most frequently used digital currency, were valued at $1.2 trillion on the open market.
What is Litecoin?
The ticker symbol for Litecoin, a cryptocurrency token, is LTC. It has been a top-performing cryptocurrency since its introduction in 2011.
Charlie “Satoshi Lite” Lee, a former Google and Coinbase developer, created Litecoin, which is now run by Lee and the rest of the Litecoin Foundation. The Litecoin Foundation is dedicated to promoting the cryptocurrency’s growth and adoption.
The altcoin is widely cited as a leading indicator for the whole cryptocurrency market.
Litecoin’s code is nearly identical to Bitcoin’s, and it, like Bitcoin, has a fixed supply and a halving of the LTC block reward. Like Bitcoin, the Litecoin network is founded on proof of work consensus.
The LTC supply is four times bigger than Bitcoin’s, with a hard cap of 84 million LTC. Litecoin has cut the time it takes to build a block from 10 to 2.5 minutes, making it a faster choice for sending and receiving data. It has made Litecoin the preferred method of sending and receiving cryptocurrency, whereas Bitcoin is now mostly used as a store of value.
Charlie Lee, the creator of Litecoin, made news when he sold his holdings at exorbitant prices, perhaps causing the currency to plummet. Lee, on the other hand, correctly forecasted the peak and warned customers that the price may fall to $20. Litecoin did exactly that at the bottom of the bear market. However, now that the low has been established, Litecoin is once again a smart investment.
Why do people invest in cryptocurrencies?
Bitcoin and other cryptocurrencies are seen as the money of the future, and supporters are hurrying to get their hands on them before they become any more valuable. Some supporters like the concept that bitcoin relieves central banks of the responsibility of controlling the money supply because central banks tend to devalue money over time through inflation.
Others argue that blockchain technology, which enables cryptocurrencies, is preferable to traditional payment systems because it is a decentralized processing and recording system that is potentially more secure.
Some investors are interested in cryptocurrencies because of their rising value, but they are unconcerned about their long-term utility as a payment mechanism.
Despite the fact that cryptocurrency values are rising, many investors consider them to be speculative rather than long-term investments. What exactly is the basis for this? Because cryptocurrencies, like real currencies, have no cash flow, you must pay more for the currency than you did in order to benefit.
The “greater fool” investment theory is what it’s called. A well-run firm, on the other hand, increases in value over time as profits and cash flow increase.
Investing in cryptocurrencies like Bitcoin, which have traditionally had minimal price relationships with the US stock market, can help you diversify your portfolio. If you believe that bitcoin will become more popular over time, putting some cryptocurrency in your portfolio as part of a well-balanced investment strategy is typically a smart idea.
Before you buy any cryptocurrency, be sure you have a solid investment thesis. This will assist you in comprehending why the currency will continue to exist.
There are alternative methods to profit from the bitcoin surge if purchasing cryptocurrency appears to be too hazardous. You may invest in a crypto futures market like CME Group or acquire shares in firms like Coinbase, Square, and PayPal. While investing in these businesses might be successful, it does not provide the same level of upside as investing directly in cryptocurrencies.
Is Litecoin a worthwhile investment?
Litecoin’s faith in 2020 plunged even more after failing to perform like Bitcoin following its halving and experiencing an immediate surge in demand due to restricted supply, making it one of the few currencies to fail to achieve a new all-time high before the year’s end.
Litecoin had not had a particularly bad year, but it has been left behind by any positive activity in the crypto market. On the LTC/BTC trading pair, Litecoin has fallen even more, albeit it is currently showing signs of recovery.
Unlike Bitcoin and Ethereum, Litecoin did not achieve a new all-time high in 2021. This isn’t to suggest that buying Litecoin is a bad idea. Because it still has a long way to go to catch up to the rest of the market, it shows that Litecoin has a larger return to risk ratio than other cryptocurrencies.
It also offers a bigger financial reward in terms of upward potential, whereas other cryptocurrencies have already tapped into a significant amount of positive momentum.
Litecoin continues to pique the curiosity of developers. It was one of the first to use segregated witness and is widely used as a Bitcoin development platform.
Litecoin is highly valued because of its tight ties to Bitcoin and its digital scarcity. With over 100,000 active addresses and 40,000 transactions per 24 hours, on-chain activity reflects a healthy Litecoin network.
How can I invest in Litecoin?
Investing in Litecoin, like other crypto assets, may be done by mining or buying LTC online in a few simple clicks through a cryptocurrency trading platform or exchange. After you’ve acquired Litecoin, you may invest it in a number of cryptocurrencies. Here are a few of the most common Litecoin investment strategies.
Buy and Hold: Purchasing Litecoin and other cryptocurrencies on a spot exchange and then transferring them to a web wallet or hardware wallet for secure storage is how you acquire and hold them.
This form of investment necessitates the least amount of skill or effort, but it also wastes money. In 2019, the price of Litecoin, for example, has climbed from roughly $20 to over $160. In 2020, it is predicted to fall below $40.
Trading: Rather than purchasing and owning a product, investors may seek to profit from price fluctuations by becoming traders. Below are the two most prevalent trading tactics.
Spot trading is buying an item at a low price and selling it at a high price in order to profit from each swing as much as possible. When markets drop, however, the only option is to sell assets and transfer them to cash. On spot marketplaces, there is no way to make money when markets are collapsing.
Derivatives trading is a type of spot trading that allows traders to benefit regardless of market direction by going long or short on the market. Longing or shorting Litecoin using leveraged CFDs might be much more rewarding. As a result, use caution while implementing risk management strategies.
How do I buy cryptocurrency?
While certain cryptocurrencies, such as bitcoin, may be purchased using US dollars, others require the purchase of bitcoins or another cryptocurrency.
To buy cryptocurrencies, you’ll need a “wallet,” which is a piece of online software that keeps track of your funds. In general, you establish a cryptocurrency exchange account and then buy cryptocurrencies like bitcoin or Ethereum using real money.
Coinbase is a well-known cryptocurrency exchange where you can build a wallet, make an account, buy, sell, and store bitcoin and other cryptocurrencies. A growing number of online brokers, including as eToro, Tradestation, and Sofi Active Investing, are now offering cryptocurrency trading. Robinhood Crypto is a free bitcoin trading program that is available in most, but not all, states in the United States.
Cryptocurrency is a high-risk, high-reward investment. Investing in shares of well-known companies is frequently safer than investing in cryptocurrencies such as bitcoin.